Shamanth Rao: the onboarding has
done a very good job of qualifying
and priming you to convert and you
are less price sensitive than lot of
teams and founders sometimes assume.
I would say the single most
impactful change that I've seen for
the vast majority of subscription
apps that I worked with is.
You get almost no
monetization signals early on.
If you have a purchase, you get the
first time purchase, but you have no
idea how long the LTV CO is going to be.
Jacob: Hey, shaman, great
to have you on the podcast.
So we were talking earlier about how,
you know, most marketers transitioning
from these free to play games and that
kind of world to subscription apps
still think in terms of ROAS and these
immediate payback periods or need
to get your money back immediately.
But is there a, a mindset shift that
they need to make when maybe LTV
happens over months or, or these longer
period of times with subscription apps?
Shamanth Rao: I actually have a lot of
firsthand perspective because I've seen
both those worlds over the last decade
or so that I've been actually working.
I think the most fundamental difference
I see is really about LTV and economics
and how they're structured really.
And you know, oh, just as background,
I actually worked with games for
most of my time in-house was a
part of three exits, know, managed
multiple millions in ad ad spend.
Now Rocketship Edge Care, I'm doing a
lot of work with subscription apps and so
I've seen both those worlds, if you will.
And really what I've noticed is,
you know, in in games there's
effectively no ceiling to monetization.
And I remember the first game I
worked on, this was in 2012 or
2013, this was like a bingo game.
I was managing close to 2 million a month,
and that seemed insane at the time, but
that was the early days of mobile things
were crazy because it was not saturated.
The market was not saturated, know?
And the players were ready to
spend, and I noticed something
really crazy at the time.
A very, very small percentage of.
Players were spending thousands of
dollars every week, and these were like
middle-aged Americans playing bingo.
And there's not even like a
fun, sexy game, if you will.
But they were spending thousands
of thousands of week even.
You know, there was that power law and I'd
read about that in books and just to see
this in real life was completely crazy.
Where you had a very, very tiny
percentage of whales who were generating
a massive amount of revenue and you
know, to what we are talking about,
That's very, very different from
subscription apps because there is a
ceiling to how much you can monetize.
You know, if a.
Person wanted to pay a subscription
app a lot of money because they're
getting a lot of utility out of it.
just no way they could do it.
Of course, there are evolving models
where you could try that, but for the
vast majority of subscription apps,
you just couldn't do it, you know?
Oh.
So I think that's the fundamental
difference where with games,
there's literally uncapped,
monetization and subscription apps.
There isn't.
And if you are looking at from a, all of
this, from a user acquisition perspective.
In games, you get that signal
literally in the first 24 hours, which
means somebody that's gonna spend
$10,000 in the first month, they will
spend 500 of that in the first day.
And you know that, that shows up
in your acquisition dashboards,
that shows up as your D zero roas,
D one roas, it's very, very clear.
And with subscription apps, and
I'm sure you know and you're aware.
They could start a trial on day zero,
or they could even make a purchase
on Day Zero if there is no trial.
But the distribution is not anywhere
the same as the games where.
You get almost no
monetization signals early on.
If you have a purchase, you get the
first time purchase, but you have no
idea how long the LTV CO is going to be.
And so, you know, in summary, you
know, gaming has high ceilings, early
signals, subscription, lower ceilings,
delayed signals, and that makes all
the difference in the business in the
LTVs and the economics of both genres.
Jacob: Yeah, and, and so.
When you're trying to figure out how to
kind of manage your, your acquisition
campaigns, do you think that, um,
you need to be bidding on, or, or,
um, estimating your acquisition cost,
customer acquisition cost on, on longer
time periods where it's maybe not, you
know, a media payback in the first seven,
first 30 days on, on that first trial
conversion, but it's kind of a longer
three months, six months, or, or do
the kind of top performance marketers
still aim for that immediate payback?
Shamanth Rao: Yes and no.
I think that can be a function of.
company's cashflow, if you will.
you know, because there are a lot of
games that are cashflow constrained,
that they want immediate payback,
and, you know, because otherwise you
could get paid back in 12 months.
Uh, but you, you probably
don't have the cashflow to wait
12 months to get paid back.
Now, uh, I, I actually remember.
Very interesting anecdote
from my gaming days.
I worked for Words With Friends,
uh, which is the hit Scrabble game.
I'm pretty sure they're still around and.
I noticed their six
month LTV was terrible.
The three month LTV waster,
LTV was terrible because
they were only ad monetized.
There was very few IEPs.
It was only, I think to remove ads
and there was nothing else, right?
Which, which meant that
early LTV was really bad.
But the 24 month LTV.
Amazing.
That's because they had such amazing
long-term retention and they're
owned by a public company that could
invest in a 24 month payback period.
Right?
So I don't think there's any kind
of generalized way of saying, look,
you need to look at longer payback
periods or shorter ones, even for
subscription apps that we work with.
Sometimes you can only afford to
have a three month payback period,
or six months, or even like just
the first purchase, if you will.
Right.
And, uh, and we can talk about some
of those situations afterwards,
uh, hopefully in this conversation.
But, uh, I would say that timeframes
for payback, I don't think matter
as matter as much based on whether
you're gaming or non-gaming.
Jacob: Yeah.
Yeah.
And so yeah, for specifically
subscription apps.
