Marketing company with $1.5M MRR from mobile apps

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Part 9 of SubHub Podcast is live now! And we’re going on with the discussion of mobile app development and the subscription model of monetization.

The guest of the day is a talent app developer Sergey Ovseenko. Being 23yo he managed to build a marketing company with 45 employees and $1.5 million MRR from mobile apps. Impressive, isn’t it? Let us discover how he started in 2012, the whole path from zero to hero. We’ll learn about his outsanding money making journey, affiliate marketing experience, ASO click farm and appealing account suspension.

As the majority of episodes are not in English, we’d like to highlight the most exciting parts of the conversation in the form of an interview. Enjoy the text below.

Money Making journey

Sergey Ovseenko: Speaking of the very beginning, I made my first dollar long before I started apps. I was only 15 when ZeptoLab released a web-browser game named Cut the Rope on the basis of HTML5. That was a marketing campaign, I believe, as the game was accessible on Internet Explorer only. I did my best to withdraw the source code of the game and made it portable. Then I uploaded it to Facebook, put a banner spot and monetized via Google Ads. Thus I made my first $2.000.

Vitaly: What year that was?

Sergey Ovseenko: 2012. I only had my iPod Touch, had to learn Objective-C to compile my first apps and submitted them to AppStore. There had been lots of public educational videos on TV. I’d been wrapping those videos into courses and then released them as independent mobile apps.

Blackhat Affiliate Marketing

Vitaly: You didn’t practice any media buying while being focused on organic traffic and the content. How did you know about Affiliate Marketing and paid traffic?

Sergey Ovseenko: 2018 that was. I had some networking talk with the guys who provided primitive apps to run traffic at. And these guys made more money than I did. There I discovered that it was high time to learn about media buying.

Vitaly: Will you please explain how Affiliate Marketing on mobile apps works by the way?

Sergey Ovseenko: In the most common part there is an offer – a link to a gambling or a betting service provider, nevermind. You manage paid traffic to those links, while the offer pays per every CPA lead generated.

Well, it works a bit differently these days. Affiliates compile a mobile webview app (in the core there is a web browser), and the app sends the user directly into casino. You only purchase traffic via Facebook Ads or Google Ads. That is the way most affiliates do.

Vitaly: How did you get into it?

Sergey Ovseenko: Learned a lot at first. About the offers, traffic sources, affiliate networks, niches and verticals of this business and so on. As soon as I had some expertise in iOS app development, one day I recognized that providing my own apps as the ready-made service to other affiliates could be quite prospective.

The vivid obstacle is that Facebook and Google strictly forbid any gambling or betting links (especially for ads). That is why one cannot promote websites with prohibited content. Promoting apps is quite the other story, as the Facebook review system cannot track casino links in the app.

Nikita: How to pass the revision then?

Sergey Ovseenko: Well, there are tricks! You are to display different contents to a final user and to a reviewer. You are to hide the casino within the app. The common technique was to hide the casino under the “Terms of Use” page (or privacy policy page, or whatever-policy page). After your app is released you could just switch the webview page to a casino website.

Nikita: How about the app itself?

Sergey Ovseenko: Social Casino which is just a simulation of real money gambling is totally compliant. 

About Apple Search

Nikita: You do ASO, how do you boost rankings?

Sergey Ovseenko: For half a year, I’d been trying to bring apps to the top rank with the help of incentivized traffic only. I just used incentive traffic services. Some low quality installs with a key request “Vulkan Casino” (they scroll to the hundredth place, download your application), thus AppStore thinks: “Oh, this app seems to be relevant.” The next day, if you have a sufficient volume – you are the first

One day I discovered that I was buying out almost every incentivized app install but my apps were not ranked as top-1. Ok, how did other people reach the first spot?

They do it with the help of bots. A key request is submitted quite the same way, the application is downloaded then, but not by live user rather than by an emulated one. Bots are able to provide competitive volumes of app installs. That’s  

It is very difficult to find this bot traffic in open sources. We began to dig, assembled a team, and in about six months we unearthed this story. Now we have our own bot farm, we pour it onto our applications ourselves, bring them to the top.

Vitaly Davydov: So you implemented an in-house ASO click farm, didn’t you?

Sergey Ovseenko: Definitely.

Nikita Maidanov: Is Apple OK about it? They probably change their algos from time to time? You need to adapt.

