In 2016, Pixite held an offsite for its 6-person team that was notably more urgent than the year before. For Co-founder Eugene Kaneko and group, 2015 saw flattened downloads and plunging revenue. Surprisingly for a tech company, though, the problem had nothing to do with product. In fact, Pixite enjoyed featured-status for multiple titles in the past, a recognition by Apple as a testament to the quality and appeal of their apps.
The decline was driven by a sea-change that publishers in all categories were feeling: the new reality of a maturing app economy. Pixite’s precarious position was so emblematic of a larger trend among app publishers; in fact, that Verge published an article about the company to highlight that very topic.
The Pixite team kicks off their annual offsite (image credit: Verge)
Little did they know that the outcome of their meeting that day - a new mission and a decision to double down on marketing - would transform a declining business into a rapidly growing one seemingly overnight.
How we got here
In 2011, consumers were hungry for new experiences to enjoy on their iPhones. The new form factor had users actively searching for and purchasing apps (63% of downloads were paid apps). This made for a profitable business model for app developers who were eagerly filling up categories with new titles.
Fast forward to 2014 and the ecosystem dynamics had changed significantly. As the stores became saturated (1.5 million apps in App Store, 1.6 for Android users) and the appetite for novel experiences waned, consumers began to download fewer apps and use just a fragment of what they download (3 on average).
With the change in behavior, app developers looking to grow would need to adapt. While app store revenue has never been higher (Over $40 billion at last count), a few large players at the top have largely reaped the rewards of that growth.
To re-invigorate their business (and profitability), Pixite embraced a new acquisition strategy, doubling down on marketing and laying a blueprint for their subscription-based apps to achieve massive growth.
The new formula for success
With organic user acquisition in major decline, Pixite looked to paid acquisition to accelerate growth and build a sustainable business model. However, as Pixite co-founder Eugene Kaneko explains, implementing a paid UA strategy comes with a couple major challenges.
“Being bootstrapped, we didn't have a whole lot of cash laying around to properly scale user acquisition. We ran different financial models using traditional debt financing and investment strategies, but we would need a substantial amount of money to reach our goals.”
Access to capital substantial enough to drive meaningful growth is hard to come by, unless you’re one of the few who is successful in raising equity. But equity comes at a huge cost – months of distracting fundraising & due diligence, and ultimately giving away a big chunk of your company in the process.
Pixite didn’t want to go that route. Instead, they connected with Braavo – a powerful new platform that offers automated financing for mobile apps. Braavo’s Accelerate product provided Pixite unlimited growth potential, flexibility and complete control of the company with low risk.
Suddenly, Pixite didn’t have to “punch above their weight” to compete with the giants at the top of the food chain who were reaping the benefits of the new app economy. Now they had rapid access to cash flow to scale their budget and a laser focus on ROI to keep their growth efficient.
Building a business on paid user acquisition
To accelerate the growth of Pixite, Kaneko and team knew they couldn’t just focus on installs - they had to optimize for ROI. This meant that they had to constantly measure, iterate and optimize against two key metrics: user LTV and marketing CPA.
Pixite team brainstorms a new path forward (Image Credit: Verge)
To start, they primarily used Facebook lookalike audiences and custom audiences to drive growth. For a time, their new strategy was hitting on all cylinders, but soon the company hit a snag.
“The major problem with advertising is that as in you increase scale, costs go up. There is no volume discount…we were hitting a wall.”
Braavo introduced the Pixite team to Appnique in hopes that the platform could help achieve greater scale while meeting strict LTV and CPA goals. Appnique’s solution is uniquely positioned to maintain low acquisition costs, even as audiences scale. Its intelligent targeting technology is able to build lookalike-style audiences segments by analyzing the user base of any app and mapping those segments back to precise Facebook interests for rapid acquisition.
For apps and brands that can’t afford to see their audiences become more expensive just as they begin hitting growth goals, Appnique’s suite of tools and dedicated account management can’t be beat.
“Appnique was able to deliver interest-based audiences that performed really well. With their help, we're again hitting our financial targets and experiencing some major growth.”
Since Pixite launched its new strategy with the help of Appnique and Braavo in March of 2017, it has tripled revenue and increased profitability, and has a clear path for sustainable growth moving forward.
“Appnique has a wide variety of tools to build almost unlimited audiences and Braavo affords us the supply of capital to achieve almost unlimited scale.”