Pay to Play in the Play Store

 This past summer I worked for a mobile fitness application called BodBot. BodBot’s primary customer acquisition channel is the App Store (iOS) and Play Store (Android). Much like paid Google search, the Android app store is driven by paid search placement.

 (Links to an external sit. BodBot’s primary customer acquisition channel is the App Store (iOS) and Play Store (Android). Much like paid Google search, the Android app store is driven by paid search placement.

One interesting aspect of the Play Store environment is performance-based advertising. Rather than paying for views or clicks, BodBot paid a premium for successful actions further down their acquisition funnel. As an example, an app can use a pay-per-download advertising scheme. 

 

My understanding of how this works is as follows:

 

1. An app places a bid on downloads or other actions
2. Google aggregates the app’s bids with all other bids, then runs optimization algorithms to match the users most likely to convert with the highest bidding party

 

There are more specific actions an app can bid on than downloads. For example, BodBot commonly bids on an app download plus in-app purchase of premium membership. It costs more, but the acquired user is more valuable.

 

Another interesting piece of this whole system is the potential conflict of interest for Google. Since Google nets 30% of all app and in-app purchases, there is potentially room for them to cherry-pick bids with a higher purchase value, all else equal.