Lomit Patel, VP of growth at IMVU, a 3D avatar-based social networking universe, was already planning for an economic downturn in 2017.
Growth marketing, he said, is as much about expansion as it is about mitigating risk.
“I never only think about the moment, I think 12 to 18 months out,” said Patel, who joined IMVU in late 2016. “Whether things are going well or not, you have to focus on predictability in driving customers and revenue.”
Three years ago, that meant introducing a high level of marketing automation into IMVU’s user acquisition (UA) efforts and focusing more on IMVU’s mobile app than its desktop presence.
More recently, when COVID-19 hit and advertisers started pausing their ad budgets, Patel started thinking about Q4.
“In most cases, marketing budgets are use it or lose it, so I see a big flood coming in Q4, not to mention the upcoming US presidential election,” he said. “We’re going to see special interest groups flood the social networks as a way to influence voters, and that will lead to a natural increase in costs on Google and Facebook.”
Which is why IMVU pulled a large portion of the budget it had earmarked for the second half of the year into Q2 when pricing was still low. “It was a good time to spend and get users in,” Patel said, “and a good time to look at increasing our footprint outside of the US.”
AdExchanger caught up with Patel to talk about how IMVU is using automation to keep growth humming during COVID-19.
AdExchanger: How did you get started with automating your UA?
LOMIT PATEL: I began studying the finance industry and the big brokerage houses and realized that the way they do what they do is similar to what I do in UA. We both spend a budget and try to invest with a return. In my case, the return is return on ad spend or the cost to acquire a customer.
It’s just a matter of having the AI to automate the triggers for when to buy and when to sell.
I got into a lot of the Google, Facebook, Snap and even TikTok betas as they were developing their automation for things like Universal App Campaigns, and as a beta partner I learned a lot about how they were building their machine learning capabilities to optimize the data they were getting from us.
But I came to realize that a lot of the benefit they were seeing came from a self-serving algorithm. It was all about you spending more with them, and we had little purview into how our Facebook campaigns were doing compared with Google or other platforms.
I wanted to build something for us that would let me see how my data is doing across the ecosystem without giving away control.
How did you do that?
Companies like Uber and Lyft have developed similar capabilities, but they also have huge teams to maintain them. I wanted to have a machine do it and keep our team lean from the start. Today, I have four people on my team.
I founded a company called Nectar9, which provides AI-powered marketing automation technology. We set up API integrations and worked with them to start automating all of the levers that we could control, including bids, budgets and orchestrations. They built an algorithm just for us.
We’ve been able to increase the velocity of our A/B testing and our rate of learning to find the right audience, messages and experiences that bring people into the product and create the habits that lead to the best user lifetime value (LTV). Before, we were able to run a couple of hundred A/B tests with the team I had. Once we were able to automate that, we could run tens of thousands of A/B tests over the course of a month.
The big difference now vs. before is that we used to have fixed budgets. We might have spent $700,000 or $800,000 with Facebook, Google or any given partner. Now, everything is fluid. They know they have to earn our budgets.
Is there anything you can’t automate?
The creative. We ended up hiring more people in house to support our creative inputs. We do a heck of a lot of creative testing. We’re constantly rotating images and calls to action to try and figure out the right personalized message for any given user on Facebook, for example, which is a little different from Google or Apple Search or any other partner.
Has this approach helped you during the pandemic?
We’ve been doing this for almost three years, which has allowed us to build up a lot of historical data. The algorithm has gotten a lot better at forecasting.
For example, when COVID-19 hit, a lot of people started cutting back on their budgets as a knee-jerk reaction. But we were able to do the opposite. We got alerts from the machine that there were huge dips in cost and we saw our CAC [customer acquisition cost] go down significantly, so we knew there was an opportunity. In March, we increased spending by 60%, and in April we were spending 80% more than before COVID-19.
How much of your monetization comes from advertising?
We’ve always catered more toward performance advertisers rather than brand advertisers. But we ensured early on that in-app purchases [IAP] would be a bigger part of our revenue stream than ads, and that continues to hold. It helps us be more predictable, especially now. Around 60% of our monetization comes from IAPs.
In order to insulate ourselves on the IAP side, we’ve started getting more into the subscription business. We have a few different subscription offerings that have done well for desktop and one we launched for mobile at the end of last year which is starting to take off.
How are the users you acquired during the pandemic retaining?
We’ve found that retention is up during COVID-19, because more people are spending more time in the app. But we’re also trying to do things to help us improve retention. One is to try and get people into our subscription offerings but, more importantly – and this is where we leverage AI and automation – we’re thinking about the onboarding experience and a user’s first seven days. We’ve created user journeys with a set sequence of steps and behaviors that people normally take in the app that lead to the best LTV.
The pandemic will accelerate the trend to automation. Accountability is that much more important, and people will be held to a much higher standard in terms of their spending.
This interview has been edited and condensed.