Overseas promotion: business model for products exported overseas!

The overseas market has a large user base, and the domestic Internet has developed rapidly in certain business forms in recent years, surpassing the development stage of the Internet in some other countries. As a result, many Internet companies have chosen to go overseas, using domestic Internet work experience to defeat low-dimensional companies in high dimensions and form an Internet product model for going overseas.

Different product business forms have different business strategies during the entire project implementation process. Due to the market environment at home and abroad, there may be significant differences in thinking and strategy.

The overseas market has a large user base, and the domestic Internet has developed rapidly in certain business forms in recent years, surpassing the development stage of the Internet in some other countries. As a result, many Internet companies have chosen to go overseas, using domestic Internet work experience to defeat low-dimensional companies in high dimensions and form an Internet product model for going overseas.

Due to differences and barriers in politics, culture, social development stage and Internet infrastructure. At present, the popular overseas products are mainly concentrated in games and tool products. First of all, the leisure and entertainment needs of games in various countries and groups are similar, and tool products are completely dependent on the use of mobile phones and life and work scenarios, so they are more universal.

For the above two aspects of exported products, there will be no insurmountable invisible barriers such as culture, politics, and region. Other product business models are difficult to implement due to the requirements for localized resources and product ecology. Therefore, many small and medium-sized companies going overseas will choose tool or game product projects as the first batch of projects. This is not only because the project requirements are clear and replicable, but also because the investment cycle is short and the ROI is high.

Let’s break down some of the key elements of this overseas product business model.

Commercialization

The monetization methods for mini-games and tool products mainly revolve around advertising monetization and payment. Of course, many large companies' large businesses such as finance, logistics, services, etc. are not within the scope of this discussion.

The core of advertising monetization is to embed advertisements in products, settle accounts with advertising platforms, and monetize through display. Advertising monetization is actually the various common advertising display monetizations we see, which is to connect third-party advertisements to some user paths of the product that do not affect the core user experience but have high or low exposure rates to achieve business changes, such as startup ads, information flow ads, banner ads, etc. The main domestic advertising platforms are Baidu Advertising Alliance, Tencent Guangdiantong, Toutiao Advertising, etc.

Overseas advertisements are all connected to the advertising SDKs of major advertisers and are generally settled on a CPM basis, such as Facebook, Google Admob, etc. There are other small and medium-sized advertising companies, including Inmobi, Applovin, etc.

Payment is related to the product form and what kind of value-added services make users willing to pay. For example, paying for game props, paying to unlock advanced features of tool products, etc. are all paid monetization. Users on the IOS platform have good payment habits, while users on the Android platform generally have poor payment habits and the proportion of paying users is low. But it’s just because of the product form.

For example, paying for content such as music, magazines, and videos is very good, and there is not much difference between platforms.

The above two monetization methods are both sources of product revenue, which will ultimately be reflected in the product ARPU value. During the life cycle of a product, what kind of business value formula must be met for the product to run?

Average new user cost < average user LTV value

Average new user cost = promotion cost / (promotion volume and natural volume)

Average user LTV value = user LT * user ARPU value

To explain, other R&D costs are not taken into account here, and a positive average return can make the overall benefit of the team positive by increasing the magnitude.

Average new user cost = promotion cost / (promotion volume and natural volume)

As for the cost of new users, the goal is to spend less money and attract more users. How to control the average promotion cost of new users? The core goal is to reduce the average cost of new users while ensuring that the product's LTV value performs normally. Promotion costs money, but nature is free. Therefore, the key lies in reducing promotion costs, optimizing products and increasing natural volume.

Generally, new users of a product mainly come from promotional purchases and natural growth. Overseas application markets generally only include Google Play and IOS App Store, and promotion channels are generally concentrated on Facebook, Google Adwords, and some small channels. Overseas teams generally adjust their promotion strategies based on their product form. For example, there are some channels that perform particularly well for game promotions. Buying traffic actually means placing advertisements on third-party platforms, buying users, and encouraging them to download and install, etc.