Even there's not, um, there's
not the right payback period.
It's more based on your business,
Shamanth Rao: You
Jacob: based on your cash flow that, you
know, we would all love to be able to
bid on, uh, uh, acquire new users based
on, you know, long payback periods.
But, but a lot of subscription
apps, you know, smaller companies,
you need faster cash flow.
And I think it's, there's
probably also advantages.
Um, maybe correct me if I'm wrong, there's
advantages that if you're, um, have a
faster feedback loop, you know, if your
ads are performing, if you wait too long,
uh, the monetization could change, right?
Where if you, if you're waiting three
months, six months to actually, uh, assess
that something could have changed and your
predictions are, are no longer correct.
Shamanth Rao: a hundred percent.
And I think that's definitely a
challenge with subscription apps
where have to wait at least.
A month or two to understand what
the downstream monetization is.
And if you, your plans skew heavily
towards monthly or weekly, is not enough.
One to two months is not enough to say
what your long-term LTV is going to be.
That's really challenging.
And again, you contrast that with games
where you don't have the monthly cadence,
if you will, monthly or weekly cadence.
So the, you have more of a
daily cadence of purchases, so
within seven to 14 days you.
Have enough of an idea of users are
monetizing to understand what your
D 365 roas LTV is gonna be, with.
Whereas with subscriptions, it's just
hard to make even an estimate based
on a few weeks or months of data.
Jacob: Yeah.
Yeah.
And, and you were, um, you, you had
mentioned previously that, uh, in
another conversation or something I was
reading that, that the LTV cap ratios
can be misleading for subscription apps.
Um, I think, I think that's
kind of touched upon where,
what we're talking about, right?
Is that right?
How, how do you think about that?
Shamanth Rao: I think a lot of, I, I like
to say LTV is a made up number, because.
It doesn't make sense
without context, you know?
Or you, an ideal world, you would say.
My 12 month LTV iOS in the US on
Facebook is so much You need all of those
qualifiers for the word LTV to make sense.
Um, and without that context, it's
really meaningless, I would say.
Right?
And the other reason why I
think it's a made up number is.
It's theoretical, if you will.
know, because, uh, as we were just
talking about it, the only way to make LTV
actionable is in context of your cashflow.
say, look, can I wait so much so
for so much time to get paid back?
Yes or no?
That's the way LTV to be actionable
and without that context and nuance.
It can be a really misleading metric.
And uh, I've seen basically investor pitch
decks that founders have shared, which is
like, oh, our LTV to C ratio is amazing.
It is X, Y, Z.
And I'm like, you need to
define what LTV means, you know?
Oh yeah.
So I, the short version and yeah.
Jacob: Yeah, we should probably
just stop using LTV because.
If we have to put all these qualifiers
on it, you know, if you think it stands
for lifetime value, but then if we say
it's 12 month LTV, 12 month lifetime
value doesn't even make sense anymore.
And so we should probably just
get rid of the, the LTV term.
In general.
It's an easy, understandable term,
but it's not really, uh, what,
what we're, what we're looking for.
Shamanth Rao: Yeah.
Jacob: And, and so what, what, um.
What do you think people
should, should aim for instead?
Just those kind of shorter terms,
like, you know, three month returns,
three month return on ad spend or,
or uh, you know, payback period.
What do you think is a better,
uh, kind of substitute?
Shamanth Rao: Uh, you know, I, I wouldn't
say ditch the word LTV, I would just say
use it with care if you will, uh, and
Jacob: Yeah.
Shamanth Rao: it with payback period
like you suggested, You, you would
say, look, my three month LTV is so
much, and therefore my CAC needs to be.
on trials, on purchases, on on first
time subscribers me to be profitable.
I think if we have that nuance, it's a
clearer picture for contextualizing LTV.
So I wouldn't necessarily ditch the word
LTV, but I would just have all of those
to make sure it actually makes sense.
Jacob: It's time.
Bounded a specific definition.
We actually understand
what we're talking about.
How it, yeah.
How it relates.
Um, yeah.
So that, that, that makes sense.
So we're, you know, we're talking
about, uh, a kind of revenue coming in.
Um, I think that, you know, we can
launch all these paywall tasks.
We can, uh, convert.
Users better with different
ads and creative, but, um,
people pay for your app.
The price that you're charging,
uh, for your app, um, makes
a pretty big difference.
Uh, have you seen any, um, you know,
impactful results or impactful, uh,
changes from a pricing change that
that can really, uh, uh, change growth?
Shamanth Rao: Massively because price
is easily the single most important
thing that governs your unity.
Economics, uh, and, uh, you know,
uh, because that can make or break
whether your app is profitable and
growing or just unable to hit the
cap targets that you need to hit.
And, uh, I would say the single most
impactful change that I've seen is that
I've seen, uh, for the vast majority of
subscription apps that I worked with is.
To increase the share of
users who offer annual plans.
And this is obviously purely from
a user acquisition perspective.
Uh, and obviously this is because
once someone's converting to an
annual plan, you as the developer or
a marketer are not really worrying
about the month to month retention.
were just talking about like, look.
One month or two months after a
user installs, you have no idea
what the LTV is, if you are,
if they're on a monthly plan.
But if they're on an, an annual plan
and you're getting 70, $80 upfront,
your one year LTV is taken care of,
you're not worried about retention.
