App Install Ads Could Be The Growing Cash Calf Of Facebook’s Earnings

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How do you get hundreds of millions of people to consider downloading your app? One of the only answers is Facebook’s app install ads. With the app stores overrun and every company going mobile, app install ads are Facebook’s big chance to monetize mobile. Companies like 1-800-Flowers and Poshmark say the ads are already a hit, and I think they could be the star of Facebook’s earnings tomorrow.

PUTTING NEEDLES ATOP THE HAYSTACK

If you’re unfamiliar, Facebook launched app install ads in October 2012 to let developers pay to promote their apps in the mobile news feed of Facebook’s apps. The ads show the app’s name, a short description, the category of app (i.e. adventure game, ecommerce app), a big image of the app, and an obvious “Install Now” button that opens the app’s page in the Apple App Store or Google Play so it can be quickly downloaded. On iOS, the App Store can even be opened in an overlaid window so users don’t feel like they’ve ditched their friends on Facebook.

Why are these so important? Because app discovery is a mess right now, yet mobile is becoming critical to nearly every business — web giants, mobile-first startups, game developers, name-brand retailers, and with time, even smaller businesses.

Beyond word of mouth, the only reliable way to get an app discovered for free is to climb onto the frequently browsed app store charts…which requires tens of thousands of downloads in the first place. That leads developers to try to buy installs however they can, but often they end up with users that never really use their app. It doesn’t matter how cheap they are to acquire if they don’t generate any return on investment.

A BIG BANG THAT GETS YOUR BUCKS BACK

What app makers need are legitimate downloads. Downloads from users that will engage, share with their friends, and pay. Lots and lots of downloads. Few channels are big enough to deliver app discovery at a massive scale. There’s the existing favorite, Google AdWords, which are popular and making Google a ton of money. But increasingly, developers are turning to Facebook’s app install ads. In its last earnings call, Facebook said that since the launch of app install ads, 20% of the top 100 grossing iOS apps are using them.

Today after his talk at TechCrunch Disrupt NY, I asked Facebook’s product director of advertising Gokul Rajaram how mobile install ads are doing. He candidly told me “They’re performing well, and we’re seeing them deliver really high quality users that take actions.”

Facebook’s clients agree. 1-800-Flowers.com’s VP of Mobile and Social Amit Shah tells me “Our ability to reach hundreds of millions of US users who are accessing Facebook every day on their mobile devices is phenomenal. Other than Google search ads, there’s not another discovery medium at scale if you want to drive a large number of downloads.”

Mobile-only fashion marketplace app Poshmark’s CEO Manish Chandra concurs, “We’ve been using mobile install ads since their beta and they’ve been incredibly cost effective. We’ve found no difference in the acquired users, whether from Facebook’s organic shares or mobile install ads, in terms of their engagement and overall behavior, so we’ve been using them as one of the largest sources of user acquisition for Poshmark.” Meanwhile, Canadian ecommerce discounts app Checkout 51 was able to pull in 10,000 installs over two days using app install ads. The cost per install came in at just $0.60.