Paid User Acquisition: Are Non-transparent Channels Harming Your Growth?

Paid user acquisition is a crucial part of any app growth strategy—so much so that very few app developers manage to grow exponentially without investing in user acquisition. However, as important as it is, for many, it can be complicated to venture into a buzzword-filled world.  

I have 12 years of experience in the digital industry, with ten years in mobile marketing. I’ve seen many advertisers struggle with complex terms or fall for promises of quick and easy results at low cost.

In this article, we dive into the challenging world of mobile acquisition channels. We’ll focus on the risky options that can quickly harm your company’s growth.

User Acquisition: Why Paid App Marketing Activities?

Before embarking on this journey, we should consider the steps we need to take before starting a paid user acquisition campaign. 

While developing a mobile app, we must choose the right infrastructure to support future marketing strategies. The digital infrastructure is the pillar of a successful mobile app growth strategy. Without strong foundations, no buildings can stand, or, as we like to say, no rocket can take off.  

Depending on the level of growth that we want to sustain during the months, we need to consider a reliable attribution partner that can help us track all marketing channels. Initially, the natural choice might seem to be Firebase (free and Google-made). However, this has some limitations we cannot ignore when spending on several advertising channels. 

When doing paid user acquisition campaigns, we want to use a 3rd party independent platform to track our marketing activities. This means that we cannot rely on the advertising platform of choice for a fair attribution or a tool like Firebase, which cannot track Facebook, for example. These attribution platforms are also known as Mobile Measurement Partners (MMP). 

Setting up the right digital infrastructure, including a proper attribution system and analytical tools, is essential in mobile marketing to ensure we can effectively read and understand data.

Paid User Acquisition: What Are the Options Out There?

When looking at ways to acquire potential users, the mobile landscape offers quite a few options. The wide variety of channels in the market can confuse us and make us lose control of our budget.

The best way to start is by choosing those channels that everyone talks about, the “good” ones, so to speak. These are:

Paid Social Media Marketing– Those media channels are usually the #1 choice for many advertisers starting out. Especially Facebook and Instagram, because of their massive reach to active users and ease of use. New ones are TikTok and Snapchat, which have taken a lot of interest from more advanced and experienced advertisers. 

Paid Search – Those options refer to channels that allow us to bid for specific keywords or search terms. With Apple Search Ads, we can do so directly in the App Store. With Google and its Google App Campaigns, we can assign some budget to Google Search on their search engine. . 

Paid Display – Paid Display refers to high-quality display activities commonly seen in Google App Campaigns, such as banners, interstitials, or video ads, aimed at acquiring new users and boosting key KPIs like retention and ROAS. This strategy also includes leveraging the Facebook Target Audience Network. While many view it as part of the Facebook platform, it operates as a display ad network on 3rd-party mobile apps, targeting specific demographics and optimizing for monetization. Paid display efforts can significantly impact metrics like LTV and churn while contributing to broader goals, including ASO and referral growth across both iOS and Android ecosystems. The Degree of Transparency

One important question is: What are the key metrics of transparency I can get on these “good” channels? 

The image below represents to what extent an advertiser can “control” where its ads are showing. Both Paid Social and Paid Search offer a “full” transparent model. This is because you know exactly what the placements are and where your potential audience will be finding your ads.

Paid Display, however, is not that controllable. In fact, on Google Display, we can see where (app name) our ads are shown, but we have no control over that. In comparison, the Facebook Audience Network gives us control over categories but no visibility on app names.

AdNetworks, DSPs, Affiliate Networks: What About Those? 

The mobile marketing landscape offers more options to “invest” our budget. However, because there are, it doesn’t necessarily mean it’s a good idea to do so. You might get easily confused by those three terms depending on your industry knowledge. 

Let’s try to give a bit more context to those players. 

Paid User Acquisition: The Three Platforms

AdNetworks – Those are AdTech companies with their SDK (a piece of code to show ads) in various mobile apps in different countries and verticals. The most commonly used AdNetworks (probably the safest) are video networks, such as Applovin, Vungle, AdColony, Unity, and Mintegral. These act somehow to the same level as the Facebook Audience Networks, the only difference being that these show mainly video interstitials and rewarded video ads. Despite being safe, sometimes, we come across stories that make us question the value that they could bring to our media mix. 

DSP or Demand Side Platforms – These platforms allow us to buy programmatically on different Ad Exchanges. DSP, as a term, has become widely used in the past few years. So much so that most players today in our industry (without an SDK) claim to have a DSP for programmatic advertising. However, we need to be careful as most companies claim to have proprietary technology while using a 3rd party one.

This is not necessarily a bad thing, but it certainly doesn’t help create a sense of trust when the first claim they make is not entirely true. Normally, DSPs offer either a managed or self-serve option and should, in theory, give us full control and visibility on placements and bids. When this doesn’t happen, we should question whether a DSP is used for acquisition or it is just a way to disguise other types of traffic. 

Affiliate Networks – These are companies that use other affiliates to buy traffic. They usually have no technology whatsoever and offer zero visibility on what they are doing and where they buy from. Because “affiliate” as a term has taken a very bad connotation, nowadays, these companies tend to refer to themselves as simply networks or (even worse) agencies to fool advertisers and app developers.