Yes, you might still offer a
terrible product experience.
It might be, you know, you
might get terrible reviews.
always that risk.
Uh.
But just from a user acquisition,
unity economics perspective, that's
one less thing for you to worry about.
Uh, now obviously it's not like you flip
a switch and suddenly everyone picks anw.
You still have to experiment.
You figure out the right onboarding,
you have to figure out the right
presentation in the paywall, and
I'm sure you a lot more expertise
than I do in, uh, a lot of this.
Uh.
But again, I, I would say as a developer,
as a founder, my suggestion would be,
there's one thing you could focus on, it
would be to get more users on Anil plans.
And, uh, you know, and as a corollary
to that, I would also look at the
actual pricing of the Anil plan.
And, uh, I dunno what your experience
has been Jacob, but, uh, in the vast
majority of cases that I have seen.
Increasing annual plan prices
has led to higher revenue.
Uh, I, my hypothesis is if you're
buying an annual, you are already
pre-sold your high intent.
And the onboarding has done
a very good job of qualifying
and priming you to convert.
and you are less price sensitive than lot
of teams and founders sometimes assume.
So my encouragement to literally everyone,
uh, we work with is to see how far you
can push the annual, annual plan pricing.
Uh, and, and of course there's
also the option to test a lifetime
plan, which I know some marketers,
some developers have done, which is
also an option to look at as well.
And obviously all of this presupposes
that the product is actually
offering real sustained utility.
It's not a scam app,
although you could argue.
For a scam app, you could still
use many of the same tactics.
Uh uh Yeah.
And, and so I, you know, in salary,
I would say just the annual plan, if
there was one thing you could focus
on, one strategy you could really
focus on, it would be the annual plan.
Uh, and you can really change the profile.
Uh, you can really change the
payback profile of a subscription
app through that focus.
Jacob: Yeah.
I, I, I agree.
I think it's, like you say, it's,
it's even more important when you're
growing through paid user acquisition
because you get that money back faster.
So even if, um, even if you're
making, let's say you have annual
and monthly, even if you're making.
The same amount of money from both
the annual and monthly plan, which
is never usually the case, but let's
say you are, it still is beneficial
for you to get that money upfront to
reinvest and paid acquisition and,
and, and be able to grow faster.
Um, and also just predictable because I.
If something could
happen, people can churn.
And I think that's, you know,
generally consumer retention, uh,
consumer renewals is pretty low.
Um, and we, we think, you know, you may
look at, you know, Spotify or Netflix and
say, oh, well they have monthly plans.
They do okay.
It's like, yeah, well
Shamanth Rao: Yeah,
Jacob: they're Spotify and Netflix.
You can't compare yourselves to these
world class companies that, that, and so
I think there's, there's some cases, and I
think it, it varies by product sometimes.
Having a monthly plan for some people,
depending on your use case, where
maybe, um, it's a shorter term use case.
It it, it's not a kind of
long-term value and they want to
use the product for a few months.
Makes sense.
Just price your monthly plan higher
and so that you, it balances out the
higher churn rates, uh, uh, that you're
gonna get and you can drive more annual.
Yeah, I, I completely agree.
Um, I'm, I'm curious.
I, I've, um.
Do you have any, um, good
learnings on, uh, like for, for
an annual plan, trial length?
Do you default to, you know, I
think the normal is seven days.
Do you, do you, um, have you seen good
success with like three days or longer
trials or first do you, do you have
kind of heuristics in your mind that
certain types of products work better
for with longer trials or shorter trials?
Shamanth Rao: You know, it's
been very product dependent.
That's something I've seen is
Jacob: Yeah.
Shamanth Rao: you know,
something that's a little more.
Casual use product.
Let's just say one of the study
talk apps are some of the AI apps,
which you could call as almost
an impulse purchase if you will.
you know, and, uh, tho those would
tend to benefit from slightly shorter
trials because, you know, they don't,
they aren't really that invested.
They just wanna try
something out, if you will.
Uh, that's sort of one heuristic I've
seen, but really, I, I think there's
just been the range of across the
different products that we've seen.
Jacob: Yeah.
Yeah.
I'm, I'm always just curious what,
what other people have seen there,
because, yeah, I think there's.
You know, if, if your product needs
more time to be discovered, then
yeah, a longer trial may make sense.
But a lot of times if you have a shorter
trial and, and people can get the value
quickly and convert faster, uh, and, and
all that stuff, um, and, and, uh, yeah.
Yeah, it makes sense.
And so, uh, how, how do you,
so there's the, you know, price
can be very impactful for, um.
Uh, converting users
and starting that trial.
But for subscription apps, um, you
need to sell that, like the immediate
value that people are getting.
But then you're also trying to build
that longer term habit so people renew.
Um, but this often starts
in your advertising, right?
Where, where you're trying
to sell the product early on.
Um, do you have any thoughts on
how you kind of balance these like.
Early, immediate value and also
long-term habits with kind of
your ads and creative strategy.
Shamanth Rao: Uh, so short answer,
you don't balance those two.
Jacob: Okay.
Shamanth Rao: You.
Yeah.
You know, and I can speak to a lot of this
from first time data, uh, just background.