Sergei Ovseenko: Some crap occasionally happens. Yes, you have to slightly change the schemes, IPs, devices, IDs and so on. We have to find working solutions every few months.

About Popunder and Push Traffic

Nikita Maidanov:: What are the volumes to push an app to the top rank?

Sergei Ovseenko: Depending on a keyword and the region (I basically promote US keywords, as we have subscription-type apps only) an app may require 7-8k of incentivized installs.

Nikita: Daily?

Sergei Ovseenko: Sure, that’s why you will never reach the reasonable amount of installs without bots. Incentivized traffic platforms cannot allow such capacities. For instance, their maximum amount is 10k installs. It’s not enough, as you need 10k per every keyword.

Nikita: It could be rather expensive.

Sergei Ovseenko: Much more expensive than the bots.

VPN Client Apps

Vitaly: You ended up with gambling traffic and affiliate marketing. What was next?

Sergei Ovseenko: I’ve made some good starting funds on it. But to be honest I never considered this to be a long-term strategy. High-quality apps were prospective. Me and my team switched to that vertical. 

Nikita: How did you start?

Sergei Ovseenko: We decided to develop VPN client apps. 

Nikita: Why?

Sergei Ovseenko: VPN apps are quite popular among affiliate marketers. Lots of them monetize traffic with CPA-offers of that type. The cost of traffic matters, not the app itself.

Nikita: Are there any hints of how to promote VPN offers?

Sergei Ovseenko: Popunder traffic first of all. It is not popular these days but works perfectly for VPN client apps. The other source is the so-called calendar-traffic. Imagine that your device occasionally receives a calendar push notification warning you: “Your device is infected. To clean out the virus, install the ad blocker VPN tool”. Quite effective, I would say. But it doesn’t work like this any longer as soon as Apple fixed it with recent iOS updates.

Nikita: Can you give advice about new traffic sources to promote apps?

Sergei Ovseenko: Well, nothing has changed for at least a year.

Nikita: Tell us more about your experiments with VPN client apps. How many apps did you release? One solid project or a bundle of small ones cloning each other?

Sergei Ovseenko: Our first attempt counted three different units?

Nikita: Different ones? Why so?

Sergei Ovseenko: First of all we wanted any risks to be diversified, as the niche is a slippery road indeed. I mean, there are lots of blocked apps and non-paid bills by Apple. Thus high profit and vast variety are essential to survive

Nikita: Why does Apple suspend VPN apps?

Sergei Ovseenko: First and foremost because of subscription prices. To make it worth risking you set up a year subscription with a price of about $ 130. Customers are not happy in fact. It leads to multiple refunds. Plenty of refunding events usually cause the suspension of your app. The second is aggressive promotion. You put in practice some haunting pre-landers while promoting an app. For example, you run adult traffic with the promo and a pre-lander claiming: “Big Brother is watching you. Install a VPN client and they will never know websites you surf”. 

Vitaly: What is a pre-lander? A page you show before the App Store?

Sergei Ovseenko: Yes, a pre-landing website which is shown before the App Store page. 

Nikita: How does Apple track pre-landing pages?

Sergei Ovseenko: Nobody knows, actually. But all these tricks are an object to be blocked. Apple ceases your app and suspends account’s balance either. 

Nikita: Funds remain frozen or what?

Sergei Ovseenko: Funds are never paid. I know lots of marketers with millions of dollars unpaid by Apple.

Nikita: What Apple’s doing with arrested funds?

Sergei Ovseenko: They claim that all subscriptions are fully refunded. I personally subscribe to my apps, by the way. And have never seen any returns after the apps are blocked.

Vitaly: You released an app. Then you sent plenty of traffic to promote it. Something went wrong and every dollar on it cesed. What should one do in such a case?

Sergei Ovseenko: You should appeal. Appeals must be sent in a correct manner. We’ve got a huge experience appealing every banned app. I suppose our rate of payment is 50%.

Nikita: Any hints on how to appeal? What do you state in a ticket?

Sergei Ovseenko: Approach differs from time to time. At the beginning, Apple never says: why the app was blocked. You are said that the app does not follow the guidelines multiple times and so on. Quite a standard response from their support. Thus, you are to send a correct appeal to distinguish a definite reason for the ban. For instance, they say “Your subscription price is unreasonably high”. If things go this way, just respond that the developer’s expense is either high, the price is common to other VPN client apps and so on in this manner. 

