Ads API Profile: Nanigans’ Cost Per Action Service
Facebook’s performance advertising system does not offer the control or analytics features to allow larger, sophisticated ad buyers to take full advantage of its rich targeting options. Last fall, an ads API was released to a limited number of developers to allow them to build tools and services that facilitate better ad buying. One such service that helps developers acquire high quality users through ads is Nanigans.
Nanigans is a social advertising service which runs cost-per-install and cost-per-action campaigns through the Facebook Ads API. Clients set a desired CPA and per day budget, and Nanigans assumes the risk, experimenting with ad creative and targeting trying to attain the CPA with a CPC low enough to net the service a margin. Clients install pixels at various milestones of their product, such as at install, completing the app tutorial, or reaching level 3 of a game. They can then split their CPA to pay Nanigans different amounts when users complete these actions which signify probability of monetization. Unlike tools which clients use themselves, like Alchemy’s ad purchase and analytics tool we profiled, Nanigans clients set budgets and monitor through a dashboard while Nanigans does most of the work.
Nanigans is a 12-person company founded by Ric Calvillo and Claude Denton who are funded by angels and have advisors including PeerPong CEO Ro Choy. The company is half engineers, rounded out with ads operations managers who handle initiating and maintaining campaigns. Since its launch in late June, Nanigans has found 24 clients who spend an average of $2,000 a day, and are mostly game developers, along with some dating and e-commerce apps. They include many companies who make mid-size games with around 500,000 MAU, according to AppData such as Clicknation (Facebook games Superhero City and Age of Champions), and Jolt Online (Farmvillian, Gangsta Zombies and the off-platform game Legends of Zork). CEO Ric Calvillo says the service works best for these medium size games because targeting is less specific for huge games with very broad audiences.
Clients use Nanigans because they want to increase traffic from monetizable users. The two work together to set target demographics, a reasonable CPA and a budget large enough to attain them. If the client has existing analytics, Nanigans can use the data to help them with this decision, or the client can install pixels to determine their current CPA. For instance, a client could say they want 18+ males from the major English speaking countries and wants to pay a $1 CPA. They have the option of splitting this payment to Nanigans, such as paying 50 cents upon install, and $2.50 upon a user reaching level 3 of a game, which 1 in 5 users who install reach. Since some users take months to start paying, the company tracks early monetization predictors like reaching a certain level instead of all the transactions themselves. Therefore for every 5 installs, the client pays Nanigans (5 x .50c) + (1 x $2.50) = $5/5 users = $1 CPA. Clients can also pay upon a user sharing with their network or other in game actions, and even set different CPIs and splits by age or country. If Nanigans can’t achieve the CPA with the given budget within a day, they’ll try new creatives or targeting, but if they still fall short they may ask a client to raise their budget, permitting Nanigans to bid higher CPCs for ad space or run more ads. Nanigans will deliver the desired traffic, with campaigns which operate at a loss being offset by margins on successful ones. The company says they accept their small current profit margins because it is thinking long-term.
Once finances and metrics are agreed on, clients can give Nanigans creative elements like images or copy to integrate, or allow Nanigans’ creative team to develop all new creative, free of charge. Ads operation managers then select targeting parameters like age or city, use a keyword discovery engine and database to choose interest segments, and automatically combine them into thousands of permutations. The only limit on the number of ad sets in a campaign is the budget, as at least a dollar is needed to test each set.
Ads then begin to run, the system first testing a sample of the different demographics, then trying multiple creatives and keywords in demographics that perform well. Preliminarily, budgets are divided so 50% goes towards proven effective ads, and 50% towards experimenting with all the created ad sets to find these top performing permutations. A combination of automated AIs (such as “The Reaper” which kills bad ads) and the ads operation manager expand the budgets of the best ads, pause underperformers, and optimize CPC bids for profits. Utilizing performance data from the ads API and the installed pixels, campaigns typically undergo 5000 changes an hour, applied at 5-minute intervals for near real-time optimization for profit. Over time, managers rotate creative and add trending keywords to keep traffic high. Calvillo says that using their system, a good ads operations manager can run 6 big campaigns simultaneously, something impossible for a client-side employee to do using Facebook’s standard performance ads buying system.
While these tweaks are being done on the back end, clients can view limited analytics and make some changes including pausing campaigns from the client dashboard. Since Nanigans assumes the risk and manages the ads, clients can’t see data including CPC, Nanigans’ effective CPA, value per click, margins, and profits, which is available to Nanigans’ managers. If they could they might jump ship after Nanigans did the experimentation legwork. Instead they can monitor impressions, clicks, click through rate, actions, actions rate, and total spend, which they can slice by campaign, date, and other parameters. The “creatives” tab shows clients which images, headlines, and copy are currently active.
The core of the client analytics is the funnel. These reports integrate data from when the installed pixels fire (called events) to show how incoming clicks whittle down to purchases. These flash graphs reveal more detail upon mouse over, and let clients see during which steps like installation, tutorial, or sharing they lose the most users. For instance, if a developer see plenty of installs but a large drop off during the game tutorial, they know the tutorial might need simplification or a code bug might be causing the hemorrhage. These graphic reports are one of the most valuable parts of the Nanigans service.
Lastly, the “events” tab allows clients to see when their pixels fire to ensure they are functioning properly. Calvillo explained that since the pixels are self-serve so clients don’t have to wait for Nanigans or have them interact with the client’s code, a big pain point of the service has been improper installation. This tab lets them diagnose and correct errors without assistance from Nanigans.
Nanigans provides a solid solution for developers who want to focus on their apps or sites, not on managing ads. Rob Calvillo thinks ads API services are superior to tools for many developers because running the tools takes a lot of understanding. “It’s a new space, everyone is new and inexperienced.” He thinks hiring a company with around-the-clock ads managers and a dedicated creative team is efficient because these specialists “get better at their jobs over time.” Clients have apparently reported spending 3x as much on their own to get Nanigans’ results. “It’s a win/win” since Nanigans’ margin goes up as they help apps become more profitable.
Calvillo says he understands that Facebook’s limited rollout of the ads API is because there’s a limited amount of support they can offer. By releasing it to companies that provide services and tools instead of using the API for themselves they create middlemen who insulate Facebook from having to work with every advertiser directly. Until ad buyers have a better understanding of how to run CPA-minded campaigns themselves, Nanigans offers a resource-light solution to attracting more paying customers.