Ep 631: Cracking Profitable, Incremental Scale on Applovin with Pilothouse

0:00Before we jump into today's all killer, no filler episode, a quick word about who makes this show possible. The D2C podcast is brought to you by Pilothouse, the performance agency behind some of the fastest growing D2C brands in the world. Creative, media and customer journey all under one roof. Performance and brand without the tradeoff. Every Friday, we hand the mic to a Pilothouse operator to break down what's actually working in their space right now. Want a team that treats your growth like their own? That's Pilothouse. Head to Pilothouse.co and now on with the show.

0:30Jacob:App-loving is growing pretty quick. We're seeing a variety of results across our clients, but for the most part, they've been very strong. There is quite a large new audience to tap into. It's not just like, oh, only these three verticals will work. All verticals potentially can tap into an audience here because they're apps that their network consists of is just so wide. It's not just certain types of games. It's games that 20-year-olds are playing. It's puzzle games that 60-year-olds are playing.

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1:38No scroll, no skip, no little square buried in a feed. Just your brand in front of someone who's paying attention on the biggest screen in their house. Sign up today at ParamountAdsManager.com. Get your brand on TV's biggest shows by tomorrow. It's all killer, no filler. This is the DTC Podcast, and I'm here with Pilot House's head of meta, Jacob, who is here to give us a bit of a breakdown of his experience with the platform Applovin. Big fan of this platform, been following it for a while, got a few hesitations about it. I love that it was named after a super bad joke and that even though it tried to rename itself Axon, people were just like, no, that's not a thing.

2:19It's still going to be called Applovin. Can you just walk me through to start your sort of experience on the platform and give me a sense of how it's working compared to a platform like Meta today for some of our clients?

2:31Jacob:Yeah, I mean, on AppLovin, it's growing pretty quick. We're seeing a variety of results across our clients, but for the most part, they've been very strong. You know, a lot of the instances, it's very similar to what we're seeing on Meta in terms of CPA, return on ad spend, even things like impression costs and all that. And it's an interesting platform, right? It's a little different than your standard social platform like Pinterest or Meta or TikTok. It's, you know, if you've played a mobile game, if you've ordered delivery, if you're browsing apps to kill time, which pretty much everyone is these days, is you've probably interacted with ads that have been built on AppLovin.

3:12Jacob:And they've recently opened up to the public. Historically, the past two years, it's been more of like an invite-only, kind of exclusive platform. They're sort of testing the waters with certain industries, verticals, but they've just recently opened up to the general public. So we're getting a lot of requests from the clients we manage. We have a service built out, and yeah, it's growing fairly quick. It's an exciting platform, honestly, and excited to get into it a bit more. It had really high minimums before, and those are now down now. Are there minimums on the platform now? No minimums. They sort of recommend around$250 a day minimum just to get the data that you need.

3:55Jacob:But they have some incentives and things like that if you are spending a little quicker out the gate. And from what we've seen, it's worth putting at least a few hundred in a day to get your initial data. And if you look at the platform's growth, it definitely tells a good story. You compiled some stats for me here about how quickly the platform has grown, how big it's getting so quick. It's also, I came across the fact that they sort of have like, they sold their app business actually in 2025. So that's like the company itself is all in on this e-commerce engine, which I think is a vote of confidence for sure.

4:32What do you have to say about their growth, I guess?

4:34Jacob:Yeah, I mean, they've grown about 60 % year over year. They're doing like almost$2 billion in revenue in the first quarter of this year. So they're a massive company. They've kind of been like a secret engine under the hood that a lot of people aren't aware of. They just obviously you're aware of ads you're getting on mobile apps. But for the most part, that's coming through app loving. 50 % growth. Yeah, tons of money. Their margin is also strong. So they're quite healthy. They're actually publicly traded on the NASDAQ. And you'll see their cost per share is quite high. So they have a large market cap for sure.

5:13Walk me through an example without giving me the brand necessarily of a client who it's really, really worked for maybe. Walk me through the process of – because I'm always interested in – I've heard stories about brands being able to come out of the gate and spend at a level that you could potentially spend on meta, which is kind of unheard of in this world. So maybe walk me through a really best case example of how it worked and how long it took to get to scale.

