For the love of Transactions, don't CPT it.

I recently put down some thoughts on how the responsibility of ROI must always rest with the Brand / App Owner, and why wishing it away to external parties would almost always result in the objectives being achieved, if at all they are, in ways that would compromise your Brand or Spends.

Time and again I see brands that have relied on Cost per Transaction (CPT) deals on PC web apply the same learnings to Mobile and worse still apply it to the Affiliate ecosystem in Mobile. Performance marketing PC web transactions were widely delivered by Search (legit ones) & Re-marketing, and the same holds/will hold true for mobile. It's no different. Affiliates like on the Web come with he same risks on mobile too.

When marquee brands like Zomato (one that I respect) go the CPT route, one can't quite blame the ecosystem to follow suite.

ROI and Transactions are closely related. If you must own ROI internally, its but obvious that you must also control and own Transactions and hence the key KPI of Cost Per Transactions.

Here is why its critical to do so and what you'll be missing out or what you're likely to do wrong if you don't control CPT internally:

1. You won't really know whats making it tick

Once you've given out a target CPI or CPT, you'll tend to not focus on anything else. You'll not care what CTRs are coming or what CPC, or how many clicks, impressions or, more importantly, from where these clicks and impressions are coming.

Once you stop focussing on these, what you really stop focussing on is what's really making your Product tick. Are you really on to something? If you are an early stage start-up, then is this real consumer traction? Whats driving this traction? How can I accelerate growth?

When you yourself have to optimise for CPI or CPT then you'll monitor and measure every attribute of those Clicks, Impressions, Installs & Transactions. You'll not only want to know where these Clicks and Impressions came from or what CTR each source gave - you'll want to know what devices they are coming from, from what OS version, what time of day gave best conversions, maybe even how travel or the weather impacted purchase. You never know which of these metrics gives you that Eureka insight, that your competitors will never know. And you could build that into a core differentiator.

2. CPT is the wrong KPI. Measure LTV, to the V.

Here is a more interesting fact. CPT like CPI might just be worth nothing. True ROI is measured by LTV.

Like CPI, a CPT is achievable, but as before you've got to be aware of HOW. I'll repeat the math from my previous post to demonstrate again why its important. Lets say your campaign is operating at a CPT of Rs.150 - lets see what it'll take to achieve that:

Rs.30 CPM (1000 Impressions) x 1% CTR = 10 Clicks x 10% click to install conversion ratio = 1 Install (costing Rs.30). Now, assuming a 20% Install to Order Conversion Ratio we need to have atleast 5 Installs at Rs.30 to get a Rs.150 per First Order. An install at Rs.30 that converts at 20%? Hmm.. I'll say again.. There. Are. No. Free. Lunches.

Lets just say that you did actually get the CPT at Rs.150, but what you'd really want to know is the Order Value of that Transaction and moreover your Revenue from it. If the order value was a healthy Rs.500 and your Revenue from that Transaction a healthy 20% = Rs.100, you'd still not have hit ROI. It might seem tempting to say 'hey Rs.150 Cost and Rs.100 Revenue not that bad' - but please do re-look at the math and be honest enough to realise that possibly the "real" cost of a transaction from a good traffic source is upwards of Rs.500, way upwards perhaps. Now re-look at what it'll take to get that kind of ROI. A single Order that meets the CPT will not guarantee that that user will go on and get you sufficient LTV.

Focussing on the HOWs however, will give you a better chance because then you'll be measuring LTV and every attribute that helped you achieve it.

3. How does it all work then?

One must ask, how do companies deliver these numbers? After all there are Agencies and Networks that are more than happy to work with you on these CPT rates, so how do they do it?

There are only two ways its possible:

a. Via a legit source like Google, Facebook etc. using 'old school' techniques, such as

• Someone looking to Book a Movie with the keywords "Baahubali Movie Tickets for 7pm show" or even just "Baahubali Movie Tickets" will likely convert and give you a Cost per Transaction thats a 2X ROI from the single transaction
• Deep Segmentation & Re-Targeting users basis these segments across destinations like Facebook, GDN at the right time and, if possible, place. Segments could look like Cart Abandons, Weekenders, Aamir Fans etc.
• Between Facebook's Audience Network & GDN, you're likely to cover a large %, 95%+ I would imagine of the intended users. Other sources will increase this reach marginally including Affiliates.

b. Via non legit sources (Read fraud)

Fraud has come to be a major problem in the ecosystem and the biggest concern is no one knows the extent of it. Some call incentivised installs as fraud but if I were to say, incentivised installs are the last kind of 'fraud' you have to worry about. Infact Incentivised Installs are not fraud at all - whats important is to know that you're using such a source and Incentivize users via such sources smartly. So if you give out a campaign and say "Non incent only" - please come back and read this piece all over again.

What you've got to be worried about is one major major Fraud technique called Click Injection or Click Stuffing or Install Hijacking.

This is how it works.

• Apps Installed with a Networks SDK or the App themselves 'read' apps installed on device. You'd have noticed the permission "This app can read other app activity" or "Retrieve running apps" or "read phone status" - what permissions like these allow an app to do is to read other apps on device, whenever they are installed or sometimes even when they are opened.
• These SDKs and Apps therefore "know" if a User already has the app installed for which a campaign is active.
• If a user does not have the app, it then starts to 'send' clicks on the Campaign URLs to claim this user - now whenever this user installs the app, even be it organically, the attribution for this install will go to the Source that sent the 'click'.
• What this essentially means is that all the Network or App has to do is be present on enough devices that don't have your app and without driving any real traffic keep earning from your Campaign.

Check out the image given above by Adjust.com and visit the link to read more on how it works and what you can do about it.

There are more fraudulent methods like Click Farms that simply have real devices that are not used by real users or those that simply clone / create false device information. It's because these realities that you need to be more focussed on the HOW and not just on a CPT that seems 'safe' to go with.

In Summary

The point of it all is that a CPT doesn't get you anywhere. Be old school with your techniques (Focus on CPM, CPC, CTR by Source + Sources itself) and new age with your tech. Its not easy to do all of this manually of course. You'll have to get yourself a platform. One that will assist you in making all of that marketing jargon realistically actionable and that Transaction goal a reality. From source-wise LTV to Segments basis in-app Events to Targeting and Re-Targeting Users - its all possible today. While there is no one single platform that will solve it all, but combining any two can and will help you a great deal to easily measure LTV to the V = Value.

In essence, don't make your problem someone else's. Transactions are a Holy Grail to be preserved and perfected in-house. Own it. For the love of Transactions, don't CPT it.