The Key Ingredients To Driving a Successful Food Delivery App Business
In a market where mobile apps continuously compete to acquire new users, discover how food delivery apps can achieve success.
App marketers always look for powerful tools to take their apps to the next level. With competition among apps growing, it is essential to ensure the app stands out to acquire new users. So, how can food delivery apps achieve success? Andrey Kazakov, vice president of demand, AppLovin, shares a few best practices.
From reaching new users quickly and improving monetization strategies to optimizing campaigns, app marketers, including those of food delivery apps, are constantly on the lookout for new powerful tools to take their apps to the next level.
It’s no wonder when you look at the state of the mobile app ecosystem. According to data.ai, consumers are spending an average of 4.8 hours on their mobile devices each day, with 90% of that time spent in-app. While mobile gaming has amassed diverse and devoted audiences in recent years, attention is also diversifying beyond games. In fact, according to Sensor Tower, non-game app usage surpassed gaming apps for the first time in Q2 of 2022, expanding the potential for marketers across all verticals (ecommerce, entertainment, health and fitness) to drive value in-app.
Like with any other business venture, running a successful app means tracking performance, measuring return on investment, and using data to inform decisions and make enhancements. Competition is only increasing in the mobile app industry, with consumer spending estimated to climb by at least 18% year-over-year in 2022, according to Sensor Tower. The United States will continue to be the leading market for mobile consumer spending, approaching $50 billion in 2022. Therefore, whatever app business you are running, ensuring your app stands out is critical.
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User Acquisition: Path of Continuous Experiment
At the center of any successful app business is a user acquisition (UA) strategy. Finding new users to download your app is a critical part of growing your business and will ultimately bring in long-term revenue.
Over the years, UA has evolved from a single channel, narrowly-targeted approach, enabling app developers to test on a relatively small budget, to a holistic multichannel strategy allowing more creative and technically sophisticated ways to reach new prospects, measure success, and optimize campaigns.
Gaming apps have often been considered the guinea pig or ‘laboratory’ of effective UA because the economics of UA in gaming is much more forgiving due to each user’s high potential lifetime value (LTV). Gaming apps will more frequently land ‘big spenders’ — for example, users who spend tens of thousands on in-app purchases to progress their play and heighten their gaming experience. Those who spend the same on non-gaming apps, like food delivery apps, are less common.
As a result of these big spenders, gaming apps have taken a more aggressive approach to UA compared to their non-gaming peers. The results they see from spending on UA appear much quicker, so they can test more with the confidence that if their UA strategy generates some success over a longer period, the big spenders will justify their UA spend. This allows gaming developers to progress on a path of continuous experimentation to eventually reach optimal points of learning and strategy, which eventually sees their acquisition efforts take off.
Non-gaming Brands Face a Different Challenge
Overall, “brand” is more of a driver in non-gaming. The barrier to entry with non-gaming apps like a food delivery app is much higher than with games because users typically need to “think about it” more before they install it. Brands can also sometimes wait a relatively long time to monetize their users — the lifespan of a user can be months or even years for some apps, meaning that a certain amount of patience is required when it comes to conversion. For example, you might download a food delivery app one night with the possibility of ordering but not decide to order anything on it for some time (weeks, even months) until the right opportunity arises. Moreover, brands often have more to work with, given that many of the businesses behind the app have been around longer than gaming companies — think Uber Eats, for example. They sometimes have a better understanding of their audience when initially targeting new users.
Lastly, non-gaming apps are more sensitive to performance goals and budgets, specifically in the early stages of a campaign, and keeping the spend strictly within the planned budget. They must follow best practices more closely to build sustainable businesses and hit that inflection point earlier on.
Your Recipe for Success
While there might not be a standard playbook for UA, there are certainly some best practices to consider when configuring your UA strategy for your food delivery app.
- An effective channel acquisition strategy: Consider which channels are most compatible with your specific app’s audience and goals. Then, determine the budget and how much you can spend on ‘experiments’ on each channel to drive more efficient performance.
- Channel allocation optimization: Budgets are usually allocated across channels in a way that will deliver particular payback within the required timeframe, whether breaking even on a large volume or achieving a 110% D90 return on ad spend (ROAS) but on a minimal volume. For food delivery businesses, it makes a lot of sense to focus on first-order CPE (as a down-the-funnel metric to optimize toward, with efficiency in mind), and given the impact of organics, the use of active suppression lists is critical.
This allows you to analyze individual channel performance at a particular scale and combine it with others to complement each other and reach the overall goal.
- Test and improve creatives: With the help of data analytics, analyze how different visuals and copy for your brand work across various audiences, demographics and channels. For food specifically, focusing on ads built around offer codes and including very palatable food visuals is an efficient way to go. The most effective ad networks will look at their clients’ creative strategy in a consultative way to see what works best vertical to vertical.
- Predictive analytics: Perhaps the most critical investment is predictive analytics because predictive lifetime value (pLTV) models drive the goals and actual buying decisions. This means the more accurate pLTV models get, the more efficient UA.
- Continue experimenting: Whether with creatives, UA, or predictive analytics, keep testing until you find what works. Invest in a diverse set of skills and an analytics stack you can trust. Gaming or not, successful mobile growth teams are multidisciplinary — designers for creative works, data scientists for predictive analytics, and UA professionals to execute on ad channels.
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Achieving Profitable Scale in a Crowded Market
Following these steps can lead to success with the right ad partner. Take the popular app Delivery Hero, for example, now the market leader in food delivery. In a competitive and saturated market, Delivery Hero struggled to reach first-time users. Delivery Hero achieved stable and profitable scale growth by using a mixture of advanced automation campaigns optimized towards acquiring first-time buyers, combined with CPE (Cost Per Event) campaigns. This included increasing unique first-time orders by 294% and significantly improving campaign performance by reducing CPE by 66%, all while only increasing UA spend by 33%.
To give another non-gaming example, Daily Yoga, a leading fitness and meditation platform, has been able to sustainably expand its acquisition efforts globally, achieving 100% month-on-month growth with a refreshed ad network and UA strategy. Following the release of Apple’s iOS14 update, Daily Yoga saw slowing user growth on their major UA channels and platforms, as well as challenges evaluating performance. To continue to scale profitably and at their targeted pace, they looked for an ad network that could identify and optimize toward quality iOS traffic.
Using cost-per-point (CPP) campaigns, Daily Yoga was able to optimize user acquisition for subscribers and improved D0 return on ad spend (ROAS) by 62%, which boosted overall app D0 ROAS by 24%. This sustainable growth helped raise their U.S. Health and Fitness rating to No. 16 on iOS.
There’s No One-size-Fits-all Approach
There’s no one-size-fits-all approach, but there are some best practices to think about when configuring your food delivery app’s UA strategy. While there are key distinctions between UA in gaming versus non-gaming, it’s crucial to use data analytics to inform your strategies and figure out what works best to reach new users within your budget. Those approaching UA with considered strategy and planning, with the right partner, can succeed.
What steps have you taken to make your food delivery app business successful? Share with us on Facebook, Twitter, and LinkedIn.
Image Source: Shutterstock
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