User Acquisition
With more than four million apps in the leading stores, developers and UA managers need to have a solid plan in place to win users. That plan might include a well-constructed, strategic combination of organic and paid channels, but no matter how clever and effective it is, there’s always room for improvement. That’s where campaign optimization comes in. But in order to optimize your campaign, you need to understand the goals for which you’re optimizing. What results are you looking for? And how are you measuring those results?
You need to have a clearly defined set of Key Performance Indicators, or KPIs. KPIs are the metrics you and your team have identified as those most important for your campaign’s success. These are the goals that you have to monitor carefully and consistently to ensure your campaign is hitting all its marks, and that you’re getting the most out of your budget.
While different UA campaigns may have different KPIs, here are a few of the most common and useful ones.
ROAS measures how efficient your campaign spend is. Your ROAS is the amount of money you get back for every dollar spent on advertising. To determine ROAS, you need to divide the gross revenue earned as the result of your campaign by its cost. Ideally, you want to spend as little as you can while achieving maximum results, so a high ROAS is a good thing. It’s a really important KPI to keep in mind as you optimize campaigns.
How much does it cost to acquire a new user for your app or game? CAC sums up your sales and marketing investment into acquiring new customers over a set period of time. It’s helpful in making budgeting decisions and for calculating your return on investment (ROI).
With CPI campaigns, developers and UA managers only pay for ads when their app is actually installed. That means ROI can be calculated easily and accurately, so you can set a price per install that works toward your campaign goals and optimize to that number — or below it. CPI is very similar to CPA, a model used broadly in digital marketing, except that CPI is exclusive to mobile apps.
CPI has many different dependencies, including geographic location and whether devices are iOS or Android. You can calculate CPI by dividing the ad spend by the number of new installs over a set period of time.
ARPDAU measures how well your monetization strategies are working on a daily basis. It tells you how much revenue your active users generate for your app or game every day from multiple sources, including ads, in-app purchases, and subscriptions.
While this may not be helpful for a newly launched app, it becomes much more important further on in an app’s lifecycle. Since UA campaigns continue long past launch, ARPDAU becomes an important tool to help you understand who your best users are. Once you have that information, you can target more users like them. Where are your highest revenue customers coming from — which networks, apps, ads? When you know, you can invest more in those creatives and channels to attract and win more high-value users like them. See also: ARPPU
LTV is exactly what it sounds like it is — a prediction of the profit margin you’ll earn from your app’s average user over the time period they have and use your app. It’s arguably the most important KPI since it takes all revenue factors into account.
Like ARPDAU, LTV is a metric that can’t really be calculated until your app actually has a user base. However, once you’re able to figure out your user LTV, you’ll be able to measure a lot of other things that will make all of your campaigns more efficient and effective. There are some incredibly valuable applications for this KPI:
To calculate LTV, we most commonly use is this formula:
LTV = ARPDAU * Lifetime
…but there are a lot of ways to figure it out.
As any developer knows, app store optimization is a critical factor in user acquisition. It’s an entire marketing discipline in its own right, and it has its own set of KPIs, but this list wouldn’t be complete without mentioning them. These are the most important to keep in mind:
As you begin to optimize your UA campaigns, you’ll need to know which of these metrics are really KPIs. Once you have those prioritized, you’ll be able to adjust the levers effectively to get the most out of all your campaigns.
Want to learn more about the KPIs you need to track for user acquisition campaigns — and how to optimize for them? Come see AppLovin speak on the panel “How to Optimize Your Campaigns to Acquire the Most Valuable Users” at the App Promotion Summit Berlin 2021, December 2-9, 2021!
