Blog Post

As app user acquisition challenges loom, Fiksu offers a fix

Finding new users for apps has grown increasingly complicated with the number of apps exploding  and app store owners like Apple cracking down on some download tools like pay-per-install campaigns. That has forced some publishers and developers to look at third-party companies such as Fiksu, a Boston startup, in order to wrangle new users.

Fiksu for Mobile Apps, which got underway in April, works for iOS (s AAPL) and Android (s GOOG) and optimizes user acquisition by selecting the most effective way at any given moment to reach users across more than 20 ad networks, real-time bidding systems, and incentivized download networks. This flexibility means that if one method becomes expensive or becomes closed off, as in the case with incentivized app downloads on iOS, Fiksu can work around that in real time to still acquire users. Incentivized downloads allow consumers were able to gain virtual currency in an app in exchange for downloading another app.

Founder and CEO Micah Adler built Fiksu after his Fluent Mobile news reader app got off to a strong start but then struggled to maintain a steady stream of downloads. By building an algorithm that allocates spending across different channels based on real-time conditions, Fiksu lowers the cost of acquisition while driving up the number of downloads. Fiksu said it’s able to lower the average loyal user acquisition cost to less than $1 per user, in some cases down to 45 cents per user. Barnes & Noble (s BKS), Gilt, Groupon, Hearst Magazines, VH1 (s VIA), WHERE and others have signed on as early customers of the service.

Adler said interest in Fiksu has taken off in the wake of Apple’s decision to ban incentivized app installs. He said since that went into effect, available inventory has fallen by half for pay per install campaigns.

“We have seen a lot of people who were reliant on Tapjoy and other (pay per install providers) are recognizing that easy avenue for downloads is in the process of disappearing and they’re coming to us,” Adler said. “The problem of user acquisition is becoming more complex and they absolutely need more breadth of options.”

Adler said the goal for advertisers is also shifting away from pure downloads to loyal, engaged users. That’s why Fisku also tries to align client campaigns with the most relevant users so they’re more likely to remain loyal to an app.

I think services like Fiksu, which has previously raised $5.5 million from Charles River Ventures, are going to become more appealing as the issue of user acquisition becomes more daunting. It might not work as well for small startups, who don’t have the budgets to pay for these campaigns, but bigger apps and publishers are increasingly looking for reliable ways to get their apps used by people. They can rely on banner ads, which are still effective to some extent. But it makes more sense to look for intelligent platforms that make the most of their money.