Sub Club Podcast: Thriving as an App Developer Despite Apple’s ATT: Eric Seufert, Heracles

0:01[Music] hey you're listening to the sub club podcast a show dedicated to the best practices for building and growing subscription app businesses we'll share insider secrets from the top subscription apps on the app stores let's get into the show hello i'm your host david bernard for the first time ever i'm flying solo today revenue cat ceo jacob biden is busy ceoing my guest today is eric suffer having worked in growth and strategy roles at consumer tech companies such as wooga and rovio eric has a depth and breadth of experience with mobile apps and games that few can match he also founded and sold marketing business intelligence company agamemnon

0:43and is an active investor in the mobile gaming and ad tech categories over the past year eric has written extensively about app tracking transparency and the future of mobile advertising on his trade blog mobile dev memo on the podcast i talked with eric about the value destruction of app tracking transparency the limitations of sk ad network and how to thrive as an app developer in this new paradigm hey eric thanks for being on the podcast david thank you for having me on the podcast so um we're gonna start off with uh a bit of a dead horse that's been beaten over and over again uh apple's

1:18motivation in uh enacting app tracking transparency but but i did want to take kind of a different perspective on it um the the most interesting thing to me personally about apple's motivation with app tracking transparency is is what it says about what they are gonna do in the future is you know did they build sk at network purposely handicapped or did they not really understand how handicapped it was you know were they really trying to kill facebook or was that a kind of uh a side benefit and and i think that their motivation's important because it kind of forecasts um what changes they may or not make moving

2:05forward as they start to see the impact so i think the the the first thing i wanted to ask you was how do you see apple's reaction and maybe um how they perceive att to be going now that we're seeing snap drop 25 after quarterly earnings report and see kind of more of the disruption that you and others were predicting but um but maybe apple didn't quite see coming so how do you how do you think apple sees this going currently what does that say about the future of of privacy on ios right so i think that apple's primary motivation was not to capture mobile advertising

2:50market share i i don't think that was a primary motivation i think that's happened um and i think that they expected that to happen um but i don't i don't think that was that was the the sort of primary driver of this decision what i think they wanted to do was there's kind of like a big picture idea here and then sort of like an immediate consequence idea i think what they didn't like i think what apple did not like was that they had kind of lost control over uh content discovery on on the iphone right so when when the app store was first launched i mean that was how you

3:23discovered apps right it was it was through going to the app store and and you know some small parts search but then in large part just like the editorial curation that that you know apple exposes there right um and and that changed over the years and and you know up until kind of the the announcement or or the the enactment of att the the way that people discovered apps um was through advertising right and primarily facebook advertising and so you know apple totally lost control it's it's you know the sort of the the the the content that people interacted with on their phones was was not the result

4:04of any sort of deliberate decision on apple's part or sort of like deliberate consideration right it just so happened to be whatever could scale ads you know the best right like whatever whatever content whatever companies could scale their ads the most efficiently that's what you know people interacted with and that's what you know became dominant on the platform and apple really had no say in that right um and so my senses that's kind of like short term sort of like kind of narrow aperture view of this it's like well they just wanted to regain control of that they wanted to be the king makers they wanted to sort of be the taste

4:35makers the people that decided the party that decided like what became popular on the iphone how the iphone was used right um and i mean that's it's i think if you've worked in in gaming especially but if you've worked in mobile apps at all and you've ever had to go and you know go go through the whole process of like pitching your app to apple um and sort of like pleading for featuring you know that that's what they want they they liked having that control because that allowed them to sort of percolate their new ios features into the app community through just sort of like uh almost like horse

5:08trading it's like well okay you want featuring what happened to be featuring but you've got to integrate xyz thing into your app and once you do that we're happy to feature you right um that that was sort of that was the the sort of the negotiating process right and like you know that that process even that process itself became less important and less prominent in like the life of a developer over the last few years like in 2012 to 15 that's what you did every time you were launching a new app or even if you're doing like a major update you flew you flew to san francisco you

5:37went to cupertino you went into a a conference room at apple hq and you pitched somebody right and like that just stopped being something that that people did like just people kind of realized that you know even if we get featuring it's not going to be that meaningful for our business what we really need to be able to nail what we have to do our success is dependent on our ability to scale the product with with paid advertising you know and explicitly you know specifically through through facebook right so so i think that was the primary motivation to regain that control right now i think there's a bigger picture idea here

6:06there's like a bigger picture of motivation or or like projection here which is that you know we're moving into a paradigm where you know the phone that you have the the device that you have that you consume content with is like totally unconstrained um in terms of what it accesses right like what and and how it accesses content and that's what that's that's the sort of that's the sort of behavioral um norm that that people are moving into right it's like they just expect their favorite stuff to be available from whatever device they have in their hand at that moment as long as it's connected the internet they expect to be able to

6:39connect to disney plus to hulu to netflix to facebook to anything that they use every day and like you get to a point where you know if you run this kind of gatekeeping platform right like at the app store or google play or whatever if if if users have leapfrogged that kind of paradigm into like no my favorite content is always available it's it's you know sort of like um just just persistent in the cloud and i should be able to access it however i want at any any given point in time um then you've lost control of that sort of of that gatekeeper positioning and i feel like

7:17what apple wanted to do is like they they know that that's inevitable like we'll get there but they wanted to like prolong the sort of dominance and the sort of prominence of the app store in terms of you know the consumer relationship right like that's the first stop you've got to go through them to get to the content um because then that also like that also like provides them with with some sort of um leverage over the over the developer right and i think we're we've i think we've probably accelerated past that but but maybe not maybe this maybe this you know buys two to three more years of

7:48okay well i have an iphone that means i i go through the app store to get content right or i have an android maybe that means i go through google play to get to content not that like it doesn't matter what device i'm using i'm using my samsung tv or my iphone or my ipad or my facebook portal or whatever or my my uh amazon uh echo i want to get to the content that i have you know available to me in a persistent way in the cloud right and so i think that was that was also the primary motivation or that was part of the primary motivation but that

