Interview

UA MegaTrends guy Eric Seufert on setting up Heracles, a boutique agency providing CMO smarts

UA MegaTrends guy Eric Seufert on setting up Heracles, a boutique agency providing CMO smarts

While hundreds of people work in user acquisition, Eric Seufertis perhaps the most well known.

Thanks to his roles with star developers such as Wooga and Rovio, his book Freemium Economics: The Savvy Manager's Guide, resource site Mobile Dev Memo, and his popular conference talks on UA megatrends, he brings a nuanced approach to what fundamentally is a numbers-based exercise.

On the basis, the news that Seufert has set up Heracles, a boutique mobile marketing agency, provided a good opportunity to discuss the state of the UA sector and where it might be headed.

PocketGamer.biz: So what can you tell us about Heracles - what areas of marketing are you specifically focused on?

Eric Seufert: Heracles is a mobile marketing agency: we help clients grow their user bases and optimize their mobile marketing campaigns.

I founded Heracles in May with Christian Calderon, the CRO at Ketchapp, and we're currently working with a handful of clients in different capacities.

We founded Heracles because we saw that most marketing agencies that operate on mobile don't do so in a way that is mobile-first and performance oriented.

We think that charging clients on percentage-of-spend basis - that is, billing a client some percentage of the money that was spent on their marketing campaign - misaligns an agency's incentives with what the client needs.

If an agency is making money in proportion to how much money they spend on behalf of a client, they're motivated to simply spend as much as possible, independent of campaign performance.

We take a different approach with Heracles. We don't really 'engage' with app developers; we see our clients as partners.

We come in as de facto CMOs, help them to put together a strategy for building their app's user base, and then we execute against that strategy with full campaign management and share in the app's revenue.

Our incentives are aligned with our partners': we make money when they make money.
Eric Seufert

This way, our incentives are aligned with our partners': we make money when they make money. Inherent in this approach is a high degree of transparency around performance in terms of campaign reporting and analysis.

Obviously, this model only really works for developers with a certain profile. If a huge company came to us and asked us to take on the handful of networks or affiliates that their internal UA team doesn't want to handle, then we'd probably have to turn that down as it wouldn't be a good fit for us and how we work.

We're a boutique agency, in that sense. The value of working with us isn't strictly tied to the volume of traffic we can drive to an app. There are other agencies that are better equipped to operate like that.

As well as campaign management, you're also building an analytics suite. Surely the world doesn't need another set of UA tools?

The mobile analytics ecosystem is fairly robust, but there are actually a pretty limited number of tools that are purpose-built for mobile UA.

It's actually kind of shocking, given how much money is being spent on direct-response mobile advertising and how big of a proportion of the overall expense base that UA represents for most mobile gaming companies.

UA isn't a small line item; in some cases it's a quarter or 30 or 40% of overall expenditures.

And developers are having to log into the dashboards of various ad networks and export their spend into CSV files when they want to analyze campaign performance!

There's a massive gap between the amount of money being spent on mobile advertising and the level of sophistication of the mobile advertising tools space.

That said, the first UA tool I'm building is something I always wished someone else had built when I was running UA at Wooga and Rovio: a revenue model that takes into account traffic quality and app performance to predict cash flow.

There's a massive gap between the amount of money being spent on mobile advertising and sophistication of mobile advertising tools.
Eric Seufert

It's basically just a web app version of the revenue model that I make available for free at Mobile Dev Memo, although it'll offer more fundamental utility as an app than a spreadsheet can.

Basically, a user will be able to connect the app to the networks they're running advertising campaigns on, pull campaign spend and performance data into the app, edit things like traffic quality, etc., and the tool will predict projected cash flows out for the app based on some other inputs (like organic installs, monetization, etc.).

Another use case for the tool will be accounting. One huge headache for most UA managers is keeping track of spend across all of the networks they're running campaigns on.

