Optimizing your Keywords and Monetization ― Part 2 with Ramit Arora, Microsoft

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in-app purchases, manage customers, and grow revenue across iOS, Android and the web. You can learn more at revenuecat.com. Let's get into the show. So without further ado, I wanted to introduce Ramit. He has helped lead the Microsoft app teams there. So the first thing I wanted to get to, and you can tell us a little bit about your role at Microsoft, but I keep getting people asking me, "Microsoft, they're like enterprise. Why are you speaking to Microsoft at an app event?" And so tell us a little bit about what you do, but then also how the apps inside Microsoft are a startup inside this massive company.

Ramit Arora:

Yeah. Thanks a lot for having me, David. And hi, everyone. And London is awesome, by the way. So I'm a growth lead. I'm part of Product Management at Microsoft 365 Consumer Business. So basically our Word, Excel, PowerPoint apps, and there's also the Microsoft 365 app. So my current role is very focused on leading our apps on the Mac platform. I mean, Mac App Store is a big part of it. We also have a direct channel, and then I support iOS and Android, basically our mobile apps as well. And we sell Microsoft 365 Personal and Family, which is our consumer subscriptions. And then we also sell Copilot Pro and we have a fairly large business on App Stores, so straight up in-app purchase and business on App Store. And we are very much like you guys when it comes to just growing our apps. And essentially, yes, Microsoft is an enterprise company in a lot of ways, but we are also a very big consumer company. Our app presence is actually pretty good.

David Barnard:

Yeah, if you look at a sensor tower or data AI, Microsoft apps are some of the leaders in monetization on the App Store, some of the biggest apps, some of the biggest performing apps. And before talking to you, I always thought of it like a lot of the questions I got this morning about why I was talking to Microsoft. Do you think of it as like, "Oh, it's an afterthought, it's something Microsoft does because they have to?" But the more you and I have gotten to know each other and talked through how Microsoft thinks about it's pretty cool how you are able to operate as a startup and how much growth and monetization you are seeing on the App Stores that it's not an afterthought. It's actually a huge line of business.

Ramit Arora:

Yeah. And it's a big part of the strategy. So for our consumer business, App Stores are very important and we actually have a pretty decent amount of people and money that we spend on all the things that are somewhat covered in this conference like a ASO MMP. We have a paid ad strategy, we have an ASO strategy, we have teams that are doing optimization on the funnel. So at all parts activation, monetization and acquisition and renewal optimization and so on. I like to say we have an equivalent of say, RevenueCat and Braze and some app companies inside. Obviously we work with a lot of vendors as well, so we have a pretty decent strategy around that.

David Barnard:

Awesome. So I wanted to dive into ASO because I think again, even though it's Microsoft, I think we all have a lot to learn from the strategies that you and your teams have employed there at Microsoft. But before we go, I know you needed to make a small disclaimer.

Ramit:

Yes. So all opinions are my own and do not represent Microsoft's official stance.

David Barnard:

Lovely.

Ramit Arora:

So that is a disclaimer that I'm always supposed to make.

David Barnard:

Yeah, of course. And that's the thing, Microsoft is such a big company, there's so many things going on, it makes sense that we're going to talk about some of the things you've learned and stuff, but it's not official Microsoft's strategy. But on ASO, I think a lot of people in this room, again, people I talked to this morning think, "Oh, well, Microsoft can just own any keyword," and like, "Oh, it's just all brand search. People just go and search Word." But as you and I have discussed, that's not actually the case, so tell me a little bit about what kind of ASO work Microsoft does to find the right audiences on their App Stores.

Ramit:

Okay. I mean, just like most other app companies, we have an ASO vendor and we work with them on a number of things. And so if you look at it broadly, there's the brand optimization which we can get because our apps are named Microsoft Word, Microsoft Excel, etc, so our brand is very much in the title itself most of the time. So for the keyword optimization piece, we do comparative keywords. So if you look at App Stores, a lot of times we are not the number one productivity app, so there are other apps that are on Mac, on iOS, also on Android, there are a number of productivity apps that keep going up and down in the charts. So we have a competitive strategy with keywords.

David Barnard:

The App Stores are a great equalizer, right?