8:14was like sort of like the bigger picture consequence of it right where i mean where do you put apple's kind of stated motivation of privacy in this hierarchy of motivations and and outcomes because you know a lot of people have said oh well apple was clearly acting anti-competitively to favor their own ad business and crush these other ad businesses it was you know primarily driven by the greed to expand their ad revenue and then i think yours is really interesting as far as like the control but then of course apple goes and just said in the court of results recently and has stated over and over again that

8:52it was 100 privacy motivated um do you just not buy that no not at all i don't i don't necessarily even think at this moment that consumer privacy um has been benefited or protected as a result of this right and we can get into that in a second but you know i've been publishing a lot about they're still allowing fingerprinting they said they wouldn't that's in the policy right it's explicit like there's no ambiguity there and they're allowing for it right and they're not policing and they could because they've done in the past and so i think if you wanted to be protective of privacy that would be one of the things that you

9:31would prioritize is preventing that from happening and you don't think that not i mean diving into fingerprinting real quick do you think that it's potentially that they're just delaying the enforcement to kind of smooth some of the disruption that tr app tracking transparency has already caused because them not enforcing it immediately doesn't mean they're not going to enforce it so but i i find it baffling as well that they're not so do you see them enforcing it soon or do you think that this really is an indication that they don't actually care about privacy and it's not ever going to be enforced they could enforce it at

10:09some point and like there there there was like i think kind of a widespread belief that in the developer community that there was going to be a grace period right they would introduce att but they're going to allow for fingerprinting for some amount of time because you know if you just you know made this very radical change and it was like absolute from day one the impact would have been even more severe than than what we saw um so i there was a belief that there would be a grace period but you know we're going on like four months now right and and the thing is you know my my sense

10:38was when as soon as they that's because they you know they talked about private relay at wwdc this year i was like oh okay that's how they do it right because and i've talked a bunch about how it would be clunky to police fingerprinting through app store review the app store review process right i talked about that in a piece i just wrote two weeks ago or last week and it would be clunky but they could have introduced us in private relay i thought that's that's what they were going to do or at the very least they would roll private relay out because it applies to you know safari

11:08traffic now and they would say look well we have to reach parity on our treatment of the web and our treatment of inapp traffic and so therefore you know maybe for whatever technical reason we can't uh we can't uh obfuscate the ip address of in-app traffic it'd be too expensive or it's a technical challenge that we haven't solved yet but like this is the moment you know ad tech when you must stop fingerprinting and i think if they said that you know these ad tech companies would right because the way that they've sort of implemented this in a lot of these solutions is it's like an option right

11:38like they say you can turn it off if you want right because i think these ad tech companies are surprised they thought fingerprinting was going to be prevented or policed early on maybe not on day one but you'd get like two weeks a month right um and so they kind of introduced this as like an optional feature right then you know they presented as like hey it's a feature for developers if they want it and so you know it's it's something that they could switch off and they they they're ready to switch off i think so i think even if apple just sort of like you know kind of pantomimed

12:06those motions people would stop doing it because okay it's actually uh you know it's sort of like actually against policy now versus just before where it was like ignored but you know i i thought they were getting interested in ios 15 for that reason or at least again like just make the go through the motions of saying that right that it's it's not allowed but but so just just back back to your question about like where does privacy sit in the in the sort of list of motivations i think it's probably so my my the heart the hard time that i have with like reconciling this idea

12:34that like and you hear this a lot like apple cares about policy like people say that privacy apple cares about privacy how can app apple's not a person apple's a apple is a corporate structure there's there's however many employees at apple they don't all agree on things right who and tim cook is not a dictator he can't just run the company like that apple shareholders you know have some control this board has some control right and so you know or at least they have influence and so like uh the apple has a it can't have it doesn't have like a monolithic opinion about stuff it's not an entity

13:05in its own right and so like i just don't buy this idea that a company can care about some abstract concept right like here's another question for you like apple makes the apple watch right it's a health tracker does apple care about your health do they are they really concerned are they genuinely you know invested in your health right or they want to sell something right and so i think the idea with privacy is okay it gives us an opportunity to to strike a juxtaposit eject a position against android which you know has is kind of perceived i believe as like less sort of like privacy set safe um but even the android

13:39has gone to great lengths or google has gone to great lengths to sort of bring privacy to the for android a lot of it's just about informing consumers about their data that being accessed but it's you know still they've done some things right so anyway i just i don't believe that a company a corporate entity can care about an abstract concept right so putting that aside what does privacy buy them it buys them that juxtaposition and they're bri it buys them cover right it buys them cover to do all this other stuff right and then to and then to spin up this big narrative that probably

14:05helps to sell iphones right because you know what i mean future ar glasses or yeah exactly i think in some ways positioning themselves they care about privacy insofar as it's an incredible marketing tool for them and it it gives them cover for future devices they become more and more and more and more private i mean this thing that you wear in your rest you know biometric sensors and tracking your sleep and everything else you know customers are going to feel more comfortable wearing ar glasses that have cameras on them when it's apple branded than when it's facebook branded i mean there's been backlash with the ray-ban

14:42glasses from facebook so so yeah i mean i i get you you know they don't i you know the apple fanboy in me wants to believe that you know apple you know wants to do good in the world but i i've since lost my apple religion and but i but i do think to a certain extent that they care about they do care about privacy and whether or not any of that's motivated by goodwill or otherwise it's incredible marketing for them and so that being the case you know and this is where maybe our opinions diverge or at least how we interpret some of of what's been going on

15:20i still am of the opinion that's naive as it may be that privacy was the primary motivation for them whether altruistic or marketing or you know whatever other you know reasons they have to be to be positioning themselves this way i still think that that that was primary and in that and i don't know that they even fully understood or expected some of the the things that have been happening i i think they thought skin network was a better solution than it actually is and i don't know that they expected to see a company like snap that is actually fairly aligned with them at least you