Obviously we run a lot of, uh, user
acquisition and creative for subscription
apps, but what I also do is I run a weekly
segment on LinkedIn and YouTube, where
every week I'm deconstructing one brand.
Through our AI agent, which
is called Brute Force ai.
And Jacob, I've shown what I'm billing
to, to you sort of under the hood.
Uh, but what the agent does is
it's basically looking at a couple
hundred ads for each brand every
week and it's spotting patterns.
And I've done like at least 20,
25 brands now, not counting folks
that analyze for our clients.
One clear pattern stood, stands out,
which is almost nobody's just emphasizing
long-term habit formation in ad creatives.
not in the headline or, uh, the hook.
And you know, and I
actually hadn't sort of.
Connected the dot dots on this.
But then as I sort looked through a
lot of these of like 20, 25 brands, I'm
like, goodness, nobody's doing this.
And uh, when I think, when you think about
it, it kind of makes sense because the job
of the first three seconds, the hook or
the headline, is not to sell the habit.
It is to grab attention,
is to spark anticipation.
It to give some immediate value, even
if it's anticipated value, right?
They can't really try the app on the
ad, in the ad, but they can at least
imagine what the value is gonna be,
which could be gonna lose weight.
I'm gonna bulk up, you know, or I'm gonna
lose my postpartum belly, if you will.
with all of that, you don't want the
user to do extra homework in that moment.
You have to think about where they are.
Like they're, they're like doom scrolling,
instant TikTok, and you're like.
By the way, you had to spend 75
minutes every week like trudging to
the gym and lifting heavy things.
I, I, I don't think I make it sound
miserable enough, but, you know,
or you had to sit still for 40
minutes, three times a week, make,
if you make it sound really hard.
Yes, of course, that's part
of the journey, that's part of
the journey of habit formation.
But if that's the first thing you hear.
That's not gonna convert.
Uh, you know, or really, so, so really
the goal of the hook, the headline really
needs to be, to interrupt the scroll, to
be that pattern interrupt, to interest
them, make them think looks useful,
this looks simple, this looks doable.
Uh, really highlights
speed to value in that.
Now, obviously.
There is always the risk that you
can go the other extreme and you, you
can say, lose 20 pounds overnight.
You know, you, you don't
wanna do that either.
you know, because then, then it's
like no one's gonna believe you.
No one's gonna believe the ad.
You're gonna get a lot of
negative comments and your
conversions are gonna drop, right?
So yes, you have to, pattern
interrupt them through the
hook or the headline the body.
That's where you layer in.
The process and the details.
By the way, even in the body, you
don't talk about how miserable
going to the gym is gonna be,
how hard it's gonna be, right?
If you've never worked out for, I don't
know, three years, it's really hard.
I've been that guy who's not worked
out forever and gone to the gym
and I'm like, you know, you don't
wanna talk about that in the body.
so.
You talk about the process, you talk
about the progression, you make the
promise believable and realistic.
So just to make sure
it doesn't sound like.
overnight transformation just to make sure
it doesn't look like a gimmick, you know?
And you can show, look, here's your
day one, here's your day seven.
Here's how you progress.
You can talk about that.
You can talk about, look, here's the
pain points, pains you're going through.
If you have, let's just say, you know, per
pause, here's the symptoms you're facing.
And make them feel seen,
make them feel understood.
But really.
Don't give them homework in the ad.
you know, again, actually in
preparation for this call, kind
of knew this self conclusion that
giving homework doesn't work.
But I actually look back at every one of
the deconstructions I've done and actually
to see, have I missed something here?
There's just one brand that I
noticed that seemed to emphasize
long-term habit formation.
This was not like all of that ads.
There's some ads that did that.
Right.
And this exception was Duolingo.
And when you think about it, it makes
sense that they emphasize streaks and
habit formation in their ads, because
that's a meme on TikTok, People post
about, oh, this is my streak on Duolingo.
You know?
So of makes sense.
That has some kind of social resonance.
So I.
Imagine, and I can imagine, and I can
understand why Duolingo would lean
into habit formation, but for literally
every other subscription app, I would
say don't, don't give users homework.
Don't tell users how hard
the habit formation can be.
Make it seem easy.
Give them that instant
gratification upfront.
Uh, again, you know, there's a time
and place for building that It's in
the onboarding, you're priming them.
The first time user experience, post pay
wall, you are delivering immediate value.
So, you know, hopefully they can stick,
but don't do that before they click.
Jacob: Yeah, the, the Duolingo example
is interesting where I think that
you could almost think of those as
kind of retargeting ads, because
everybody knows Duolingo, so it's
not like it's your first impression.
And I actually, I, I started getting, uh.
I think we're targeting ads on
Duolingo, where they're like,
come back to Duolingo on YouTube.
Shamanth Rao: Yeah.
Jacob: but, but then also, but
essentially any, everyone knows Duolingo.
It's not like it's you, you have
to make a first impression anymore.
Shamanth Rao: Yeah.
Jacob: You know?
You're, you're aware.
So I, I think that makes sense.
Um, yeah, the, the, the, um, thinking of.
All your ads is just getting that early
impression, selling that immediate
value, uh, uh, makes a lot of sense.
I think, you know, I, um, I started my
marketing career in kind of the email
marketing world where, uh, it's kind
of like the subject line of your email.
Um, I.
