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Advertisers: Do you understand the basics of your vertical?

by Tom Lemrond on Mar 30, 2017

Sometimes new advertisers come to us with the assumption that their product is so strong they don’t need to understand it within the context of its vertical. While occasionally that’s true, it’s far more often the case that having an in-depth understanding of the vertical (and of others as well) is distinctly to an advertiser’s advantage.

Here are three things I think every advertiser should know when it comes to verticals:

Demographics and user groups matter.

When it comes to demographics, no two verticals are alike, so you can’t truly succeed unless you focus on the specific demographic or user groups within a given vertical and optimize within them. In order to do this, you need to share data with your ad network so that it can build on what you’ve already learned about your users. Keep in mind that shared data works both ways: while an ad network can’t share specific demographic data, it should be able share with you some details about the demographics of your vertical, such as what types of people are attracted to particular games or who is more active shopping at certain times of the year.

Each vertical has a different ballpark CPI and KPI targets.

Each vertical is essentially its own playing field, with its own range of CPIs that you should aim for, along with down-funnel goals that make sense within the context of that vertical. While of course you’re not going to know exactly what CPI your competitors have (much less details on their down-funnel goals), you should definitely have a firm handle on what CPI you should be bidding/targeting, along with the down-funnel goals that make the most sense comparative to the rest of the industry. The last thing you want is the “guess and check” approach because it can lead to “false failure” if you bid incorrectly and get lower quality traffic.

Here’s an example with a midcore game: Imagine that you aim to bid $3 on iOS in top tier geographics. While aiming for a low CPI overall is well and good, the problem with shooting for $3 in this particular vertical and genre is that while there is traffic to be won at that rate, the premium advertisers (your competition) are paying upwards of $10+ and locking in all the higher quality traffic. If you bid at $3, you’ll be bottom fed all the lower quality impressions because the bigger advertisers are cleaning off the top.

But if you still want to be conservative with your bid in that situation, then the best approach is to start at a $6-7 bid, let the data come in, and then optimize your bid within platforms based on correlating quality. That way you will compete for higher quality impressions and have the opportunity to discover which sources work and zero in on them.

As for what you can expect from each vertical, naturally that varies. With casual games, which are very popular, players tend to spend less, so you want the CPI to be low and you should aim for a lower ROAS range from in-app purchases. Once you get into midcore and hardcore games, the dynamics become slightly different because the CPI targets are higher and because monetization occurs down-funnel (these games have a longer shelf life). Commerce apps are  completely different — they can vary wildly depending on the brand and demographic target. Target CPIs for travel/booking are among the highest, but ROAS is a bit harder to project because purchases often happen longer after install and sporadically after that.

Campaigns should be granularized within specific verticals.

Marketers need to be as granular as possible with their campaigns, so their bids should vary based on the inventory source and the quality it provides. But your campaigns should also take into account various starting points based on your verticals, like category-level targeting. For example, if you’re marketing a mobile game in a given genre, then you’ll likely find the best success acquiring new users who are already players of games in that genre. I advise looking for a marketing partner who can offer that level of granular targeting. Even if it charges a premium for that service, the net return is often worth it.

Understanding the basics of your vertical is key to success in growing your business — you just can’t do it well in isolation. If you have questions, you should feel free to ask someone who is well-versed in the back-end of the industry, like someone at your ad network. They’ve likely seen hundreds, if not thousands, of campaigns and are very familiar with what is realistic, and you should leverage that expertise whenever you can.

Tom Lemrond is AppLovin’s director of sales.

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