15:59know again in marketing and a public perception as being a more privacy focused company and to see this company that has been kind of rooting and talking positively about apptracking transparency and see them drop 25 in a single day because and and then say specifically it's because skid network isn't delivering i mean i i still think personally that this has more to do with apple not understanding and not listening to the industry which we've just seen for decades right like apple doesn't listen they're not good at like receiving outside feedback on road maps on on their apis on anything else they they think they know what to

16:43do and they think as a product company they can just build this product and bring it to the world and it's going to be the best thing since sliced bread and skid network is just another um another example of them trying that approach and then just falling flat on their face and and i think this is important because if that is the case and if they really if the primary motivation really was privacy then maybe we do see an ski network 3.0 that's way better than this current one after they realize they've destroyed tens of billions of dollars of value and also potentially handicap their own

17:22platform because as ad efficiency goes down and as apps struggle to gain traction they lose too so yeah i mean i guess just i'd love to hear your kind of response to that because i know we we probably disagree on this a bit i guess it doesn't really matter like it you know if we i mean i don't know at this point it kind of seems like semantics a little bit because it's like well they care about privacy because privacy is a good marketing message like my point is like i don't think they generally care whether people's data is being accessed by advertising networks right i don't think

17:52they cared about that to to the degree that um it didn't impact it was it was it was happening sort of unawares right like or you know that these users were like sort of unawares once it became like a like a sort of social rallying cry around you know facebook and you know it's the congressional testimony and you're listening on our devices and like once it became something that i think that they could you know exploit then sure then maybe they care about it because it is a differentiator for the products and they can help them sell more products right but but i think so first

18:24of all so we are on scanner 3.0 they release 3.0 3.0 is just like a minor improvement so 3.0 added view through attribution and i think it added one more thing and then also with ios 15 they allowed the post packs to be sent directly to the advertiser not just the network so i mean those are improvements but i don't see them continuing to develop ski i don't work i just don't see that but i think i do i do agree i agree with you that that they didn't understand how consequential that this would be to the advertising i think it's an example of like the left hand not talking the right

18:55hand apple is like a super secretive organization not just to the outside world right internally apple teams are very secretive right and um you know i i don't know that the app store team was talking to the itunes team i mean i don't even really know how that how how the sort of corporate structure separates those two teams but my sense is that like the app store team the people that work with developers um weren't aware of this like and i i've been told that i've been told that they learned about it at wwdc two years ago right and then they got they had to field a bunch of angry

19:28emails and phone calls right um you know i think there there wasn't a whole lot of consensus internally around what the impact of this would be i think the impact was underestimated and to be honest i don't think they would have released something if they knew that it was going to wipe out you know just annihilate a quarter of snap's market cap in a day right i don't think they would have released something if they knew it was going to annihilate a fifth of zynga's market cap in a day last quarter you know what i mean i i don't think they you know and what we saw with

19:54facebook was that there's like this kind of slow erosion of of of market cap or you know from from like the you know all-time high a couple months ago but you know the damage hasn't been just just in terms of stock price hasn't been as as severe to facebook as it has to some of these other companies um you know who weren't really doing the things that apple wanted uh you know to sort of to mitigate right right so i i don't think that they fully you know first of all they didn't you know workshop this with advertisers like i know that to be true right uh or or i believe that to be true

20:29unless some people did it in like you know deep secret and they've never revealed it but i don't think they i don't think that's true because i've talked to a lot of people no one no one was consulted about this that i've spoken with um you know i don't think that they really truly grasped how sort of like fundamental performance advertising was or is to a lot of these businesses right in terms of their just their their sort of you know operational success right and so i think because of that sort of differential between i i think what they thought was going to be the the result of this and what the

21:03actual result was you know i i feel like that does call into question you know not only just the wisdom of this but you know how well they can defend it right when you know against maybe some some some lines of inquiry um you know that that are that are sort of like you know kind of uh more powerful and sort of socially instrumental than than ours than mine or than than than app advertisers or app developers right i think they've invited a lot of questions about this through through through the severity of the impact that we've witnessed over the last couple weeks and months and and that's where i

21:37i totally agree with that and that's been my perception as well and i talked to folks as well is that apple didn't fully understand the implications and if there were people inside apple who had a better understanding of what might play out they didn't have enough of a seat at the table and that a lot of this was just ivory tower thinking was apple building ski network thinking oh this is going to be a great solution without like you said workshopping it with the people who would actually have to use it and then you know coming up with a better solution so then my question for

22:11you is okay you know you were kind of chicken little for a year the sky is going to fall the sky is going to fall the sky is going to fall i mean you've been really one of the most vocal people about how big these impacts were going to be and you had a lot of people in the industry saying oh it's not going to be that bad it's not going to be that bad well now this guy fell i mean you know a a public company having 25 of its market value wiped out in a day due to one specific policy from a platform like the

22:38sky is falling you were right but then so now apple sees it they can't they can't avoid seeing it what do they do from here you said they're not going to make sked network better you know are they going to not police fingerprinting to continue to soften the blow where does it go that's that's what's so interesting to me about okay whatever their motivation what they do in the future in reaction to what's actually happening now that we're seeing actual results matters you know to the tune of hundreds of billions of dollars and one of the things that i put in the notes to talk about is a lot of this value that's

23:17being destroyed is not accruing to apple it's not as if you know 100 billion dollars of market cap wiped out of facebook and google and snap and other folks it's not like apple is actually capturing that because they don't they don't have the ad inventory they don't they're not a big player in the space so yeah where does apple go from here have they painted themselves in a corner maybe i mean i think what i would you know if i was an apple i'd be worried about you know they've got a lot of there's are they're already under a lot of scrutiny right like you know right

23:48what the doj what just three days ago decided to re reopen the investigation into that into apple um related to to the way they operate the app store i just think it's really tough to to maintain this line on one front while you know you're obviously having to lose ground on on another front right because as we've seen like there's just been this steady trickle of them you know seeding ground to developers or giving up a lot of you know the sort of exclusivity and and um you know preferential treatment they have with with app store operation right like it just feels like maybe it's maybe it's

