Institutionalizing Programmatic Media Buying Boosts UA Performance by 25%
Since July 2019, we have spent nearly $6m using our UA platform and another $3m on traditional-media buying acquiring users through Facebook. Our UA platform managed to beat human performance by 25%.
I spent the early part of my career in the investment arena helping customers reach their goals by designing investment portfolios. Depending on each client’s goals, the portfolio would be constantly monitored and rebalanced to ensure a maximum return. Since my firm was using manpower over technology, we could only serve a limited amount of customers.
In the last few years, fin-tech companies, like Wealthfront and Betterment, revolutionized the investment industry by introducing their machine learning (ML) based investment advisor service — essentially an online financial advisor that leverages technology to help more customers reach their financial goals at a lower cost. Traditional financial advisors typically charge 1–3% of the total portfolio, whereas ML-based services charge less than 1% and sometimes as low as 0.15%.
At N3TWORK, our portfolio is comprised of game properties, where we spend millions of dollars on advertising to grow and sustain our audience. The mobile gaming marketplace is highly competitive and acquiring users is becoming more and more expensive by the day. It requires daily analysis of every aspect of our advertising campaigns — what to run, where to run, for how long, and most importantly, how much of our total marketing budget should be allocated to each game, ad or campaign. Traditional media buying does everything described above by a user acquisition team but suffers from the inability to handle many tasks simultaneously, execute at rapid speeds and do so error-free.
While traditional media buying companies provide these types of analyses and services, at N3TWORK we decided to invest early in user acquisition technology that will help us manage our portfolio and operations. This allowed us to scale our games aggressively ($100M+ in ad spend) with a pretty lean team. Similar to fin-tech, our systems allow us to internally adjust the creative and media mix, campaign timeframes, and budget allocations in real-time. The only difference is that, instead of investing in financial securities, we’re making decisions about investing in the best performing games, campaigns, creatives, countries, and channels.
The core pillars of our UA platform
There are two main technologies that programmatically manage our ad buying:
Brewster: manages operations for media buying
Markowitz: determines budget allocation for the marketing portfolio
Brewster focuses on the operational needs of a user acquisition team. It takes care of creative and ad management swiftly. Unlike traditional media buying, Brewster reduces operational costs, effectively executes ad management and is void of executional errors. Brewster is a nod to the famous Scottish physicist Sir David Brewster. He developed the brewster angle, essentially a principle that reduces glare from the sun’s reflection. Brewster is an effective way of reducing operational friction to ensure better performance.
Markowitz is an homage to the famous economist Harry Markowitz, founder of modern portfolio theory. Traditional financial advisors use Markowitz’s work to help customers reach their financial goals by maximizing returns while minimizing risk. Fin-tech platforms were able to add technology to Markowitz’s fundamental theories so more people can reach their financial goals at a lower cost. Our technology takes a similar approach, constructing a media portfolio that maximizes our return on investment whilst minimizing our risk.
In simple terms, Markowitz recommends budget allocations for the marketing portfolio and Brewster acts upon them.
Since it launched in July last year, our UA platform has a proven track record. Quarter over quarter our UA platform has outperformed traditional media buying by an average of 25%. As you can see from the figure below, our UA platform delivers consistent and reliable performance.
Fin-Tech companies have successfully leveraged technology to help more people reach their financial goals at a lower cost. In a similar fashion, we recognized traditional media buying would benefit from lessons in the investment industry by institutionalizing technology. Given the ever-increasing competitiveness in the media buying market, investing in UA tools and technologies will be essential to improving the performance, operations and scalability of a user acquisition team. This is why we’re continuing to build and improve tools to help us stay competitive in the market and further grow our business. I’ll be happy to share more learnings and results with you in the months to come.