A lot of times you wanna have a subject
line that makes sense to your email,
but it doesn't have to relate perfectly.
The goal is just get
someone to open the email.
Then once they're in, they're in.
Shamanth Rao: Yep.
Jacob: it's kind of like the ad.
Once they click and get into
your app, it's a whole new ball
game and, and you don't have to.
Yes, ideally you want your ads to be
cohesive and coherent and have continuity
from your ads to app store to the product.
But you know, you see so
many ads today that, um.
Are, uh, have very little
relevance to the actual product,
but still perform very well.
Shamanth Rao: Yes, yes, yes.
And that's not to get
off on a tangent, right?
But this also is a classic illustration
of everything we're talking about, right?
Which.
If they have nothing to do with the
product, but they still grab attention,
That's the whole point of the ad.
And oftentimes, you know, as
an example, internally we are
reviewing and we are testing what
we call like ads, if you will.
uh, the best examples I can give,
uh, would be, uh, if you can look
at any of the micro learning apps,
they lean heavily into these.
It's like.
Uh, the headline is Be an Alpha Man
or Be the Woman that he's chasing.
You know, the agenda, which is
Jacob: Yeah.
Yeah.
Shamanth Rao: I find fascinating and
it's like, download this app, spend
15 minutes a day, be doom scrolling,
rebrand yourself and be the Alpha man.
And I'm like, this is a reading
app on the surface, it has nothing
to do with being an a alpha man or
being the woman he wants to chase.
And when I think about it, I'm like, know,
but I'm also like married and have a kid.
I'm not the target market.
if someone's like, I want a quick
hack for how I can be an interesting
dude, I how I can be a cool dude.
I don't know.
I, it's not a demographic I can
personally relate to, but I can
understand why there's a certain
kind of person that would.
Stop scrolling when they see something
that I would consider cringey.
You know, because Yeah, and I think
that's a classic illustration, and I
always thought that's also a useful
reminder for me because I have to
remind myself I'm not the target market.
And sometimes it's useful to in terms
of what the user, what frame of mind
the user is in when they're scrolling.
Jacob: Yeah.
Yeah, I think.
I, I notice myself even
sometimes scrolling.
It's like, oh, I want to be cool.
I want to be an alpha.
And, and like, and I, and I, I have to
shake myself like, what am I, what am I?
It's like, it, it, it tap into
some, you know, subconscious
thing and it makes you stop.
And then you realize, what am I doing?
This is, this is ridiculous.
And you, you know, you
Shamanth Rao: yeah,
Jacob: past it.
Well, what's your, um.
And, and I think that touches
upon the emotional element, right?
Ads have to be emotional, uh,
to, to kind of get you to stop.
So, so do you have strong viewpoints
on whether, um, you know, these
ads that are maybe not directly
connected to the product, are,
you know, viable in the long term?
Or are they, is there some kind of brand
erosion that may happen if, if you kind
of do these, these types of ads or it,
does it not really matter if it works?
Shamanth Rao: It's a question that's
hard to answer in a way that's
falsifiable or not, if you will.
Jacob: Yeah.
Shamanth Rao: I've seen, what I can
say is I've seen very many products
both on gaming and non-gaming grow
substantially by leaning into what
you might describe as fake ads.
Interestingly, uh, on gaming
and also non-gaming, I've seen.
Products adapt themselves to the ads.
And this was o obviously trend,
much more that started on gaming.
And uh, for those of your listeners
who may not have that context, you
know, or I think this was about
four or five years ago, there's
this game called Homes Scapes.
I think, I'm pretty sure they were the,
uh, pioneers of this, but they would
have misleading ads that was like, that
would show a pull the pin puzzle that.
It was not even in the game.
That had nothing to do with the
game that would convert like crazy.
And they, what they did was they
put, pulled the pin as a mini
game inside the game the ads
were doing well, you know, and.
You know, oh, there's something
very similar you could do with ads.
And I'm starting to see that in some
verticals, uh, particularly, especially
reading an EdTech is an easy fit because
you can adapt what a user sees inside
the kind of genres and the kind of
content that user sees to what's the ad.
And it certainly is easy to
have a custom product page or.
A landing page if you have web
to app to be adapted to that.
you know, but definitely, uh, to your,
I think your original question was, is
there a risk that your brand gets eroded?
There certainly is, but you could
change your brand itself based on what
you see users are responding to, what
you see users are resonating with.
that's certainly a direction that I.
Would encourage more founders
and marketers to think about.
Jacob: Interesting.
So seeing, actually being informed by the
ads where ads are kind of informing your
product roadmap or product direction,
where clearly there's some interest.
If people are interested in these ads,
how can you, uh, a, capture that interest?
Shamanth Rao: yeah, yeah.
Right.
And again.
This does not have to be a very
extreme situation, if you will.
Right.
So if it's like, be an Alpha man,
you don't have to be a dating advice
app overnight, you know, that's a
Jacob: Yeah.
Shamanth Rao: right?
Uh, so obviously there are limits to that.
But, you know, again, as an example,
right, we are working with, uh,
without giving away too many details,
there's a, there's a FinTech app and, uh.
There, you know, a lot of ads picked
ways you can use credit cards
benefit, if you will, right?
To, you know, uh, to unlock office,
to unlock deals, if you will.
And we noticed that a certain
segment of, uh, ads that were doing
really well and featured travel.