Ramit Arora:

Yeah, it is a democratic place, so it's not that you are Microsoft, so you can just show up there, and it's not an exclusive to Microsoft channel. So App Store really democratizes everyone, just how Paramount Pictures and a YouTube influencer are at the same stage when it comes to YouTube in terms of eyeballs, it's the same thing with App Store. A new app can pretty much get the top spot. We have a competitive strategy, so we always, for the most, part know who are the top competitors. And sometimes actually when it comes to App Store, it's not even some of the names that you would think. I mean, sure there are the big ones like Google Canva, et cetera, but there are a lot of smaller competitors, smaller apps like productivity apps that are also at the top spot, so we do have a strategy to get some of that keyword.

So competitive is a smaller part, but actually jobs to be done is a bigger part of the strategy. So we have generic and non-generic keywords, so essentially keywords like notes, resumes. We have a lot of user research around what are our apps used for because our apps are very general. We try to focus on jobs to be done, like resume creation as a job to be done, note-taking as a job to be done, slide creation of presentation decks. Excel has budgeting as a big one, invoice creation. So those are some of the jobs to be done that we know, so we try to optimize for some of those keywords because somebody may be looking for invoice and may end up at Excel because not everybody is like a business owner looking for a QuickBooks type of solution. Sometimes you just need something very simple and Excel can do the job.

So those are the kind of things that we keep doing and there's no constant set. We are always, so every month we have an update, and our paid ASA also kind of guides us. And also there's this whole thing that once you are ranked, say top three in a keyword, we can remove that keyword and get new keywords in. If you are seeing that we are consistently ranked for say a year or so, we can then slowly take that keyword out and put an AI or a copilot because we also have newer features and newer things coming in. AI is a big one, so we try to rank for that and things like that.

David Barnard:

Yeah. I think even for smaller and mid-size apps, ASO is super competitive. So Microsoft does have an advantage, but I mean you heard it here, on the App Stores you were competing with the biggest company in the world, a multi-trillion dollar company in ASO. And so the same strategies that Ramit at Microsoft is employing is what we all, and I have apps on the App Store as well personally in addition to working at RevenueCat, and so it's the same kind of strategies we should all be employing thinking through the jobs to be done. And you were talking about App Store search ads, and I wanted to touch briefly on how you look at the profitability of specific keywords and then how that helps inform your strategy because I think that's something all app companies should be thinking about.

Ramit Arora:

I mean, there's no one answer because at any given point of time, we are running multiple campaigns. So say if we are getting certain keyword that is really sticky, we can always bring it back. But very basic like ASO one-on-one, like the keyword bank is very small. It's a hundred characters. And then you have, I mean, yes, you can stuff a few things in the description, but it also has to make sense, so there is that aspect that description has to be clean, it has to reflect Microsoft. We are not a junk app that we will write anything in the App Store, so we have to make sure that everything that is external facing is making a lot of sense, and it's not just keyword optimization, it's not just a bunch of keywords stuck together, so there has to be some flow and logic to it.

But if we do find from ASA we find some things that are high performing, we can obviously bring it back to our general ASO organic or we can just bid more there. And there's also the whole MMP angle there with ASO trying to really make sense that if this is the keyword that is only driving monthly active usage or is it driving real subscription because we have very strict CPI limits, like cost per install limits that we want to go after.

David Barnard:

Yeah, I think that's a mistake a lot of folks make in their ASO strategy is going after keywords that are easy to rank for. And so Microsoft, because the apps get downloaded so much, you could probably rank for something like swimming, but it's like, that's fine, but that's not going to drive business value. And so your ASO strategy shouldn't just be about ranking, but it should be about using App Store search ads and other tools to understand the profitability of the specific keywords and being way more focused on your approach instead of just so scattershot. Do you see any differences between iOS and Android on that front? Are there any differences there?

Ramit Arora:

Yeah, I mean there's the 80/20 rule sort of a thing. Android has a very large install base, but we constantly have seen, and so Microsoft apps are available, I believe, in six plus App Stores, so in China we have a number of App Stores that the apps are available in. There are also pre-installed deals, but still Android monetizes way less than iOS does. So there's an 80/20 sort of a thing. I mean, it's not exactly 80/20, somewhere like that, that android in-app purchase revenue still lags pretty significantly to iOS. And it becomes especially interesting from an LTV to MAU perspective that for an Android user, for example, if you have to run a paid ads, our CPI limits are 50 times less in some cases-

David Barnard:

Wow.