The second popular reason is misleading ads. Your account may be blocked for misleading pre-landers and ads. If things go that way, you can send them a fake agreement with a third-party ad agency and claim that you are not responsible for low quality ads. Just pin the blame to a non-existing person and your money. Sometimes it work.

First, reveal the exact reason. Second, send a correct appeal. That’s it. What is more, there also exist Platform to business regulator appeals, European antitrust appeals and other legal methods to claim money from Apple.  

Vitaly: It sounds like a full time job for a legal department. 

Sergei Ovseenko: Legal team is a must have if you scale such an approach. But we also test other manners of appeals. From time to time we send tickets like “Hey, Apple, I am a keen father developer of five cute children. We are doomed if you don’t pay. I am about to give it up.” We even tested suicide ticket-notes once. Sometimes it works, sometimes it doesn’t.

Vitaly: Okay, if it doesn’t. What’s next?

Sergei Ovseenko: It depends on the amount of funds frozen. It’s worth fighting for payments of at least $30-50k. Otherwise you can be wasting your time.  

About Niches and Verticals

Vitaly: Let us discuss other niches your team works with.

Sergei Ovseenko: We test many verticals these days. Depending on popular search requests we develop different useful utilities to cover specific needs of customers. There are lots of requests for apps that backup contacts and content, for smartphone cleaners, for apps that transfer data between the devices and so on. We develop apps that solve highly specific tasks. Then we boost the app to a first ASO rank.

Vitaly: What are your favourite traffic sources to promote such kinds of apps?

Sergei Ovseenko: Top-3 is Apple Search Ads of course. Top-2 is popunder and push traffic. Organic boost is the champion.

Nikita: You said the team creates apps solving specific tasks. How do you research the ideas for? How it works?

Sergei Ovseenko: First and foremost we track every top-chart of utilities, new popular apps, new niches and verticals, top apps of the week/month. If a new app (which was released a few months ago) is on top of the list, we are here to compete. We are always challenging new niches as they are less competitive for organic traffic. Long living apps are difficult to beat from their ranks. For example, beating an app that holds its position for 7 years, is totally impossible. 

The second approach is keyword exploring. There are popular search keywords that are not yet monetized enough. Or even not monetized at all. We discovered the apps with approximately 300 000 audience and AdMob monetization. Thus we can be competitive there with a subscription app. Subscription model is more profitable, it allows to take the spot in ASA auction and gain every paid tap of traffic. 

Nikita: Speaking of keyword exploration, what tools does your team use?

Sergei Ovseenko: Our instruments are: Sensor Tower, ASOMobile, AppStore Spy, App Tweak.

Vitaly: What is ASOMobile?

Sergei Ovseenko: A tool to research keyword dynamics daily. There is also an ASOdesk, but it updates the spot not so often. We need to track the best options ASAP, that is why it’s essential to track the updates accurately. ASOMobile is doing it better.  

Nikita: Tell us about your team.

Sergei Ovseenko:  There are 45 employees. 20 of them are app developers, 5 of them are designers, 5 are media buyers and 5 app managers. Also we have a legal team and release managers. Release managers are responsible for developer accounts, app bundles, used devices, IP-addresses, antidetect services and so on.

Vitaly: How much revenue does your agency bring?

Sergei Ovseenko: Our best month was $ 1.5M of revenue. Due to constant bans from Apple we switched the strategy to more compliant apps, that is why the revenue doesn’t grow. But I’m done with those bans. We’d like to make our apps useful, with less refunds and better LTV. We are quite positive about the approach. Anyway, it is more perspective rather than appealing to Apple on a daily basis. 

Vitaly: How much do you spend on traffic?

Sergei Ovseenko: We spend $300-400k for ads each month.

Nikita: You have an in-house solution for ASO. Does that mean you spend $300k for ASA and pop traffic?

Sergei Ovseenko: ASO click farm does not work for free, to be honest. It has serious expenses whilst you pay for devices, IP-addresses and other consumables, staff salaries and so on. 

Nikita: What app do you consider profitable? How much profit does a successful app bring?

Sergei Ovseenko: Any profit per app is a success. it doesn’t actually matter how much. Profit is good. We scale the most profitable cases. Of course it is more interesting to scale the apps that bring more than $ 10k of profit monthly. Our best app made $ 450k in 3 weeks.