5:39Jacob:Yeah, 100%. In terms of best case, brands that have sort of a unique product that catches your attention obviously is always good. But something in that$30 to$150 range would kind of be the magical range based on what we've seen. It's not the best platform for$500 products,$1 ,000 products. A little more consideration there. And when people are browsing on their mobile, they're in more of an act now. If you're playing a game and an ad interrupts you, you're going to be a little frustrated. If it's a$1 ,000 product, your consideration is likely going to be very low unless it's something that you've been thinking about for a while.

6:19Jacob:So we've seen those products in that kind of$50 range, honestly, come out the strongest. We have like a health product that essentially you hook up to yourself and it helps with your muscle relaxation, things like that. Very benefit oriented in the sense of, yeah, people that are maybe active, people that are, you know, out running, whatever that is. We put that onto AppLovin. We figured the fit is good once they're kind of home relaxing. Maybe that's when they're sore, right? After their activity. giving them something benefit oriented that is perfectly aligned there. So we've gone in, we developed creative, mostly video creative with a bit longer length, like don't rush the content.

7:10Jacob:The 15 to 60 second ads for the most part are unskippable. So you do want a little bit more of a longer video. It allows you to build that narrative, tell the viewer what it is, why it solves a problem and why they should care. We developed a good bank of videos. Some of that we already had from Meta, but we've also developed some specifically for AppLovin. Really hooks the viewer. You know, here's the product. Are you sore? Are you, you know, do you need this type of muscle exercise? We got the perfect product for you. Gets right to the pain point. Then there's the end card. So you actually have the ad.

7:44Jacob:They click that. It translates into an end card, which is like an HTML file. it's like animated it's kind of like the call to action that comes after the ad and it will you know have an offer potentially and they click that end card and that's like brings them right to the product page so in a way the end card sort of acts like a middle step and it allows you to sort of you have your video educating all these things they click it the end card is more action oriented by the time they click through that they're ready to go and there's animation on there and everything. And that's another difference of, you know, meta or Instagram, there's no, no end cards.

8:21Jacob:It's add to landing page. This is add to end card to landing page. Or it's a product page directly. You don't, in that case, your landing page might be a bit more of the end card and you're taking them to a more purchase ready page. Yeah. Distinct CTAs on that end card, social proof. And there's sometimes, you know, if let's just say you have a basketball product or something, the end card will have like the animation of the basketballs firing into the hoop, those kinds of, you know, five second loops that you see things like that to capture, you know, that attention. So yeah, they clicked through that.

8:55Jacob:And we sort of went wide with those launch them all. I think we were doing like 500 a day right out the gate. Campaign setup was fairly simple. We just had a couple campaigns set up for the most part, broad targeting, let the algorithm do its work. And then as we started dialed in on, okay, these types of videos are obviously bringing in better metrics. These types of end cards are bringing in better metrics. Let's get in there. Let's add some variety. Yeah, we scaled up basically a one to two month timeline. We turned it around and they were profitable like in month two. So pretty quick. Learnings were quick.

9:33Jacob:Nice thing about AppLovin is the actual campaign management setup isn't super complex, but it does require a lot of love. It requires a lot of creative. It requires a lot of, yeah, love. There's bidding and you can do all these, you know, unique pieces of it. But what about exclusions? I'm always interested in a platform like this, where you might have like a lot of kids, you know, I just saw a tweet from Shireen Obert actually talking about how she watches her kids in real time, clicking the ads to try to get out of them quicker when, uh, when they're on there, are there any, are like, I, you said broad targeting, are there any valuable exclusions or do they even allow exclusions or do you just have to trust the algo?

10:15Yeah, no, you can exclude.

10:16Jacob:Um, a lot of the time your products, you know, if you're doing like an alcohol product or something, you're going to have to exclude under 21. So you can do age exclusions. You can also just do audience suppression. Like if you have lists that you don't want to hit for whatever reason, um, you can load those existing customers, for instance, if you really want to prove that it's incremental or a new customer acquisition channel. Yep. A hundred percent. Yeah. Your existing customers. Um, and then yeah, the filtering and content controls based on your product. Uh, you do have in terms of kids content, app Levin will like automatically not show ads for people they know are under 13 years old, but that doesn't address the issue that you said, where a kid maybe is on their mom's phone or whatever.