And we were like, oh, airline miles,
you know, uh, be you, you know,
here's how, here's the secret of the
travel hackers and so on, so forth.
And then we are like, oh, this kind of
resonating, what can we do about it?
Could we have a custom
product page about this?
Uh, and, uh, you know, could we
ref, um, could we reflect this
in some part of the onboarding?
And again, going from a credit card.
Focused ad to a travel focused
ad on the surface would seem like
a huge leap, but you absolutely
could your, uh, uh, your app.
So app, so page and your onboarding
to reflect at least some elements
of that and certain, certainly
whatever is in the product itself.
Jacob: Yeah.
One, one example, and I, I've seen
this I think a few different times
and different examples of this same
thing is where, um, these, uh, kind
of surveys or quizzes in ads perform
well, where it's like, what's your.
Sleep type, what's your mental
health something or other.
And then they add this little
hidden module in the app
Shamanth Rao: Yeah.
Jacob: that it exists or, or kind of show
something in onboarding where the simple
quiz where it's not really connected to
the product or the true product value, but
it performs that kind of hook of answer
These questions, learn X in this quiz.
Flow performs well in the ad.
People get click and
they get into the app.
They can maybe get that quiz and, and
then convert into the core product.
Shamanth Rao: Yeah.
And that's also a
monetization lever, right?
Because then you're like, oh,
what kind of, I don't know.
Uh.
What kind of.
This is my, you know,
kind of sleeper are you?
Right?
So, and then you, uh, go through the,
Jacob: Mm-hmm.
Shamanth Rao: onboarding question.
And the last question can be is
gonna be, oh, we have your answer.
Pay $7 to find out your sleep style.
and you can
Jacob: Yep.
Shamanth Rao: monetize them right there.
uh, I've seen that work surprisingly
well for a lot of products,
including, I've also seen.
some might call a gray area slash
darkish thing, where there's a quiz,
quiz ad, there's a quiz onboarding.
The last thing is your answer
for only 99 cents and you
get your answer for 99 cents.
You get the renewal, the subscription
gets renewed really explicit consent.
And obviously if this is a web
onboarding, you don't really.
Have to play by apple's roots or anything.
So you basically, the first bill is
99 cents and the user's like, yay,
I got 99, I got deal for 99 cents.
the user even know they're gonna get
built again in seven days or 30 days.
And, uh, lo and behold, the
second bill is like $10 or $15.
and that's hidden in the small print.
And I've seen that.
Uh, bit of a gray area, uh,
in a couple of products.
Jacob: I, and I think we probably
both agree that that's probably not
the way to a sustainable long-term
business where that's not going to to
work forever, but, you know, people
can take advantage of it short term.
Um, yeah, that, and I think one,
one last thing I'm curious your,
your take here on is in terms of
those upsells, you mentioned kind of
these, you know, the one-off offers.
I, I've been seeing more and more
subscription apps having success.
Uh, uh, kind of with these upsells or,
um, after you start a trial, um, offering
another PDF upsell or some something
else, that's a kind of a in out purchase.
Uh, have you, have you
seen success with that too?
Shamanth Rao: Seen that.
Where there's some
Jacob: I.
Shamanth Rao: to this, Uh, you know,
for, again, this is like a, without
disclosing too much, there's a
cooking, there's an app in a cooking
space, and they're like, oh, you
can get access to a free community.
You can get access to free recipes.
And, uh, yeah, again, if there
is a, I think that's the most
common situation I've seen.
Uh.
The other example, I, I don't think
it fits exactly the mold of the
upsell that you're talking about is.
Pay as you go models that I've
seen being very interesting.
I do think I could be wrong
and you're probably more
knowledgeable about this than I am.
I think Tinder was one of the
pioneers of the pay as you go, where
you could pay for more likes on top
of your Tinder gold or whatever.
You could do that.
But lately I'm also seeing that with a
lot of AI products and apps where you
have a certain amount of credits you can.
Pay for pay as you go if you take up
more credits, which I think did was
something they were actually forced to do.
Because normally with a lot of
subscription products, the cost
of delivering the services zero.
But for AI products, it's not.
if you are a heavy user, you have to
be, you know, sometimes the app has to
build you in a way that's different.
Jacob: Yeah, I think that those,
these AI products are, are sometimes
approaching more economics of games
where you have these like whales
that spend tons on, tons on credits.
Uh, I don't think quite the same
scale yet, but a lot of them are,
are, are kind of similar with this
kind of credit based approach.
And then there's the whole, um, the,
the whole AI girlfriend category, which
is, uh, a whole, whole other black box
of, of, uh, paying and credits and yeah.
Shamanth Rao: Yeah, and I
Jacob: Uh.
Shamanth Rao: agree that these have
more in common with games than,
I don't wanna say more in common,
but a lot in common with games
you know, they're not finite and
controlled in the way that a lot of
utility subscription apps would be.
I use a lot of code ai co-pilot
tools and you can keep going and
you know, they can be addictive in
many ways, and that's certainly true
of AI girlfriend apps, if you will.
Jacob: Yep.
Yep.
Um, cool.
So I.
I think something that is, uh, hard
for people to understand what it really
means for who's newer in the, um, kind
of, uh, advertising and paid advertising
world is, um, creative fatigue.