24:25they felt like well that will it will expand one area of that that preferential treatment while we're sort of like forced to abandon other uh areas of preferential treatment but i don't know that they were i don't but that would only make sense if they actually really understood how dramatic the consequences of of att would be which i don't think they did um you know i don't know maybe they have painted themselves in a corner i mean i i don't know so that so the thing about sky network is like the way it was designed it's got a lot of features that on their own would be smart you know tech

24:53progressive privacy protective um you know mechanisms right but in combination just renders this thing like totally dysfunctional and that's the problem because now if they go back and they get rid of any of these given features so like or not features but restrictions right so let's say they say okay so first of all i mean and i'm assuming most people listening are at least familiar with this i don't want i won't go into the whole thing you know description of sky network from zero but let's say they give up on the privacy threshold which would be weird because there's a privacy threshold for apple search ads to be fair but let's say they

25:28gave that up right um then then okay you move a little bit towards you know something that that is functional and helpful but you're you you've you've made a pretty a sort of like very kind of public facing kind of mia culpa decision which i don't you know or announcement right which i don't know that is in apple's dna to do that kind of thing and giving up the privacy threshold would actually allow tracking which is what they're saying they're trying to prevent so that's the other problem with giving much ground on some of these things with skid network well it could it could and that's kind of the broader question is

26:04like can a sk ad network even be saved and you know let's say regulators did come in and say this was completely anti-competitive what's the solution i mean if you roll back and give unique identifiers to every app you're going to have all the same unintended consequences that came with the idfa so yeah i mean that's like four questions rolled into a statement but can a s-cad network actually be saved while maintaining some level of privacy maybe but i don't know that you do give up you so i don't think you totally enable tracking if you give up the privacy threshold what you'd enable would be the advertiser

26:41would be able to link the specific campaign to an individual user in their data environment now if they chose to share that with a third party platform or ads platform i guess that that would be their decision i don't think by default it would sort of instantly you know make that trackable right because all you're really doing is adding a little bit more context to every postback versus just some because you already get i mean if you get rid of the privacy threshold that just means those nulls go away right and so you're able to get a little you're able to track you're able to sort of observe the

27:12less frequent um transactions right or just tell me what it is if you tell me what it is then i can design around that right but we don't even know if it's dynamic they've they've apparently changed it like without telling anybody and so all of a sudden the number of null conversion values exploded right i mean that's the thing just make it public because if you do that then i'm gonna say you know what okay i'm i'm going to design my app such that like the people i care about are going to trigger this or not right it's not something that's it's early funnel it's something that

27:41it'll happen you know i can build my i can i can sort of like intuit you know just through like kind of statistical modeling what where i need to place this in order for it to trigger the number of people that satisfies the privacy threshold such that i get the data that i really need to make decisions because right now you have no idea and you know i have no idea where to place that what what is that unless you just experiment a bunch of times but but even then it's it's the the broader environment's too variable because the the campaign could go up and down in terms of like

28:08dau or dnu every day you know what i mean and then if they change it then there's like a totally unknown exogenous variable there right so it's impossible to tune your app such that you you say okay look i get it you're not going to let me have a conversion value if fewer than 25 people did it well i know how much traffic i'm driving through all these campaigns every day so so i need to consolidate my campaign such that each one drives 400 new new installs every day because i know that you know an eighth of the installs will trigger that thing but those will

28:38be the users i really care about right and if you did that then at least i know and i can design everything around that but i don't even know i don't even know if that changes over time relative to the number of insults i'm driving i don't know if you're changing on the back end without telling me like it's just you can't operate in with that kind of opacity it's just it's just not functional and then you've got the 100 campaign id limit you know you've got no creative uh parameters in the post back like you just can't do anything with this yeah i mean that's where it does seem

29:05like this was designed as an academic exercise right how do we prevent any unique identification of any individual ever from being even remotely possible and and it was an academic exercise that they played out whereas if they had workshopped it with the people who actually have to use it and had thought through the kind of business use cases and you made a valid point earlier you don't automatically enable tracking by reducing the privacy threshold but i think you know apple should kind of rethink some of the priorities around this so that you get better business metrics even if one or two people can slip through the cracks of

29:50being able to be uniquely identified and i think the argument there is like it doesn't matter at scale like if one person slips through the cracks facebook is not going to build technology around finding that person here and there that slips through the cracks because it doesn't matter to their business to find one or two it matters to to have more data on everyone so the campaign id limit the creative id like all of these seem very ivory tower thinking that just is not going to play out in the real world so a few minutes ago you were saying you don't think apple will improve sk ad network

30:26but now we're talking about how they could where does the rubber meet the road what's going to happen i mean i don't know because i mean the thing is like you know we're just kind of ripping right now right i think like if we sat if we sat down with the chocolate the white board or something you know because we i i wrote an article a couple months back where i actually was like right after this was announced and i kind of like here's some suggestions here here's here's what you could do to make ski network more helpful and you know some really smart people on the mobile dev memo slack

30:52pointed out holes in my analysis said no if you do this i can i if if we had enough um postbacks going i could sort of encode the idfv over and up of the post postbacks like i've had enough post packs i could put like one character from the id fee and every single one i could get the users uh so that's why you can only have one post back per install right because if you did 50 or like so that makes sense so i mean the thing is like if i'm just ripping what i do believe though is like you could you could either have the the

31:17privacy threshold or the random timer right because i need so like ramp the privacy threshold up to a million i don't care but let me have real time install accounting because without that i can't do anything right if you if i if you're obfuscating even the date of install then that i can't i can't do install accounting i can't i can't i can't uh assess the economics of my campaigns because i don't even know when the installs are produced and i can't make changes to campaigns right without having to shut the whole thing down and wait and to reuse that one precious campaign id within that within the sort

31:50of like constraint of a hundred right so i mean like my sense is that like if if you just solved for that allow that allow real time install accounting and then do whatever after that you have to do to prevent me from figuring out who those people are um okay that's fine but at least then i know this campaign drove this many installs today these were the targeting parameters this was the audience i was reaching this is how much i spent right and like even if we just went because i don't think you would lose a lot if you just went back because right you know the frontier that