Ramit Arora:

... than iOS CPI limits, because basically it's like you can drive installs to Android and you can keep getting more and more monthly active usage, but the percentage that converts to paying users is super low, so you have to be so careful with Android, both with cost per install, what you pay from a paid ad, but also sometimes in terms of your organic strategies. So for example, if you have an engagement platform that you are paying by, I don't know-

David Barnard:

By the user-

Ramit Arora:

... by data points or by usage or by MAU, you have to be really careful because your Android campaigns might start costing you more in terms of cogs because the LTV, because essentially if we are selling a consumer product, our LTVs are not in thousands of dollars, they're in hundreds of dollars. So we are just operating like any other consumer SaaS startup in that sense that we are making sure that our LTV to CAC ratios are in range so that we don't overspend on in-app engagement or on ads. It's not that we are Microsoft, so we'll just go and drain money, so all the same restrictions apply and it ultimately comes to the LTV:CAC ratio.

David Barnard:

... yeah. So I mean, I get asked this all the time, "Oh, we've got millions of active users on Android, but it's just not monetizing. How do we improve monetization?" I can now tell them I talked to Ramit from Microsoft, and it's the same thing, just like Android does not monetize as well as iOS, and understanding that reality can help you inform the Android strategy, but then also Android, I think we're going to see a lot of evolution.

I'm actually going to be talking to the Google Play Partnerships team on a forthcoming episode where we talk about some of the experiments that people are starting to find success with on Android, but it's good to hear from a prioritization standpoint that you can put a ton of work into it and Microsoft has and has all the resources, but it's just a different platform and it just monetizes differently, and understanding that helps inform strategy of how you invest, how many data points you collect, how you spend on tooling for Android versus iOS, so it's super helpful to know. Another thing I wanted to dive into was monetization and A/B testing, and if there's any particular tests or anything that you think or especially interesting on subscription monetization.

Ramit:

Yeah. So before I get into that, I'll finish the Android versus iOS. I'll just conclude it by saying that I think Android is a very promising platform. It's just that maybe developers need to think more than just straight-up expensive subscriptions because a lot of the subscriptions are very North America based, and I think some of the price points may need to go down. Some new business models may need to be there. There has to be much more thought that has to go into monetize that platform. It's a harder platform to crack.

David Barnard:

Yeah. You can't just copy and paste your iOS strategy.

Ramit Arora:

Yes, exactly. It is just a harder platform to crack, and there has to be more Android specific strategies that need to get applied. I'm not saying it's not a promising platform, I think we think it's a promising platform, but there's just more to be done there. So now moving on to A/B testing. So yes, a lot of our teams do A/B testing on mobile Microsoft 365 apps like Word, Excel, PowerPoint, as well as the 365 App and other apps that we have in the family. We keep doing a number of experiments and some of the things that have really worked just very plain bare bones ideas that have worked. I think CTAs, if you have a free trial, make sure the CTA says it's a free trial, try free for one month, something like that. Because there's one thing that we have observed is that CTA has to really communicate the free value if it's available, so that it's just more comfortable to press that button.

David Barnard:

Right.

Ramit Arora:

So basically you have a free trial wording up on the top, but then you have say something that says, "Buy now," for example. People are just not comfortable because a lot of times, because of how there is a lot of these one click buy type of things that have happened in the recent past, people are very apprehensive of pressing the buttons because they're like, "Oh, I'll just touch this and money will be charged." So if you have a free trial, if you have a more comforting motion, definitely make sure to have that on the CTA. Then another thing we have found a lot of success with is cards and GIFs, so instead of lines of text using some kind of cards with GIFs-

David Barnard:

And what would be in the GIF? Yeah, I pronounce it GIFs.

Ramit Arora:

... oh, GIFs,

David Barnard:

GIFs. Potato, potato. What's in the GIFs? Like an animation and demonstrating the value, almost like a little video kind of thing.

Ramit Arora:

Yeah, sometimes that, or sometimes just illustrations. So for a Microsoft 365 subscriptions, some of the more important things, if you open any of our apps, some of our more important things are like there is the premium apps that you get on desktop, and then there's the 1 TB OneDrive storage that you get, and then there is access to AI features that you get. So those things, you can write them down or you can actually have illustrations showing that you are getting 1 TB OneDrive for each of your family members, so you'll have six people showing, and you see that 1 TB OneDrive is going to all six of them. So if you can show them more visually, it helps in converting better. So that's more of a paywall optimization type of a thing.