What Are the Risks of Non-transparent Acquisition Channels?

By now, it should be clear that there are many options in the market, and it can be complicated to define a good media mix for our acquisition strategy. At REPLUG, we work exclusively with channels that can offer full transparency and fraud-free traffic to our partners.

Our role as an agency, consultant, and—most importantly—a partner to our clients is to help them understand the risks of using non-transparent methods to grow their user base.

When considering non-traditional channels, we need to ask: what are the risks? Choosing unreliable traffic sources means failing in our role as marketing managers. The metrics get skewed by fraudulent traffic and fake users, leaving us unable to make informed, data-driven decisions.

What About CPA Networks?

This is a relatively recent trend, emerging over the past few years. While CPA as a buying model is quite common in the desktop space, it hasn’t gained much traction in mobile due to the complexity of making it work effectively.

Let’s quickly remind ourselves how the buying-selling process of ad spaces works in terms of costs: 

All publishers, i.e., mobile apps, sell their inventory on a CPM basis. It can happen to also monetize through a CPC model (pay-per-click). Conversely, advertisers prefer to buy mobile traffic on fixed costs, such as CPI or CPA, because it’s just less risky. 

On the “good” platforms we mentioned earlier, advertisers often set a CPI or CPA target cost, allowing the algorithm to optimize CPM or CPC bids to hit that goal. Most advertisers understand that acquisition campaigns don’t have a fixed CPI or CPA cost, as ongoing creative and CTA optimizations make it an ever-changing process.

However, marketing managers welcome fixed CPAs when buying on less trustworthy platforms because it means zero risks for them – but does it? 

It’s Not Economically Sustainable

When buying on (less developed) networks, a common situation is to be flooded with clicks. Clicks everywhere. Millions of clicks per day, but no impressions. The gazillion clicks our ads apparently receive a result in an interesting situation. The conversion rate from click to install is meager. So low, we see at least two zeroes after the comma before a number appears. 

Now, without going into the specific situation, I want to make an example similar to a recent case to show how non-sustainable this option is.

Note: The example is simplified for the sake of this article.

Example

We decided to test a new affiliate who approached us, claiming to have a powerful algorithm to optimize acquisition activities directly toward in-app actions. Since we need to grow our numbers, we figured it was worth a try. They promised to deliver paying users for our shiny new app at $10 each. Considering we’re currently seeing a non-cohort CPA of $15 on Facebook, we thought it might be a good idea to see how it performs.

Note: The affiliate gets paid exclusively for a purchase. 

After a month, we have the following situation in our dashboard: 

Although we are paying just for the campaign’s outcome, so the purchase, we are a bit worried about the high number of clicks. So we decide to do some math.

We start by taking a look at the conversion rates. First of all, click to install and then install to purchase. 

The install-to-purchase conversion rate looks OK and in line with other channels, more or less. However, the click-to-install conversion rate is relatively low. So, we decided to look at the costs to see how much each conversion point (install and click) would have cost if we had paid for them.

The calculation is a bit of a stretch—we’re simply dividing what we pay the affiliate by the number of clicks and installs. This already paints a striking picture, with a CPC of just $0.000027. And that’s without even factoring in the affiliate’s margins, which would make the CPC even lower.

Looking at these numbers, how does that CPA deal seem to you? What kind of inventory could possibly be available at such a low CPC? And what about the CPM? Unfortunately, without visibility into impressions, we can’t answer that question. But we can only imagine what it might look like—if any impressions were actually shown at all.

Conclusion: It’s Dangerous and It Ruins Our Metrics

Buying this kind of traffic results in a hazardous practice. Placements available at that price are either terrible or simply fraudulent. 

When considering fraudulent traffic, we also need to ask ourselves where those conversions are coming from. Are they all fake? Or the affiliate partner was able to “steal” attribution from either organic or other traffic sources? 

All these considerations together give us a clear sign of how our metrics will be polluted and wrong when looking at the end-of-the-month reporting.

It’s Not You – It’s Them

Another mistake marketing managers make in addressing fraud from these networks is instructing them on the desired metrics—such as conversion rates, click numbers, CTIT (click-to-install-time), and more—and accepting their conversions as successful.

When you give fraudsters instructions, the result is not less fraud, but rather a more complex to spot fraudulent activity. All those metrics mentioned above, as well as publishers’ names, can be controlled manually (technically done by code). 

It’s an Additional Cost

You might think this is not a problem for your company because you have decided to implement an anti-fraud tool. The question, however, would be, if you would stick to normal traffic channels, wouldn’t you be able to save this money and test more ideas on “good” channels to achieve your marketing objectives?

Conclusion

The mobile marketing industry is a complicated ocean to navigate. It has been evolving rapidly in the past few years, and non-compliant, fraudulent traffic sources have evolved faster than one might think. Even anti-fraud tools develop solutions that are based on fraudulent activities that have happened already.

They are mitigating the problem (and then successfully preventing it). The real issue is its reactive nature. No one knows what fraudsters are thinking next. Partnering with an external expert is essential. They can help you navigate choices and optimize media buying on reliable channels.

At REPLUG, we specialize in paid user acquisition combining over 12 years of experience on both sides of the table, ensuring our partners invest every marketing dollar they have in the best possible way. 

Originally published on September 2020, updated on December 26, 2024.