Cheetah Mobile is changing its spots.
Known more as an app publisher than an ad tech player, the Beijing-based mobile media company launched its own global ad platform on Monday.
It’s part of Cheetah’s grand plan to become “one of the top five mobile ad vendors in the world,” said Cheetah Mobile CTO and co-founder Xu Ming.
It’s a big claim, but Cheetah Mobile – no connection to Experian Marketing Service’s CheetahMail – has started to put its money where its mouth is, first by shelling out $58 million to acquire French mobile ad tech player MobPartner in mid-March, followed roughly one week later with the announcement that it had taken the lead on a $24 million Series B investment in Facebook ad partner Nanigans.
In the months since, Cheetah has been working to integrate the MobPartner tech, now called Cheetah MediaLink, alongside Cheetah’s O&O, dubbed Cheetah Apps. The result is an ad stack that combines Cheetah’s own inventory with access to MobPartner’s network of third-party publishers, audience segmentation and post-install reporting.
But that wasn’t always the case for Cheetah Mobile, which started life in 2009 as a spinoff of Chinese PC-focused software company Kingsoft, becoming known over the years as a publisher of utility apps for Android, including Battery Doctor, image editor app Photo-Grid and Clean Master. The company went public on the New York Stock Exchange in May 2014.
Chasing Data
If you ask Cheetah CMO Xinhua Liu what Cheetah is, Liu – who quips that the “M” in his CMO title also stands for “monetization” – will say, “We are a data company.”
And that’s because the Cheetah gathers quite a lot of data on its users, everything from device ID, language, how often an app is being used, at what time of day it’s being used and when an app is uninstalled.
Some of Cheetah’s own apps seem built for data collection. Take Clean Master, Cheetah’s antivirus and Android optimizer. Its sole purpose is to scan all of the apps on a user’s phone with the goal of improving speed and performance.
“We are able to know which apps a user is interested in and that allows us to precisely target advertisements to those users,” said Ming.
From there, Cheetah can use correlation analytics to extrapolate user behavior. If a user downloads Dayima, a menstruation tracking app, it’s safe to assume that person is female. Or if Cheetah detects that a user is playing a particular game for 30 minutes or more at 1 a.m., it’s likely that person is a power user or has trouble sleeping.
Historically, Cheetah has applied that type of information to drive its product road map and improve user experience. But about six months ago, Cheetah started sprinting in a new direction. Over the last several quarters, the company has started to put a major emphasis on monetizing its users through data collection and advertising.
By Q1 2015, Cheetah’s overall install base was at 1.34 billion users and monthly actives topped 440 million (30% in China, 20%-25% in the US, and the rest across Europe and emerging markets), making it the second-largest publisher in Google Play, behind only Facebook. Ming said Cheetah is gunning to hit 600 million MAUs by the end of the month.
Cheetah’s mobile revenues grew 584% YoY in Q1 2015. Twitter grew 91% over the same period of time, while Yahoo grew just 61%.
Native Habitat
Because Cheetah’s apps are free to use, the user acquisition barrier is low. Users are also less likely to delete utility apps once they’ve had a decent experience.
But there are downsides to the utility model. For one, users probably aren’t going to access an app like Battery Doctor or Clean Master as often as they’d hit up a news app or a social app.
Cheetah wants to change that by defining the term utility.
“When you’re done running a scan with Clean Master, it’s done and you close the app,” Liu said. “But our goal is to turn that experience into a content discovery opportunity.”
It’s something Cheetah refers to as “native scenario-based advertising.” Rather than gating an action – for example, making a user look at an ad before initiating a Clean Master scan – Cheetah’s plan is to use the completion of a scan, or any other in-app action, as the trigger to serve a combination of relevant in-feed content and native ads. If a person has just finished using the memory boost feature within Clean Master to improve phone speed for game play, that’s a good time to serve content with suggestions around apps to download based on that user’s preferences.
“When it comes to user behavior, we’re finding that there are no longer clear boundaries between utility apps like news apps and utility apps like cleaning apps – whoever can put the most relevant information at the user’s fingertips the fastest will be the app most used,” said Jin Lei, Cheetah Mobile’s VP of marketing, noting that users can look up the weather in Clean Master. During the World Cup, they could check Clean Master for the latest match scores.
On The Social Prowl
Facebook is also a cornerstone of Cheetah’s strategy, with Nanigans at the center. Cheetah plans to use the Nanigans tech and its PMD status to help its client optimize their Facebook campaigns.
Nanigans and Cheetah will work together in three ways: One, Cheetah itself will be a client of Nanigans, taking advantage of the latter’s software to grow its own user base and run retargeting and re-engagement campaigns on social channels; two, Nanigans will make Cheetah Mobile inventory available to its clients; and three, Cheetah will promote the Nanigans tech to companies in China.
Although Facebook is banned in China, many Chinese companies boast large overseas user bases, including Cheetah. Seventy percent of Cheetah’s users are located outside of China.
“To be the largest utility category app developer, you need both user acquisition and monetization,” said Nanigans CEO and founder Ric Calvillo. “And advertising is important for both sides of that coin.”
Advertising – and ad tech – is the way forward at Cheetah Mobile, said Liu.
“This is about us declaring our strong intention to become a leading mobile ad platform and backing it up with the data, product and team required to achieve such a lofty goal,” he said. “Fundamentally, we believe large direct and agency advertisers represent only the tip of the iceberg when it comes to mobile advertising’s potential.”
