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KEY HIGHLIGHTS

🔬 Focus on SANs at low scale (<$50k/month)

📡 Concentrate your channel mix to ensure algorithms have enough signal to perform

🤔 Contextual advantages of ad networks are hard to realize at small scale

🏁 Diversify *only* after you tap out SAN traffic

FULL TRANSCRIPT BELOW

I’ve seen this stated at times – that developers should diversify their user acquisition channel mix. Investing is given as an analogy – the argument is made that a diversified portfolio is safer than one that isn’t.

While the analogy and the advice can make sense for *some* app developers – this advice unfortunately isn’t universally applicable, and I do think app developers can get burnt if they follow this without understanding their own specific context. 

I’d say this advice to diversify isn’t applicable to the vast majority of app developers that operate with small or midsize budgets, which I’d say is under ~$100k a month range.

I can speak to this very clearly because we work with and advise app developers at different levels of scale – some under $50k a month, some between $50k and $100k, and some well north of $100k. After having seen up close over a 100 products at different levels of scale, here is what we recommend around diversification.

Focus on SANs at low scale (<$50k/month)

And the #1 piece of advice I give to app developers spending under $50k a month is to NOT diversify their acquisition mix. I typically recommend they spend as much as possible on Facebook – and not worry about diversifying their channel mix at this stage. 

If the product has a strong resonance with Snap and TikTok, we might spend some budgets here. If the Android product is stronger, we might spend some budgets on UAC and Android (but not on UAC iOS at this level of scale). For products with a strong fit with Apple Search we might spend some budgets there.

But broadly, we never recommend running over 2 or 3 channels – or running outside of self-attributing networks if you’re spending under $50k a month.

Concentrate your channel mix to ensure algorithms have enough signal to perform

What also reinforces our thinking around concentrating your spend when at small budgets is that SAN algorithms actually struggle to perform if your budgets are way too small.

Let’s say you have a $20k a month budget, a CPA of ~$80 – and you spread it across 4 channels. You then have about 250 conversions a month overall, or ~62 conversions per channel per month or about 2 conversions per channel per day.

2 conversions per channel per day just doesn’t give enough signal for your channels to learn and deliver performance – so all of your channels would actually perform worse than one single concentrated channel that would deliver perhaps 8 conversions per day, learn faster, and deliver better results.

Contextual advantages of ad networks are hard to realize at small scale

What happens if you’re spending between $50k and $100k a month? I’d recommend still staying within self-attributing networks – and trying to scale within your self-attributing networks. We do not recommend advertising on ad networks or DSPs even at this stage. 

Yes, the contextual affinity of ad network traffic has a chance of working well for games. If you’re advertising for a game, an ad network can show your ads within games – and in theory it can appear that it could make sense to advertise within games via ad network traffic earlier on. 

But this contextual affinity of ad network traffic typically isn’t enough to drive performance that is on par with SANs unless you optimize ad network traffic heavily – by culling underperforming inventory and boosting performant inventory, either manually or via algorithms. And given that the ad network traffic or DSP traffic can be a bit of a haystack in which you have to find needles, this can take budgets and time for learnings to be unlocked. 

Diversify *only* after you tap out SAN traffic

But yes, there is a time and place for ad network traffic and DSP traffic – and this is typically when you want to scale – and have tapped out SAN traffic. 

A good rule of thumb for when this typically happens is when a product hits about ~$100k in spend – and is spending across the key SAN channels.

This is when it makes sense to look outside of the walled gardens. If you’re at over $100k a month in spend, and your SANs are at enough scale, it means you are able to spend time, effort and budgets in optimizing your ad network or DSP traffic – manually or via algorithms. And if these channels don’t work out (as can often happen), the hit to your overall metrics isn’t as hard.

Plus: at these sorts of budgets, you have enough signal within each of your channels(number of purchases or in-app events) that the channel algorithms are able to learn and optimize without requiring a lot of time – or budgets relative to your overall budgets.

And if these channels do work out, you’re able to unlock a massive amount of inventory that you wouldn’t have otherwise had access to via SANs alone. Unlocking this can let you scale faster – and let you go from 6 to 7 figures in spend. 

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In summary, diversification can absolutely help you scale – but this is not for everyone, and not at all stages of an app’s scale. We’d recommend a strategy of staying concentrated in your key channels at small spend – and diversifying as you unlock additional scale.

A REQUEST BEFORE YOU GO

I have a very important favor to ask, which as those of you who know me know I don’t do often. If you get any pleasure or inspiration from this episode, could you PLEASE leave a review on your favorite podcasting platform – be it iTunes, Overcast, Spotify, Google Podcasts or wherever you get your podcast fix. This podcast is very much a labor of love – and each episode takes many many hours to put together. When you write a review, it will not only be a great deal of encouragement to us, but it will also support getting the word out about the Mobile User Acquisition Show.

Constructive criticism and suggestions for improvement are welcome, whether on podcasting platforms – or by email to shamanth at rocketshiphq.com. We read all reviews & I want to make this podcast better.

Thank you – and I look forward to seeing you with the next episode!