In our global app ecosystem, marketers often face the same challenges worldwide, particularly when it comes to user acquisition. Thankfully, the solution often boils down to figuring out what incentivizes your audience. Tapjoy met with Hidenobu Yamamoto, a marketing team member for U-NEXT which reached 2M users, to find out how he approaches the issue for Japanese subscribers.

  • Incentivizing ads is one of the most effective ways to acquire and retain a loyal, high-value audience.
  • For subscriber acquisition marketing, cost per acquisition and monthly subscription rates are the two most important metrics to track.
  • Mobile advertising may become more “sincere” as campaigns become more straightforward and partners address easily identifiable fraud

Mr. Yamamoto, thanks for taking the time to speak with us today. Can you tell us a little about U-NEXT and its business model?

U-NEXT is a video-on-demand service that launched in 2007 in Japan and has continued to grow steadily as an independent, Japanese service amid the crowds of international services. Within flat-rate video-on-demand services, we had the largest market share for domestic services in 2019.

U-NEXT is a subscription-based service. However, you receive a monthly points balance that you can use to rent the latest products, and we call it a hybrid model. E-books and Livestream concerts are offered in the same service.

Please tell us about your role at U-NEXT.

I am in charge of digital advertising for new subscriber acquisition, with a focus on incentivized ads such as rewarded and affiliate advertising.

What do you think is the most effective technique in mobile advertising?

It depends on how you define ‘effective,’ but if your ad offers incentives, you can effectively increase your subscribers. And if you place your ad in media that introduces products and services, you can effectively attract a higher number of loyal subscribers.

In your opinion, how should VOD providers who are developing along the lines of U-NEXT engage with marketing?

I think that when it comes to advertising, these companies should determine factors like the efficiency of user acquisition or retention rate, and establish their priorities for each type of media and network separately, rather than just budgeting for it and subcontracting everything to advertising agencies.

What would you say makes for the ideal marketing team structure? How does this differ from traditional systems? At U-NEXT, how is advertising divided between in-house and agencies, and how is it managed?

Each of our main media channels and ad networks has a dedicated PDCA cycle that must be followed, so I would say that the ideal setup is one that allows us to focus on the details.

The main advantage of in-house is the ability to communicate closely with each of media channels and ad networks, but when it comes to programmatic advertising and other ad media where trends are evolving at breakneck speed, there are times when it’s more efficient to utilize the know-how of an agency, so in those cases, we will send projects to agencies.

Please tell us about the most important KPIs for marketing for VOD providers like U-NEXT and the reasoning behind them.

U-NEXT has a 31 day free-trial period during which users can use the service and decide whether to continue to use it or not. Cost of new subscriber acquisition and monthly subscription rates following sign-up are the most important KPIs for new-subscriber acquisition marketing.

Techniques that offer incentives may have low CPA, but there are times when they return remarkably bad monthly subscription rates. It’s essential to keep track of both figures.

You have been using mobile in-app ads and rewarded ads for many years—what role have they played in U-NEXT’s growth strategy? Which techniques have you felt to be the most effective for particular channels?

When we first began our online promotion in 2012, there was very little awareness of VOD, so rewarded ads contributed significantly to increasing our subscribers.

Awareness of VOD has been growing in recent years, and by connecting the products we deliver to game and manga apps, we are creating loyal subscribers.

Ad fraud is a concern for many advertisers. In recent years, with automated bidding becoming possible, and insofar as ad placement via traditional methods is also indirect, we see a lack of transparency around ad audiences. What issues has U-NEXT encountered in this area so far, and how are you counteracting and assessing these issues?

Ad fraud, where we can’t tell who our ad is reaching, is a difficult issue. How quickly you can detect fake accounts and then whether you can work out where they originated as soon as they’ve been detected are important factors.

We are doing all we can to increase transparency around recipients that pose a risk, and in some real world rewards cases (media that allow users to exchange the points into a real world system of payment), we make the decision to suspend real-time granting of rewards.

Many companies are putting more and more emphasis on effective data management. How does U-NEXT manage its data infrastructure, and what impact has this had on your organization? And how—and using which KPIs—do you measure advertising quality and results?

If we can control the four KPIs of CTR, CVR, CPA, and monthly subscription rate in combination with media channel matching, we can achieve an efficient ad in terms of user acquisition. But beyond efficiency, it’s also crucial to leave the user with a positive impression, so I think that sincere advertising that takes factors like user response into account may have a lot to offer toward increasing efficiency. And approaching each of these elements requires resources.

What do you think U-NEXT’s greatest achievement in marketing and user acquisition has been? What results are you proud of?

I’ll come back to this question when we have the largest market share for VOD in Japan!

What do you think is currently the most prominent industry trend in the mobile advertising space? Where do you think we’re heading over the next few years?

I think we’re going to see less insincere advertising going forward. I believe that ads using unpleasant or confusing expressions, along with easily falsifiable rewarded ads, come into the category of insincere advertising.

And finally, is there any one message you think we should take away today?

Within the category of rewarded ads, there is a distinction between rewards subscribers claim in cash, and rewards redeemed for content like games and comic books. With Tapjoy, the latter type presents a low risk of fraud. It is compatible with ads for VOD and other digital content, and you can run detailed A/B testing of your ad creative, allowing you to constantly work toward the creatives users want. I look forward to seeing both our companies continue to develop going forward.

Tapjoy would like to thank Hidenobu Yamamoto for taking the time to join us. For more insights from our Mobile Champions, check out our interview with WINC’s Rohan Panjiar.

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