And so I, I would love to talk a little
bit about that for kind of one your
running advertisement where you guys, you
know, run ads for a lot of different apps.
And for subscription apps, um, how do you,
how do you combat creative fatigue when
you're scaling up from, you know, let's
say, I don't know, you know, 50 K to all
the way to, for 500 k, you know, different
challenges, different problems, but how do
you think about that as a creative volume?
Is it different approaches?
Yeah.
How do you kind of combat
this creative fatigue?
Shamanth Rao: Uh, I think the short
version is diversity, and strategy.
All three are super important.
My strategy and the first step is.
Don't put out AI slop and really
think through what's going up.
Uh, but know, to elaborate, right?
So yes, you definitely need volume of
creative uh, I like to call this, uh, the
best way I, I can think of to describe
why is because metal has what we call
internally as micro segments of users.
So.
You want creative that appeals
to different micro segments.
So for example, a micro segment could be
a millennial mom the east or west coast of
the United States in a tech job, just had
a baby, wants to lose belly fat, right?
One very, one super micro
segment and something else
could be Debbie from Kansas.
Uh, retired 55, getting
old, wants to get stronger.
Those are two very, very different
micro audiences, micro segments.
Meta has got very, very good at
identifying those segments to target them.
And as marketers, we need to be
sure to have creative that speaks
to every micro segment to as
many micro segments as possible.
So to tie into your thing about,
uh, creative fatigue, that's why
you need a high volume of creative.
you can speak to every micro segment.
And that's also why you
need a diversity of formats.
And we internally have a MA
matrix where we say, look, we
need faceless U-G-C-A-I-G-C image.
Mm, uh, uh, image ads and, uh, you, we
need all of that for every big messaging
pillar that we might need for a kids app.
It might be build confidence,
healthy screen time.
can relax, you know, so it's really
four multiply by four in most cases.
uh, that's really critical because,
again, I think of this one time when
we, we were scaling this, uh, product.
You know, we were like at,
think we started 500 a day.
Things were going, well, we
went a thousand in a week.
The next week we were like 3000, 5,000.
And we were like doing,
spending 10,000 a day.
And we were like,
a lot of that spend, 70%
of that spend is on one ad.
That was terrifying.
And sure enough, later that I
crashed, I'm like, goodness.
Uh, and then, then you're like.
Or fi your finger, uh, filling your
thumbs, and you're like, what do I do?
It's we spending 10
grand a day is crashed.
We are not like, and we are not like at
500 a day, how many days do you wait?
Right?
And uh, after three days we are
like, all right, we're gonna go
back to like 500 a day and go easy.
So I say that because.
A big part of combating creative
fatigue is managing risk because you
could test hundreds of creators and
if meta gives spent to, you know, one
creator meta gives 70% of spent to one
creative, there's nothing you can do
that to combat that creative fatigue
because man just has that base CN
system, which gives spend to one ad.
I think a big part of
managing creative fatigue is.
Also to take control back from
meta's Advantage Plus structures,
automated structures, and to have
manual tests, a man, a manual
campaigns and ad groups, because way
you de-risk yourself substantially.
And you know, again, in that situation
where you're going from 500 to
10,000, we would be less on the edge.
If we had ourselves by
saying, right, we're scaling.
have five different ad groups.
scale the top one to 5,000,
but let's just have some other
ads in these other buckets.
Which is also why creative volume and
diversity becomes important because
your top ads at 5,000, hopefully it
has something else that's spending
a thousand and doing it profitably.
You have on something else that's at
1500 that's doing it profitably, right?
So.
That's a big piece of combat and
creativity, which is really managing
risk intelligently by back the
control from the automated systems.
Jacob: For those micro segments,
do you use those to kind of
inform, um, creative production?
Do you use those as kind of personas to,
to hypothesize what ads we should create?
Shamanth Rao: Yeah.
Jacob: I, I really like that kind
of concept of these microsegments.
Shamanth Rao: Yeah.
Yeah, a hundred percent.
And that's a big part
of our creative briefs.
We are like, look, what
is the target audience?
And is there a diff, is there a
slightly different target audience
we can go after with this ad?
And one of the questions we ask ourselves
is, if this ad is winning, can we
target something, a different segment?
Right?
So again, uh, this is for a product
that's targeting small businesses.
We were like, Hey.
We said, if you are a restaurant
owner, blah, blah, blah, and we
are like, could we just keep, and
that's what's doing really well.
That was a top perform.
Then we are like, all right, can we
change that to, if you're a real estate
agent, if you are a borrower, you
know, if you are a startup founder,
Jacob: Got it.
Shamanth Rao: And.
doesn't have to be rocket science, right?
It's, you know, uh, I learned improv at
one point of time and one of the things
they taught me was the secret of, of
improv is to ask yourself, is true.
What else is true?
So you ask yourself if something's
working for, could you say bar
owners rather real estate agents?
So you can certainly go down that path.
Jacob: Got it.
And, and so you can start with
maybe your high level demographic
definitions that you know,
Shamanth Rao: Yeah.
Jacob: you know, men or 25 to
45 and X doing X thing, but then
when you actually break it down.
There's tons of these little micro
segments within which actually help
you create these specific ad creatives
because that's what you want, right?
You don't want these broad general things.
The more specific you can speak to
somebody, that's how you get emotional.
