Eric Seufert, Vice President of Acquisition and Engagement at Rovio, spoke in his blog about what an optimization funnel and growth are in relation to mobile app marketing. We offer the Russian version of the material.
The original version of the material can be found on Mobile Dev Memo, a website dedicated to the mobile industry, run by Eric Seferth himself, author of the book Freemium Economics.
An optimization funnel is the process of improving some user paths within a product so that the number of users reaching the endpoint is maximized. Often this concept is confused or combined with a vague group of marketing strategies known as grown hacks.
At first glance, the optimization funnel is a process leading to growth. Such a view seems justified especially in the case of applying the optimization funnel to the paths that potential users follow in the process of becoming real users: landing optimization, optimization of the first session, optimization of registration, and so on.
Often the success of a metric (namely a metric that has been optimized for something) they are associated with those optimization funnels that are focused on engagement: the number of completed tutorials, the number of imported contacts, the number of users who returned the next day after downloading, and so on. But some metrics act as growth-oriented, including new registrations.
The difference between successful metrics focused on growth and engagement leads to the question of determining what growth is. Everything that optimizes processes for existing users of the product is, of course, retention, but where is the line separating retention from growth? If landing optimization increases the number of registrations by 10% (from 100% to 110%), does this increase the number of users by 10 people or just keeps 10 people who have already been marked?
Growth can be viewed from two positions:
From the point of view of existing marketing goals, that is, the totality available to reach the audience with the help of existing marketing channels. These are all those people who can potentially be covered by an existing advertising campaign (using direct marketing channels, such as mobile advertising, Google AdWords, and so on) or who can find an application on their own (using search).
From the point of view of the entire addressable market or the totality of all people who can potentially find use for the application.
If growth is considered only based on the first perspective, then the optimization of existing channels can increase various metrics, which, although they relate to the expansion of the project (like registrations), but do not significantly affect the maximum radius of marketing coverage of the project.
If the entire addressable market is considered as the coverage radius limit, then closing the gap between the existing achievable audience with the help of existing campaigns requires research and experimentation with channels, not their optimization.
This does not mean that growth based on optimization (improving the performance of existing channels) is not important, it is vital in terms of increasing the effectiveness of marketing costs and efforts spent. By the way, the charm of grown hacks is due to the fact that many ignore the opportunity costs and the cost of workers’ time, considering optimization work free.
Be that as it may, a balance must be achieved in optimization and expansion in terms of increasing maximum coverage to achieve long-term continuous growth, while focusing on optimization alone threatens to reduce profitability.
A source: http://mobiledevmemo.com