The cost of buying traffic in different overseas countries is different, so different buying traffic strategies need to be formulated for different countries. Since Google Play and App Store will evaluate your product based on the application’s recent comprehensive performance, including downloads, user ratings, product usage and other indicators with rich dimensions, and recommend and display it in searches, this determines the natural performance. Natural volume is free, so the better the product performance is and the higher the proportion of natural volume is, the lower the overall cost of buying volume will be.

The cost of buying traffic will be affected by the product's advertising selling points, the buying performance of competing products, channel factors, and the cyclical volatility of the overall advertising market. Generally, overseas product promotions will have a basic average new user cost threshold (this is determined based on current product experience and can be determined through ROI testing in the early stages). To ensure that you can make money, you must ensure that the cost of buying volume is not higher than the warning line, otherwise you will suffer losses. The lower the cost, the better. However, we must also ensure that the value of the user products purchased is normal. The user product value is LTV. Let's take a look at another formula:

Average user LTV value = user LT * ARPU value

The core of improving the average user LTV value lies in two factors: ensuring or even improving LT and increasing ARPU value. Payment and advertising are related to the APRU value of the product. The overall income from payment can be broken down into the payment rate, payment unit price and a whole set of payment strategies, but the core is whether anyone is willing to pay for the value-added services and whether the income brought by payment is sufficient to cover the costs.

We will not discuss payment in depth, but simply talk about CPM this time. Advertisements for overseas products are generally settled on a CPM basis. CPM itself is a black box. The value of an ad space is affected not only by the advertising manufacturer, advertising format, and cyclical market fluctuations, but also by issues such as the display scenario of our product ads, the attributes of the product user group, and the utilization rate of advertising opportunities caused by the advertising display strategy. Therefore, optimizing advertising revenue and increasing paid conversions are the key to increasing ARPU value. That is to explore commercial value in the user traffic pool.

User LT is actually related to the product form, and the LT performance of different product forms will be very different. The demands for social interaction and gaming themselves vary greatly, so the performance of LT is definitely huge. People need social interaction every day, but they may not play games every day. Or maybe the fun of the game also determines LT. Therefore, improving LT is the highest priority product goal for many products. From the perspective of buying volume, the core indicator of the quality of buying volume is the retention indicator, and retention is actually LT. The long LT time gives the product enough room to realize commercialization.

The retention performance of users purchased through different channels and users purchased with different advertising creative selling points is different, especially for personalized or tool products. Moreover, the performance of product function data will also be different. For example, personalized tools are often promoted with different personalized selling points, which will result in much better performance of certain function data for users who come with specific personalized selling point materials. This is why we need to pay attention to the product value performance of users coming from different buying methods. The LT performance of different countries can also vary greatly, which is also a point that requires detailed attention.

The above is a simple breakdown of the key factors that affect the operation of an overseas product, but there are actually many details that have not been covered. The product function data performance and advertising monetization performance of overseas products in different countries will vary greatly, and may require detailed optimization. Simple buying of traffic actually involves the careful optimization of countless details, from the design of advertising materials, promotion strategies, to the design of application platform product display pages. But all our optimizations are actually aimed at achieving the most basic business value calculation model. If the model works well, then we will look at the ROI of the product, and then the return on investment cycle.

In the entire calculation model of [promotion cost/(promotion volume and natural volume) < (user LT ARPU value)] , some people directly evaluate whether the project is worth continuing to promote according to [(promotion cost/promotion volume)/(user LT ARPU value)>N (ROI threshold)] in order to control risks. Because data accuracy must control risks, the ROI threshold evaluation model is adopted. The similarities and differences between the overseas and domestic markets are probably reflected in the rough analysis above. The product forms currently covered are relatively simple and do not represent all commercial product models. Discussions are welcome.

Source: Fightersky