A lot of times, a UA team is given a margin mandate on their spend (for instance, achieving ROI of 110% on all spend) while at the same time being constrained by a monthly budget.

It's onerous and labor intensive to manage the dynamic between those two things (hitting a specific profitability target while also keeping overall spend under some number). The tool will help UA managers (and controllers/finance people) with that by automatically keeping track of campaign spend.

You're working with Christian Calderon from Ketchapp. What's he bringing to the table given Ketchapp have a very different approach to mobile game marketing?

Well, Christian was the VP of Marketing and Revenue at Dots before joining Ketchapp and he helped grow Two Dots into a global phenomenon.

There isn't another mobile UA expert that I would have considered starting something like this with; he's among the best in the world at what he does.

But where Christian's expertise complements mine is in ad monetization, which Ketchapp does exceptionally well.

Ad monetization and user acquisition are basically two sides of the same coin: CPMs impact both revenue and expenses for apps that show ads and a lot of app developers are starting to bring both of these aspects of their business (selling ads and buying inventory) into negotiations with networks.

It makes a lot of sense to unite these two functional areas organizationally and strategically, too:

  • To which users should ads be shown?
  • How should ad revenue be implemented into the LTV model?
  • How should a developer manage UA in high-CPM cycles (like the Christmas season) when ad monetization also increases?

These are important questions.

You're based in NYC. Any particular reason?

Christian is based in NYC, but I'm actually based in Pärnu, Estonia for the summer. Pärnu is a sleepy Estonian beach town across the Baltic Sea from Helsinki - not quite a mobile game development hub, but most of my work is done either onsite with clients or remotely, anyway.

Given that we're servicing mobile app developers, I think it's important for us to maintain access to Europe.

I've written before about the geographic distribution of 'hit' mobile games and why so few seem to come out of Silicon Valley.

This isn't the proper venue to re-litigate that argument, but being able to meet with clients across Europe and Israel with just a quick, direct flight is really valuable at this stage of our company.

Early on, we discussed having one or both of us being based in Silicon Valley, but with my network in Europe and Christian's work with Ketchapp (which is based in Paris), we decided that it'd be best for me to remain in Europe and for Christian to remain in NYC for the time being.

That could change, of course: I could potentially relocate or we could establish a presence on the West coast through an expanded partnership. But for the time being, given our current client base, I think it makes sense for us to be located where we are.

Finally, given your UA MegaTrends talks, what do you think are biggest incoming trends for marketing mobile games?

I definitely see UA (and more general marketing) becoming a consideration further up the development cycle now, to the point that it's impacting product strategy in a meaningful way.

It's impossible for the product team to simply 'deliver' a finished game to the UA (or marketing) team and expect them to grow a userbase for it now: the app economy is too mature for that paradigm.

I'm seeing some of the hype around influencer marketing deflate.
Eric Seufert

No desktop digital consumer tech company would finish a product and then ask, "I wonder if anyone wants to buy this?", and app developers aren't doing that anymore, either.

They're building apps for large, well-defined demographics with an eye toward monetization, total addressable market, brand receptiveness and awareness, and, perhaps most importantly, willingness to click on ads.

The UA mentality has percolated up the development process into the concept phase for a lot of developers, and so UA is as much a product design concern as it as a technical, operations-based concern.

Also, I'm seeing some of the hype around influencer marketing deflate.

It's certainly worth exploring for some types of apps, but it's not the panacea that a lot of people thought it might be: a lot of really popular influencers have outsized opinions of how much the exposure they can provide is worth and product placements are difficult to pull off without an air of insincerity

"Today we'll be cooking a recipe for banana bread that has been in my family for 200 years! And speaking of bananas, check out Fruit Crush Pop Strike Clash, a great new Match-3 game."

I'm seeing a lot of developers move down the popularity chain into the tier of YouTube/Twitch stars with follower counts in the mid-5 digits.

These influencers can produce better performance metrics, but obviously aggregate reach is a challenge.

You can find out more details at the Heracles website.

 


Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

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