Once your company has been in the mobile app space long enough it will normally have more than one app and you will start promoting one app within another. This is normally referred to as cross promotion or cross promo for short. In reality, you are simply advertising one of your app inside another and you are reducing the advertising space that you could have given ad-networks. There is a clear trade off between cross promotion and ad revenue so once you start attributing your advertising revenue, you would want to also get a grip on your cross promotion ROI.
Example of cross promotion ROI calculation
Lets think about a single user journey. You paid $3 CPI to bring him to your first app, he generated $1 in the first app that had aggressive cross-promo ads. Over 2 months of playing he watched 500 cross promo ad impressions and then eventually installed your second app where he generated additional $5 in from buying in-app products of the second app. The total he paid you is $6 on a $3 marketing investment. In high level this was a good user but we are interested in the cross promotion ROI. We need to look at each app individually:
The first app lost ad revenue on the cross-promo
When we are looking at the story from the perspective of the first app we realize that there is more to it. The first app paid $3 and only received $1 direct revenues. If we don’t assign any revenue to the cross promotion ads the manager of the first app will stop the campaign that brought this user. Furthermore, the 500 ad-impressions could have generated a few dollars from those 500 ad impressions if it weren’t for the cross-promo ads.
The second app received a free install
The story of the second app is that the $5 generated usually comes with a significant marketing cost. While the manager of the second app could claim $5 to his profit, the reality is that some of this revenue should be claimed by the first app. Lets see how much exactly using two different methods
Use affiliation model to assign a share of the revenue
The first option is to simply decide that a portion of the revenue generated by the second app will be considered as generated by the first app in return for the cross promotion. The origin of this method is in affiliation models and the typical split is between 30% to 50% for the app that brought the traffic. If we go back to our example and use a 50-50 split, the first app would claim $2.5 from the $5 generated in the second app. The ROI analysis will be as follows:
- The first app spent $3 and received $3.5 – profit of $0.5
- The cross-promo ads yielded $2.5 on 500 impressions – eCPM of $5
- The second app spent $2.5 and generated $5 – profit of $2.5
This method is a bit complex and requires the internal BI to track user activities between different apps. In addition, the time that might pass until the 2nd app generated the revenue could be long which makes it hard to relay on.
Assigning a CPI value based on market price
Another method is more inline with how the mobile app economy operates today. Simply decide on a CPI value that the 2nd app is willing to pay based on what they are currently paying. If the 2nd app normally pays $4 CPI, that should be the price. The ROI analysis in our example will there for be:
- The first app spent $3 and received $5 ($1+$4) – profit of $2
- The cross-promo ads yielded $4 on 500 impressions – eCPM of $8
- The second app spent $4 and generated $5 – profit of $1
Prioritizing cross promotion in your mediation platform
Attribution aspects – who brought the install
The example we used is simplified in the sense that the user was only exposed to ads of the second app in the first app. In reality however, he is also likely to get exposed to the second app in other channels. To avoid a situation of double compensation it is advised to apply the same logic you are using when attributing your regular/external campaigns. Typically this is means last click attribution with a 30-day attribution window for clicks and optional 7-day attribution window for impressions.
Another important measurement aspect is to be able to count the cross-promo impressions and differentiate them from the regular ad impressions.
If you want attribute your ad revenue and be able to track cross promotion ROI you should check out SOOMLA Traceback – Ad LTV as a Service.