32:20we reached was like we're you know especially on facebook i'm optimizing for value i'm optimizing for roads right and that was like the sort of the final form of of of mobile advertising measurement it's like i'm telling facebook give me 110 roads on day 7. if you do that i don't care how you target who you target um yeah how much the cpi's are how much cpi is irrelevant i've got unlimited funds you know from up from a sort of like practical standpoint on any given day spend as much as you can but just make sure i'm getting 100 that was the final form and i think even if we sort of like

32:55retreated from there back to just like cpi the average ltv of this campaign is x and the average you know the cpi was y and so therefore i'm making money that would be much less efficient but still like it's workable right now what we have is not workable yeah well um i think you and i could riff on all this wonky stuff for for another couple of hours and um i hope apple's listening and actually going to make some changes and listen better now that they're starting to see some of this stuff but i did i did want to change gears and kind of start talking through

33:31what this means for developers and specifically you know sub club podcast what it means for subscription app developers and and what you were just talking about i think i think is actually a really important topic that not a lot of people fully understand you've written about it in the past but i think it's still somewhat abstract enough that i wanted to to kind of have you describe it in more concrete terms and that's the fact that with these you know day seven row as campaigns and value optimization and event optimization campaigns facebook with all of its data and ai in an incredible targeting efficiency has kind of in some ways been doing the job

34:13of developers it's been finding those unique profiles user profiles of who's actually going to spend money who's actually going to enjoy the app and and it's like in some ways they they became this really efficient black box of user profiling and understanding users that developers had kind of in the past done and then maybe now need to get good at again in the future you know again you've written about this before but just describe that process maybe a little better of of how amazing facebook really was at finding the best users for an app well they were very you know as you said very very good

34:55at it right so you know it was based on like an approach that is was very simplistic right i mean i just gonna i'm gonna if i can observe everything then i know everything about this user and i can just target most relevant ads to them because i know everything about what they interact with right and i know what they like and you know it gets to a point where that that that ability to observe was so pervasive that i i do agree like that that had gone too far like the pendulum had swung too far in that direction like it is not i i find it unsavory to think that like

35:30literally everything i do on my phone is observed and instrumented and ingested as a data point by one company right like that's i'm uncomfortable with that so you know and but but like i think you know to your point like going you know if you go back to when when uac was introduced right so google their mobile product uac is this they describe it i think they themselves describe it as a black box as like a selling point right because it's like look don't worry about any of that you will handle all of this difficult analysis for you will find the best users for you you don't have to

36:06iterate across audience definitions or even creative you know and do all that experimentation yourself we'll do that on your behalf with our superior tools and when they announced that there was a lot of um you know disqualitude in the in the developer community because people look we built this we want to do it i don't trust you to do it i trust you to do it well but i also trusted to do it to your advantage right right to in pursuit of your best interest not not necessarily mine what i think you'll do so this is and this is exactly what these platforms do is they sort of they

36:38take whatever boundary you set or whatever standard you set around efficiency and they they reach that but no more right they'll they'll get you to exactly what you say is like the sort of quality threshold or the efficiency threshold for your campaigns to keep spending money but they won't give you any more than that right so they could blow out your campaigns and get you 400 row ass but if you told them you only need 110 by day 7 that's what that's what you're going to get and if they get you to that 400 then they're going to buy you a bunch of crappy traffic that brings the

37:11sort of average down until it hits that 110 right and so you know that's that's the power that they had um which you know to be fair it's like they were really good at that and they're probably been and and them being really good at it and them and then present and providing that as a product and productizing that and making that available to everyone meant that anyone could spin up a facebook campaign you know any any shopify retailer any shopify merchant any small time app developer and spend money and grow their product grow their audience right versus go back to 2012 and like you know the

37:45best ua teams won and a lot of times these were like big teams big companies that raised a lot of money you know now you know it is way more egalitarian to open it up to anybody you know the small shop owner in i don't know the middle of kentucky or whatever could could have access to this world-class machine learning infrastructure to grow their business right and then they only really had to compete on the quality of their product and not the quality of their user acquisition infrastructure so in a way it was i mean it was a giant gift to these smbs and and if the proof is in the pudding look

38:17at facebook's advertiser mix 10 million advertisers vast majority smbs right 10 million advertisers right think about any company that's 10 million customers that's a just an absurd scale right and these are people spending you know in aggregate tons of money on facebook so like it made sense but but you know there was a lot of pushback when uac announced that because developers said look we that was our competitive advantage like well should it be if we go back to basics and everybody has access to the same quality of infrastructure and the same quality of like sort of like you know uh marketing tools then then you compete on

38:48the basis of your product so then are we kind of going back to that world i mean aftracking transparency is going to degrade facebook's targeting efficiency because they're not going to have that pervasive tracking where they know everything that's going on on your smartphone so so where do we go from from here as far as you know what developers need to be thinking about and and i forget exactly when you wrote this post but but i really appreciated you kind of talked through some some tactics even around developers needing to get better at capturing intent about potentially kind of bifurcating experience in the app is that where where developers should be

39:28headed of okay now facebook can't bring me the perfect user for my app as it exists today um and instead developers need to get back to the basics of understanding their user base and kind of building out those user profiles and understanding who they should be going after is is that where we're headed i think so i mean i think we talked about this last time i was on this podcast but like you know so when i wrote my book freeman economics i mean this was like 2013 right and so this aeo didn't exist yet you know vo was didn't exist yet this was you bought installs

40:00right and the idea of freemium or my my sort of thesis with freemium is that like it gives you the ultimate power to personalize and so you need some minimum scale because you need a minimum amount of people to experiment with in order to make you know some small percentage of people that do monetize meaningful to you um but in order to do that you need like a sort of like very large surface area for experimentation right you need a lot of content to be able to test against people and make sure that you expose to them the exact perfect thing that they want and in order to do