Steps into the Future

Vitaly: Please tell us about your next steps. How do you see the future of your company? As it was said your team switched the strategy to more useful projects with less aggressive monetization. Okay, will you be focusing on a certain vertical or a product?

Sergei Ovseenko: The team is not limited to one niche and we do not want to narrow our approach in the future. I only decided to pay more attention to quality. Hopefully, there are going to be less restrictions for Apple and Google, less refunded subscriptions and more rebilled events. 

Vitaly: Can you share any insights? Let us imagine, I’m going to make my first app. What niche should I start with and why?

Sergei Ovseenko: First I’d research the keywords and certain issues of customers. The app should solve the concrete problem of a user. The more specific – the better. High quality apps, solving particular issues are not quickly deleted by the customers. And they are less competitive either.

Vitaly: How can one recognize a non-competitive vertical?

Sergei Ovseenko: Every pain needs a relief. You can just see what people search for, while exploring the keywords. If there are no apps that solve the problem, that can be your gold mine. We take lots of ideas from Google Play. Then compare it with AppStore solutions. For instance there is a popular Android app with a 5M audience and there are no similar apps in AppStore. It can be rather because of iOS specification, but also because the spot is not taken by anyone.

Vitaly: Tell us, how your average day is scheduled.

Sergei Ovseenko: Every morning I check the statistics of the apps. It’s indispensable. As soon as I wake up, I go and check statistics: installs count, revenue, keyword rankings, apps rankings – everything related to my apps. As the leader of a team I need to decide whether to increase the boost of an app, or to switch traffic, or to send keyword installs to another app. We always target top-1 ranking with every keyword, so strategy is very important. Then I talk to the team and solve daily issues and operational questions. After it’s done, I do my favourite – research the market.

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Nikita:  Can you give a hint to developers who are good with their apps but quite bad with making money?

Sergei Ovseenko: If you failed with media buying then try out organic promotion and ASO. Here every effort is paid back, but not as fast as with the paid traffic. You spend months to boost your app to a top rank. After it returns the investments, the app gives you pure profit.

Vitaly: An app can be in a super competitive category. Health & Fitness, for instance. What’s then?

Sergei Ovseenko: The only solution then is work on monetization, sales funnel, CR and A/B tests. Until these metrics are on ultra indexes your ROAS will not be competitive. 

Subscription Price Strategy

Nikita: How do you determine the subscription price for your apps?

Sergei Ovseenko: I always try to set up the maximum price. In most apps we put $ 10/week, $ 40/month, 130$/year. But multiple tests show it’s rather reasonable to set weekly and monthly subscriptions only. Our apps show best results with these options.

Vitaly: Weekly subscriptions are statistically equivalent to monthly ones. You only receive money faster. 

Sergei Ovseenko: The bad thing is Apple may warn that you charge users frequently. And may oblige you to reduce the price. It’s a  problem, by the way, as you must reduce the price not only for new paid users but for every paid user in your App. After recent policy updates, you are no longer able to differentiate billings. 

Nikita: You see the prospects in whitehat high-quality apps. What are your plans for it?

Sergei Ovseenko: We’ve been good at monetization for some time. Now it’s time to learn more about projects themselves. I used to care about the state of subscriptions. Now I care about activity retention within my apps.

Vitaly: It’s curious enough, as most apps begin with product analysis before any marketing and monetization. You practice reversible approaches.

Sergei Ovseenko: I was thinking of it many times. The fact is: There are plenty of solid apps with zero monetization whie there are also plenty of zero apps with solid monetization. 

Vitaly: Back to affiliate marketing. Speaking of those gambling, betting and other affiliate offers, will you recommend other developers to try? 

Sergei Ovseenko: For app developers, mobile subscriptions are definitely a more prospective and long term model. You can make your first funds on affiliate marketing. But you will never build a stable long term business on it. 

Vitaly: What do you think about subscriptions in general? How will the market change in the future? Should we be aware that Apple can occasionally modify subscriptions to a new monetization model?

Sergei Ovseenko: Statistics never lie. And it says that subscriptions grow from year to year. So it’s very slightly possible that something may occasionally change. Apple generates profit from every paid subscription in the App Store. They do make it harder for developers to comply with every guideline. But Apple is not going to kill this cash cow in recent years.