David Barnard:

Yeah. No, that's a great tip. And I mean, I've been hearing that more, and actually I've been experimenting with a video on my paywall and my weather app and have seen really good results from exactly what you're saying. It's like people just don't read, so you can put all the great copywriting you want, but it's like you've got to show them, and in the age of TikTok and reels and everything else, what better way to show them than with animated illustrations or other ways to really capture their attention and then communicate that value in a way that they probably won't read even if you write it very cleverly, so that's a great tip. Another thing you had mentioned was experimenting with just the ordering of subscriptions.

Ramit Arora:

Yeah. So this was a very interesting experiment where we had our Family and Personal. So Family is slightly more expensive. It's $9.99 and Personal is a $6.99 subscription in the US, and other region prices are different, so we just reordered them. So we made Family as a default subscription. So Personal used to be the default, and then we reordered it, and then we did one more change, so actually two separate A/B tests, so one more change where we started showing monthly equivalent price. So if it's $99 for the year, then we just show something like $8 or something, a monthly equivalent price. So both of those were very successful. So monthly equivalent price when people can see, "Oh, is this going to cost me $8?" Even if they have to be billed for the whole year, it's good. We saw success there.

And the second one was, yes, this reordering where it was very interesting that when we reordered both started selling more and the one that went below the Personal one, it actually started selling a lot more. So I think from a psychological perspective, when we were backtracking, maybe there was this whole idea that people saw this default subscription, which was more expensive, and they're like, "No, no, no, this is more expensive, but let me get this other one which is cheaper," but it increased their purchase intent somehow. Now, the question in that increase, sometimes this is very psychological. Sometimes when you see an expensive thing, you walk into, say a Louis Vuitton store, you see a lot of these expensive things and then you end up buying a tie from there because it is a cheaper thing, but you still bought something from Louis Vuitton, right? So it's like that where you see this more expensive option up on the top, and then you end up buying the cheaper one because you still bought something and you still unlogged and you still have a premium experience, so something like that.

David Barnard:

I didn't plan this, but we ended up talking about pretty much the top four things that I recommend people experiment with under paywalls, because you can test colors and change the color of the CTA button and all that kind of stuff, but the highest impact or price testing and included in that, the pricing and packaging, I did a test in my weather app of defaulting to only showing the $4 a month subscription versus showing the $40 a year subscription, and I had a 20% increase in conversion to paying by them just seeing that $4. And so by experimenting with the packaging, I saw a 20% lift in conversion to paying.

And then the other things we talked about experimenting with video and stuff, these are some of the lowest hanging fruit, not just for any app here in the audience, anybody listening on the Sub Club podcast, but it applies to Microsoft as well, the biggest companies in the world. This is where the leverage points are on your paywall, so that's where you should be experimenting. So we are at time, but I did want to give you an opportunity. Is there anything you wanted to share as we wrap up?

Ramit Arora:

Maybe go and download the Microsoft 365 apps and give us great reviews if you like them, of course.

David Barnard:

Yeah. No, and I think everyone here should go download the apps. Before talking to Ramit, I thought, "Oh, Microsoft, they're just boring enterprise company." But the more I've talked to Ramit, the more I've realized they're doing really innovative stuff and working hard at optimization and working on onboarding and paywall testing and packaging testing, and so when you're doing research on best practices in the industry, the apps Ramit works on are actually fantastic examples of the type of growth experiments and the type of onboarding and the type of things that you want to do in your own app.

Ramit:

And let us know what you think, and I'm available on LinkedIn, so happy to help out anybody.

David Barnard:

Awesome. And then as we wrap up, most of you probably know I'm with RevenueCat, I'm the growth advocate. We're a subscription management and optimization platform, help simplify billing across iOS, Android and the web, and normalize all the crazy intricacies between iOS and Android so you can run your CRM campaigns based on the same token instead of having to do different ones for the different platforms and really help subscription apps. I mean, our mission as a company is to help developers make more money, and so we build the tools to do that. I do bi-weekly interviews with top industry folks to help subscription apps grow, so check out the podcast on Apple Podcasts, Spotify, or wherever you're listening to your podcasts. Thanks again so much for your time and for sharing your knowledge, and we'll have to do some more collaboration in the future.

Ramit Arora:

Yeah, absolutely. And thank you so much, David, for having me, and thank you everyone for joining.

David Barnard:

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.