40:31that you need a lot and and so what ended up happening was that idea flipped and it and it became less about doing that in the product and more about doing that with the creative right and allowing facebook to do that for your on your behalf with the creative and then they found the perfect user and you need to do any personalization in the app because they probably the perfect user just make the app for the perfect user that individual profile that one profile the perfect you make that app facebook will find those people through like mass you know wide scale experimentation with creative well now it's flipped again and

41:00so you know when someone comes into your app you don't know who they are you don't know how qualified they are because the targeting has been degraded to the to the point where you know there's there's not a whole lot of of sort of like a priori you know relevancy that you can intuit there so you've got to parse that out from their behavior show them something see how they react to it if they react positively to it show them more of that and if they don't show them more of something else and and that kind of personalization though i mean it's very powerful and i talked and

41:28that's i wrote a whole book about it but it's hard to do you need a big team you need data infrastructure you need that's that's the thing then you revert back to like well only big developers can do this right and so you kind of just edged out the small guy you know the developers that are just like a couple people and they got to just whiff or they they got to take a flyer on some idea and they better hope that it works right versus being able to kind of iterate into that and provide one app that gives like personalized experiences to sort of everybody that comes through

41:56yeah so then those i mean what would your advice be today knowing that you can't just you know throw a hundred grand at facebook and let them figure out your perfect user how you know if you're if you're building an app today from scratch or let's say you're at twenty or thirty thousand dollars an mrr and you wanna make that leap and really grow what do you do well i think so in i mean in that post i mean the one thing that is you know it's a worthwhile exercise but is trying to instrument these these signals with the conversion values for sk ad network now

42:28the problem with that was you know going into this before att was launched and you know i worked you know i worked with some companies to do this and it's like a data science exercise right you just you you run these you know you you go back and you have like kind of look back models and you find out what the commonality was amongst people that ended up being good users and you try to surface that in the app and you encode that as a signal for a scan org the problem is going into that exercise thinking that ski network was like a good faith solution right it

42:57made sense but now we realize well we don't even know when they're gonna when they're gonna how many of these we need to trigger before they even start reporting them to us right and so like it's like okay well that's not really an option you know i think the other thing is you know you approach this as more of like a product marketing you know project and and just trying to figure out who your audience is right and that's like going back to basics that's saying okay like what are the demo features of the groups that like this type of product and that's what i have

43:21to target against right and then just and then trying to get you know because you can't do mass creative testing anymore at least not on ios and so you know trying to work out some pipeline of like we try concepts on android where we can still do kind of mass testing and then we promote the the conceptual winners to ios but then we've got you know fewer variants success there so we've got to kind of adapt that for the ios environment like it's just you lose a lot of there's very lossy that each time you you sort of transfer some sort of component of understanding from a

43:54totally separate platform to ios and then from ios to like different environments to to other environments on ios you just you lose signal there you lose precision so i mean it's it's but that's it right and then you know trying to get away so i think another thing is that you know you talk to some of these companies and facebook had become like kind of a drug for them i mean it's just like they were addicted to it and it was just so easy to only use facebook right right because you could accomplish pretty much everything you wanted to but you know that's a classic you know sort of uh that that's a

44:26classic sort of blunder from a from just a commercial perspective you never want to be totally dependent on another platform you know now facebook didn't make this decision apple did but you know nonetheless you know you're sort of devastated by it right because of that dependency so i think the the other piece of this is just trying to is doing doing the work you should have done a long time ago which is diversify your traffic mix right and that's actually kind of difficult because facebook again they did all that creative exploration for you you know they have such a broad user base that you could find all these

44:55different groups in scale right at to to scale like these even niche audiences niche like any any sort of like niche 4x strategy game you find enough people to build out a big dau base and that's not true on all the other platforms right and you got to really nail the form factor for those like snap it's totally different like the way to approach an app is totally different than facebook the way to approach tic tocs totally different snap right the way to approach outbrain taboola totally different than any of those you know the way to approach youtube is even different like every all these these are very you know

45:26particular um unique channels and and and the way that the ads are are exposed in the products is different across them and so you've got to you've got to go through the work and the investment it's you're investing in the data and and sort of institutional knowledge and a lot of people just never went through that exercise because it's like i can just spin up like spend more on facebook yeah and where do you think organics fall into this mix i know like we talked to all trails on the on the episode before this and not only are they a unicorn app um likely in valuation but in in their

46:04success with organics i mean there are apps that just find incredible success with that right kind of search optimization or finding that right niche that really drives organic installs where do you think the average app should be placing organic and how much focus should they be putting on trying to get some of this free attention and build you know user-generated content and links and and things like that i mean do it to to the extent that you can i mean why not um you know i don't think you've got to choose one or the other right i mean you should be ideally maximizing the effect of both of

46:46these strategies but i will say one thing it's that you always have to turn on paid ua you've always got to turn on paid marketing there's varying you know sort of timelines you know over which you have to confront that reality but it is a reality you've always got to turn it on and like i've done enough like advisory for like private equity funds and just big companies that are looking to buy other companies and it's always the reason they bring me on is because i'm going to say we could triple this business if you did paid ua right right we could quadruple this like how what's how much how much

47:17bigger could this get right right and you know what i mean like there's always a point where they've capped out they never developed this you know expertise internally right it never became like domain knowledge that they possessed and for that reason there have been a lot of false starts because it's like well we can always sort of lean back on organic and it's going to take time to spin up paid and they bring someone in and within two months they haven't really materially improved the business and they spend a bunch of money so they get fired or you know they get their budget cut and they quit and then they

47:47do that three more times and then they realize we're stalled out in growth um and no one wants to come work to be our cmo because like it's pretty obvious that they're not gonna get you know the full freedom and the only way to sort of like break out of that cycle is to have the company get acquired right by a private equity fund who's gonna say yeah we're gonna bring in a cmo and you know these management's kind of gone and or they're gone but or they can stay but they have to play ball with the new you know the new execs and um and we're just gonna