10:58Jacob:So that is just part of it naturally. But yeah, for the most part, you can exclude in their policies what want you to exclude a lot of the time as well. And then when it comes to things like incrementality, people are always looking for places to generate new customers. Are you pretty confident that like, when I think about it, I think this whole world of people on apps is maybe different than people on their metaphone. You probably are reaching a new audiences. Is the data kind of bearing that out? Yeah, there's some overlap, but for the most part, there is quite a large new audience to tap into.

11:32And it's not just like, oh, only these three verticals will work.

11:36Jacob:All verticals potentially can tap into an audience here because their apps that their network consists of is just so wide, right? It's not just certain types of games. It's games that 20-year-olds are playing. It's games like puzzle games that 60-year-olds are playing. So it's really, really wide. And yeah, definitely can tap into new audiences. We still would suggest using a MTA, like triple whale or something like that, really dial into that, you know, what is my actual new customer CPA, because just like any ad platform, it's going to tell you one thing and the actual benefit might be different.

12:14But yeah,

12:15Jacob:we're always using triple whale, Northbeam, you know, MTAs like that to basically verify before we scale. But yeah, I mean, right out the gate, I'd say maybe 60, 70 % of our brands are seeing similar new customer CPAs to some of their other platforms, which is great to see. Yeah, always great when a new contender emerges. I come from the mobile world. I had a startup back in 2013 called Tap for Tap, and it was an exchange. It was like app loving in the very early days. Should have stuck with it maybe. But back then, there was a lot of, and I think there is some SEC drama right now, potentially about attribution, not theft, but attribution spamming or like when you get when you have as many apps on as many devices as a platform like this has, there is a worry that you're gonna, you know, that this platform might take credit for purchases that you're paying for elsewhere on Meta or Google.

13:13I guess, obviously, the MTA platform we're doing helps us de-dupe that. But maybe speak a little bit to how confident you are that that's not happening?

13:21Jacob:Fairly confident. It definitely is happening, but that's why you need that MTA. I mean, for myself, example, I'm on Instagram, then I'm maybe on Reddit or some mobile game. On Instagram, I see an ad for the product. Later on my game, I see that same ad. Apple Oven has their own delivery system and all these signals. I don't know, but they can potentially see what you're searching on the web and all these things that Meta can see as well. And there's going to be recognized trends across apps. So it's like, yeah, Jacob likes basketball and it's going to show me basketball ads. So the chance I see similar products across Meta's platform, my other app platforms is high.

14:13Jacob:Maybe I'm only interacting on Meta. applovin takes a view attribution because I viewed that same ad on on their platform but I purchased through meta so that's always going to be a an issue but if you're dialing into triple whale it's only going to fire that one purchase and attribute it to one platform whereas not every platform is gonna you know just fire half a purchase they're always going to fire a full purchase so I'm very confident it's driving new value because we're seeing that in our MTAs on specifically new customer CPA, not just CPA, new customer CPA. Yeah. In some cases it's, it isn't nearly as high as the platform is showing.

14:56Jacob:So you do need to, to verify that. And then what can you say about scale? Like when I, when I think it was Sean Frank, I heard, this was probably two years ago now, but he was just talking about, he was sort of blown away at the scale compared to something like Meta. You've been working with Meta for a long, long time now. What do you see in terms of the scalability of the platform versus something like Meta? Yeah, I feel like it's not quite as matured out as, you know, Meta, like, as you scale in general, your efficiency is probably going to drop a little bit. But if you do follow their best practices, we work very close with a couple app loving reps who actually like, give us additional insights as we're scaling up.

15:37Jacob:You know, you might see some some efficiencies lost here. So you should actually tap into this avenue things like that that we're developing a you know sop around so the scalability is definitely there it does take a little bit of testing it's not just a proven out system where there's only one way to go about it the key really is to be feeding lots of videos you can't just run the same five videos for a year it needs to have a lot of variety people get pretty annoyed when they see that same unskippable 60 second video five times in a day so that's kind of a key and you do want to shorten the funnel you don't want to make like eight different pages to click through you want to make it as simple as possible have that end card really engage them and because of this less roadblocks lots of video lots of variety you can scale up and you can can hit people multiple times before they purchase so yeah i'd say like one interesting thing with app loving is about 80 of the purchases do occur in like the first hour of a user clicking an ad.