Shamanth Rao: yes.
Jacob: Yeah.
That, that, uh, is great.
That's great.
So, um, and I know you touched
upon it a little bit, uh, you know,
everybody's trying to use, um, AI to
generate creatives for your, your apps.
How, how do you do that?
Well, how do you make sure they
actually are emotional and create
some, you know, emotional resonance
with them, uh, and they kind of
create that, uh, immediate value.
Do you have any kind
of guidance for people?
Shamanth Rao: Uh, I think the
short version is involve humans,
uh, involve smart humans that are
kind of another shit, if you will.
But, uh, you know, uh, and you know,
I, I say this all the time on our team.
It's very, very easy to make
hundreds of terrible ads today.
uh, I also say this to all,
literally every one of our customers.
We all know of making ads is zero.
no longer a differentiator for anybody.
Right.
And I think, uh, and as you said, I think
the biggest differentiator is to make
ads that are emotionally layered that.
You know, sound like that human
speaking and that's not, you know,
a crazy AI slap, if you will.
So, uh, you know, there's a couple
of things we do to make sure we
try to stay human, if you will.
Uh, what, you know, something,
uh, I always have my team do
is not take the first answer AI
gives and then making a brief.
The, on our team, the dealers,
you have to push the AI at least
five times with follow ups.
Uh, you know, adding emotional context.
Talking about the lived experience
of users, rewrite with specificity,
and, uh, you know, again, I send back
edits all the time on copy and briefs.
Um, and something else that we
also do is we, uh, I, I talked
about the deconstruction.
I do, this is literally every week I've
probably analyzed and seen like hundreds
of thousands of ads out there, right?
So.
I think I've, that helps myself and
our team and, and our team reviews
every one of these really understand
what the patterns are, right?
Because it's not like, oh, I see this ad.
It looks cool, it looks entertaining.
Now they can pattern match and say.
Here's this cringe ad
that I saw for on EdTech.
Can I adapt that to a FinTech
that I'm working on today?
And, uh, I think that's where a lot
of the unexpected wins can come from.
you know, and re and really
noticing and asking ourselves why
some of these ads are doing well.
Why some of these ads are phar, right?
And.
Again, much like going to the gym,
it's not a one on one and done thing.
You know that, that's
why I do this every week.
Uh, that's why I do these deconstructions
every single week and, uh, share
publicly and with our team to
see why something may be working.
Okay.
Jacob: Yeah.
Yeah, I think that makes a lot of sense
where don't just accept what AI gives you.
Look at it, assess it, apply
that to kind of human touch.
Uh, and then also push.
What, whatever tool you're
using to generate AI for more.
Iterate, iterate, iterate, edit,
edit, make better and better.
And then I, I, I love the, um, looking
to other industries for inspiration,
not just direct competitors.
Uh, kind of look outside your,
your specific app industry.
That makes a lot of sense.
Um, well, cool.
This, this was, uh, uh,
this was super informative.
Uh, and I really appreciate
you coming on Shaman.
Uh, do you wanna give a quick, uh,
pitch or shout out to Rocketship HQ
and all the work you're doing there?
Shamanth Rao: Uh, yeah.
Uh, uh, rocket Ship hq.
We are a performance creative agency
and our big focus is subscription apps.
We work with some of the biggest
subscription apps out there.
Uh, center Lingo, kids
Mojo among others, and.
Uh, uh, we've been really on scaling
per, uh, creative scaling performance
through creative AI and humans.
Uh, know, and as I've said a couple
of times on, uh, in this episode, uh,
so a big thing we do is just use our.
AI agent, brute force AI that
really breaks down, breaks
down ads frame by frame.
And I share a lot of
these learnings publicly.
So feel free to check out my socials
if you wanna see some of these.
Uh, I try to share at
least once a once a week.
Uh, and of course if anyone that's
listening to, uh, following this podcast.
Interested in having your
own creative mix, analyze?
happy to offer a fully
complimentary audit.
just I would basically look at all the
ads you're running, uh, run them through
our, see what are the patterns, you
know, and these patterns would be here.
The pain points you have here,
the here's the emotional triggers,
here's the narrative structures.
a bunch of dimensions we look at to number
one, understand what's going on in the ad.
But also to see and have the ads
sound more human, if you will.
Jacob: I love it.
I love it.
Um, and you also have a, uh, a
podcast newsletter yourself, right?
Can they, where, where,
where do they go for that?
Shamanth Rao: Yeah.
Uh, this is a new podcast.
It's called Intelligent Artifice.
uh, that's about how the, uh, operators
and marketers in the world use ai.
So you can go check that out
on intelligent artifice.net.
uh, also have a newsletter that
goes out, uh, at least once a
week, intelligent artifice.kit.com.
So feel free to sign up, check that out.
And, uh.
That's the how far all things
interesting and cool that I'm learning
through AI and creative today.
Jacob: Awesome.
Yeah, we can link all those in, in the
show notes so people can go find those.
Um, well, cool.
I, I really appreciate, uh,
having you on, uh, and, and I
learned a lot, uh, here as well.
So yeah.
Thanks again.
Shamanth Rao: Thank you
Jacob, for having me.
These are great questions, so I appreciate
you going into the kind of that you did.
Jacob: All right, thanks.
Talk to you later.
Bye.
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