48:14spin up paid marking and that's and that's how we grow this asset and that's how we make our money uh so i've just been on enough of those deals where you always turn on paid you away if you even if you even if you think you never will uh it happens uh you know outside of your uh approval yeah i didn't mean to phrase a question in any way that made it a a black or white that you had to choose one or over the other and actually i was i was trying to to kind of uh throw a softball at you um because i think your

48:41your thinking on this um is great in that the sooner you do spin up some level of paid marketing the sooner you you can understand the different audiences that are going to be coming into the app and and that's something you've talked a lot about that i think is really fascinating is that yeah if you can find a good organic channel go for it and bring traffic in but know that when you spin up ads those that traffic's going to look different they're going to convert different they're going to be interested in different things and if you yeah i'm stealing your your kind of play but

49:16so yeah tell me why you think um even if you do have a very successful organic channel and maybe that's the strategy you kind of get from 10 k a month to 100 300k a month but to get from there to the millions a month you're gonna have to spin it up so what's the playbook for for kind of building that expertise in-house and when do you start when do you have to start ramping it up so thank you for reminding me of my own thoughts here uh so the idea the idea there is like organic's never gonna be the ultimate scale channel right like it's gonna it's gonna it's gonna you're

49:54gonna reach some sort of asymptote with growth there and it's going to flatten out and probably at you know if you kind of close your eyes and you pictured your app at like the sort of greatest potential right the sort of like greatest sort of like intrinsic potential paid is 80 of daily you know new users right or 60 or whatever but it's the majority and so if you've only you know grown via you know just sort of like organic traction and organic like magnetism and you've you've gone through like many sort of cycles of app or product iteration to sort of optimize the product for that group of people

50:32that do look distinct that will look distinct from people that have responded to some kind of stimulus right and have some sort of intent it um sort of like you know driving their their adoption of your product then you've optimized for the group that's that at the greatest potential scale of your of your product is a minority right and what you really want to do is you want to optimize the product for the majority that where all the growth where the growth can be right and so that you know if you delay layering in paid traffic and you and you delay then you delay understanding what they want

51:07out of your product and the sooner you bring that in the sooner you can sort of optimize the product for them the more efficient your pay traction will be and you'll get an organic halo effect from that right and so like it's like well the sooner that you do that the faster that you sort of reach that that sort of uh you you reach that potential on the organic side so it's more about like you the opt you're thinking about like how i mean an exercise that i always love to do is just like pause and think about like what would success look like and for most apps success looks like yeah

51:34we're spending a ton of money on paid ua and there's a lot of organic too because that's just a function of being a successful app that a lot of people know about but but we're spending a ton on ua that's a good thing it's not a bad thing it's a great thing right um and so but but the majority of our users came in through paid ua and so we've optimized the app for them um and so we've we've we've made the economics better over time and and then the other piece is like and i've talked about this a lot too it's like you've got to change that over

52:03over the life cycle of your app because you know a lot of times what you see is you know you see an app that's new and they've got like explosive growth right and you look at the just like a kind of stacked uh bar chart of the cohorts by age and it's like well on any given day the vast majority of users are new or they're less than a month old right and then like you go you fast forward two years or three years and a really good app that'll be flipped because you've you've retained people the the vast majority of people that use your products every day are old i mean in

52:33terms of like when they adopted your product because it's sticky because it's retentive right and that's a that's a great place to be but that that you've got to change the way that you think about product optimization at that point like when you're going through the product iteration process like well you're not optimizing for the newbies anymore because there's way fewer than you've got to keep the old timers involved and engaged and happy right because you know that's just where the the vast majority of your your revenue is coming from right and and you know and at that point you've probably reached you know some proportion for your tam

53:06and so you might not even be doing new user acquisition as such anymore you might be doing a lot of retargeting re-engagement and so it's just like that you got to be very conscious of like the life cycle of the app what the what the user base looks like in terms of composition by age and like all that kind of stuff and it just it just takes a lot of consideration and it's it's you know and if you get to any point where like any of those any of those distributions is skewed to in an extreme uh to an extreme one direction the other you probably got

53:32a problem like if you're all organic you're not you're leaving money on the table if you're all old-timers well you're not growing anymore if you're all newbies you're not retaining enough right it's like all these different levers that you gotta pull to make sure that you hit the optimal sort of combination yeah that's great stuff i love the way you put that too i i think there is some level of kind of magical thinking that if i have just the right app i never have to do marketing marketing's a dirty word spending money on marketing is is is wasteful or only companies with bad products have to do marketing and like

54:04that's just not true and what's especially funny is like you know a lot of these folks are like indie developers who hold up apple to be the end-all be-all apple spends tens of billions of dollars on marketing apple measures that marketing while at the same time you know enacting att so it is funny that kind of dichotomy of in the magical thinking of like i i shouldn't have to pay for users my product should be good enough or whatever like it it really is just magical thinking and ultimately you know spending money on marketing is a good thing not a bad thing i i love that

54:38perspective yeah my uh we had a halloween party for my son and his uh his like classmates and he's very young and he was he like he did this thing where he wanted to be two things for halloween so they had like a you know a parade at their school and then uh we had you know we just halloween day kind of trick-or-treating and stuff anyways he wanted to be a dinosaur and then he decided he wanted to be a vampire for the halloween day and so we had to get him in a second costume he was a vampire and uh and we know we're having this party and uh

55:08someone was like oh you look like such a scary vampire and uh and i i was like oh no i work in digital advertising i'll show you what a vampire looks like but like it's just this idea that like digital advertising oh man it's so disgusting it's it's a progress gross you're spending money you have to spend money to acquire a user that's that's uh that's that's that's so uh vulgar but like in reality it's like well you're leaving money on the table if you could be doing it you're not right right like that's not good yeah totally so so uh that that's actually a great place to wrap up like where where

55:42do we go from here so att is what it is we don't know what apple's gonna do we hope they make things better but um what is the future of of app install ads what is the future of of marketing your app successfully i you know it's funny because like i i have been the biggest like crypto skeptic since day one and i remember like i people were telling me about bitcoin in like 2011 i was like this is a joke like this is a there's no need for this there's no use case for this and i still kind of feel that way but like it's gotten to a point where i feel