16:43Jacob:But that other 20 % that does end up purchasing, it's always through another video. Like it's not through the same video. You're hitting them with maybe like a slightly different hooks, different messaging. So yeah, that kind of time to purchase is something that's interesting to validate through Triple Oil as well, the view through metrics and everything like that. And then in terms of creative volume, are we talking one or two new creatives, I guess it depends on scale, obviously, as you say, I think it's a good, good to think in the customer's head about having to go through these, these creatives, having them be content locked, wanting to make sure you're showing diverse aspects of the product and different looks at it.

17:23Talk to me, I guess, a little bit about what creative volume looks like for one of the brands that we've achieved some decent scale on.

17:28Jacob:Yeah. I mean, I would say like to start with, if you're spending, you know, 500 bucks a day type thing, you're going to want at least like 10 videos in there. This is based if you're just going around one product, which I would recommend at the start, focus on like a hero product. Don't try to promote your whole catalog right out the gate, something in that$50 range potentially. And then yeah, you're, you are adding quite a bit. Ideally it's, you know, again, if you're spending 500, maybe to a thousand a day, you're looking up to about 10 to 20 per week, I would say videos. They don't necessarily have to be completely new concepts, but they might be similar videos with different hooks at the start.

18:08Jacob:They might have, you know, different music, things like that. But for the most part, approach it similar to meta. You do want a lot of variety on different buckets of, you know, types of formats of creative and hooks. You don't just want like the same video a hundred times, right? So I would say, yeah, if you're launching, you know, maybe about 10 at the start per week, And then as you scale up, it might get closer to 20, 30 per week. And like I said, you know, mostly, mostly video. So you can kind of define quite a bit of a focus in there and yeah, you just want to really want to feed it. You know, once you get to 5 ,000 a day, you might be needing 25, 30 new videos a week.

18:49Once you get to 50 ,000 a day, which is quite a bit, you're going to need a whole system

18:54Jacob:built around that for, you know, potentially like a hundred videos every week or two. But yeah, that 10 to 20 range per week is a good starting point and very feasible for most brands. You've got a few other points here on the creative. So maximizing the video length, take the time that you have. You do want to try some 15 second ones, but you do want to try some 60 second ones as well. You want to hook the viewer, grab that attention immediately. Obviously, I guess that's similar. But then you also say add captions. I think that makes a ton of sense because of how many players have their audio muted.

19:26Jacob:Yeah, I think it's like honestly more than more than 50%. I'd have to double check that. But captions are are needed, I would say. And even better if you can make them like engaging captions, not just your standard like white subtitles, but actually have like the unique fonts and colors, maybe bolding certain buzzwords and things like that to really, really add some engagement through the captions as well. And then the end cards, are you uploading those wholly designed on your end or using templates that AppLovin provides? Both. We typically will start with our own full uploads. We develop the HTML end card, the animation, but they do have built-in templates as well to help with that.

20:08Jacob:And you can sort of upload images and then add certain animations and CTAs to it. They're nice and user-friendly there. And you will want to test quite a few end cards. So it just depends if you want full control for a full custom solution or you want to use their templates, which as you're starting, honestly, both are good solutions. But as you scale up and up, you probably are going to want to go more the custom route for sure. Makes sense. And as you mentioned, like if you're on a basketball app, you can have funnel congruency by having basketball be featured on the end card. Yeah, and you can do some unique transitions and things as they click that into the unique product page, which maybe has a similar animation or just similar imagery on it.

20:50Jacob:I think in some cases, you can even almost have it like a game within a game. The end card might have a quick game on it. Not that you can interact necessarily with the game, but if you're doing a puzzle game and you're selling a puzzle product, the end card might have like a like interactive like oh try to match the two things and like things will pop up and you're trying to match them um because the longer you stay on the the end card as well your your engagement scores like go up as well across app loving and gives you more priority and then just a couple quick notes on the campaign setup and the bidding you have a note here about how essential the learning phase is and once you get things set up at your budget you know you the 10 creatives you mentioned that you might need, you really don't want to touch it for the first seven days.

21:35Jacob:Yeah, set it up, go through the step-by-step on the setup. There's lots of little settings you're going to want to validate, make sure they align with your goals. Yeah, once it's set up and you have your 10, 20 videos live, make sure tracking's working, confirm the tracking. There's an app loving pixel that you place across Shopify or your site. Very simple to install and And they'll even send instructions to support with that as well as we can obviously support with that. And then, yeah, once you confirm, okay, tracking's working, things are set up, got my UTMs, all this thing is good to go. Just leave it for a week, maybe even two weeks.