56:15like it's actually inculcating new behaviors where this is just crypto in general is probably the thing that introduces us to these ideas and it's like sort of an imperfect way to implement them but it sort of makes us think about them and then there's going to be a solution that follows like the structure of crypto that is is actually like the better way to to implement these ideas but i've worked with a number of like web3 gaming companies right and and like their challenge is they can't be on the app store right so they're running like web properties and how do you promote that and well the thing is like if you're

56:46running it on the web you can access it from your mobile device right i mean i can access these games from my mob my device it's just not on the app store and i think like if you get one of these that blows up you get the halo of web3 games right you get the you know just hit game that creates the space for this category to thrive then maybe it just becomes uh you know acknowledged that well yeah we can go through the app store if we want specific types of games but if we want these other types of games just go straight to the browser now my big

57:20question is why did apple do private really in the first place and maybe it was to actually route everything through the app store right that would be the cynical kind of conspiratorial take right it's just that they want to prevent your access to the open web or they want to gatekeep it and so they're going to decide what you're able to access right but anyway so there's a lot of web 3 companies think about this right now like they can't go to the app store right so there's no app install ads for them it's all web-based um and and also you know they've done a great a

57:47lot of web three companies have done a great job of fostering community-driven marketing right getting a discord server with twenty thousand a hundred thousand people in it and that's that's where you advertise right you drive you never have to pay for anything and not no that's a first mover kind of thing and i think that sort of declines as more people get enter the space right and there's just you know there's just too many of these these sort of games to to sort of rely on that but a lot of companies are thinking about that right now how do we drive people the web to do acquisition

58:17right a lot of you know as you know a lot of uh subscription companies have been doing that for a long time right there are well-worn strategies for doing this right and they've been monetizing that way for a long time too they haven't been screaming about it right but they've been doing it and you know now that well okay now that's prob that's that's a policy that's allowed to you're allowed to do that apple blesses well they don't they anyway they say we can't stop you yeah uh and so maybe a consequence of this whole thing is that it just moves people into the browser right and and you know there's the web3

58:46piece of it which who knows maybe that is a dud maybe it's a gigantic category i think i'm not convinced either way yet but like you know you've got people that are saying i'm gonna set up web shops and you know i made the point that like look i don't think that you know there's there's there's systematic reasons why that probably doesn't like become a mass scale solution um and a lot of people are doing that anyway a lot of games are doing that anyway that's the other sort of dirty little secret a lot of gaming companies were sending emails saying hey you know what don't buy these ieps in

59:13the app because if you go to our website it's 20 off or whatever they're already doing it they already had webshot set up and you know but but anyway um you know i think maybe that's the consequence of this is just like we move in that direction now maybe apple then clamps down harder and they say no private relay we're blocking that um maybe they do that for web3 maybe they do that for whatever to protect people who knows but i think like there's that idea like let's just move people to the web we've got more control there it's just it's just a better storefront right like i talked about

59:40that on the on on the trajectory podcast it's a better storefront it's your you have way more opportunity to do cool things there personalization uh like real time optimization things that you just can't do with the with the app store because it's you know limited in the number of skus and all that um and then but then maybe the other thing is just like well we just we fundamentally shift the way we think about measurement right it's all about incrementality it's all about media mix models it's all about sort of like statistical probabilistic thinking and that's probably a good thing too because like you know that's you can make that work

1:00:11at scale it does still leave the smaller folks struggling to get to scale right it does yeah but but you can make that work at scale and there's no privacy concerns right yeah that's interesting i didn't know where you're going with the whole web 3 thing but i think you landed that well and i think you're right that you know it does feel like this you know apple it's the old you know the the tighter you hold on to something the more it struggles to get free and the the more apple continues clamping down on the app store the more they're pushing developers to think outside of the app store and you know

1:00:48we've seen a lot of our revenue cat customers build out web onboarding and experiment with more and more stuff on the web because of this so yeah i think i think that's really interesting and then um and then seeing what you know the facebooks of the world can do with this new paradigm of you know they can still collect a lot of first party data some of their signaling is is gone but uh it's gonna be interesting to see you know the kind of solutions they build in the in the coming years to kind of bridge some of that gap and i think yeah probabilistic and incrementality and all

1:01:22that's gonna going to play big all right well let's uh let's wrap it up then um anything else you wanted to share and uh we're gonna link to your uh linkedin and to mobile dev memo and your twitter uh in the show notes but anything else you want to share before we wrap up no i mean i just i'm i'm hoping that you know 2022 i don't talk about ht at all i would i would love it i would love it if you know i could get back to just talking about stuff that i think is more evergreen and and conceptual versus just like very you know specific policy

1:01:56level um i don't know we'll see apple maybe they reel me back in and they do something else that is is extreme or egregious but i don't know i just i think it's it's you know it hap it happened i wrote a post the other day and i was like look this happened it's had a massive impact probably not gonna go away i don't think there's gonna be a reversal so you gotta live you gotta learn to live with it and um and that's you know and and ultimately i think you know companies will do that and and it's it's also just like a really exciting time like this is like

1:02:27this is probably like at the start of a new era of like marketing science and thinking about measurement and thinking about how to bridge that with product design and product development in like really cool ways um so there's a lot of work or design stuff that that's going to get changed as a result of this i don't know that you have a standalone marketing team or like a ua team as such right like if you're thinking about media mixed models like what's your ua team um right and so you know i think uh you know it's just it's just a lot of change and a lot of exciting change a lot of

1:02:58opportunity there's always opportunity and change that's a great place to leave it opportunity all across the board i think yeah there's opportunity for apps to find new ways to find users and opportunities to fill those gaps uh in in the tooling as well so well eric thanks so much for being on the podcast and uh yeah hopefully we can have you on in 2022 and not talk about att what's up we'll make that a goal fingers crossed all right thank you eric all right take care buddy to make sure you never miss an episode subscribe to the show and your favorite podcast player thanks so much for

1:03:32listening until next time [Music]