The number of internet users worldwide in July 2023 was 5.19 billion, representing 64.6% of the world's population. Of these users, 4.88 billion, or 59.9%, were on social media.1 Imagine navigating that vast ocean of potential users for your app without a compass. You're adrift, unsure of which direction to take, and every wave feels like an unpredictable challenge.
Mobile user acquisition metrics are that compass for developers in this expansive digital waters. These metrics quantify the success of marketing campaigns and provide invaluable insights into user behavior, preferences, and engagement. They serve as a roadmap, helping user acquisition managers understand where they are, where they need to go, and how best to get there.
As we delve deeper into this topic, we'll explore the key user acquisition metrics and the pivotal they play in shaping user acquisition strategies, ensuring that publishers reach their target audience, build long-lasting user bases, and maximize their user acquisition budget.
The key to success for mobile apps and games is not just acquiring users but acquiring the right ones. Every game or app developer dreams of a user base that's not only vast but also engaged, loyal, and profitable. Understanding the key mobile user acquisition metrics can help us navigate that challenge and identify the quality of the user base we are building. Are they merely downloading the app and forgetting about it, or are they actively engaging, making in-app purchases, and even referring others?
Moreover, mobile user acquisition metrics offer a clear picture of the profitability of acquisition campaigns. It's one thing to spend heavily on advertisements and see a surge in downloads, but are these downloads translating into revenue? By fine-tuning campaigns based on metrics like Cost Per Install (CPI) and Lifetime Value (LTV), developers can ensure they're not just gaining users, but players who contribute positively to the bottom line.
But profitability is just one side of the coin. The other is the quality of users. A game might have thousands of downloads, but the campaign needs reevaluation if only a handful play it regularly. Metrics like retention rate provide insights into user stickiness and engagement, ensuring that the acquired users are here to stay and enjoy the app or game.
In the upcoming segments of this article, we'll delve deeper into these key metrics, shedding light on why they were chosen. Each metric offers a unique lens to view the acquisition process, ensuring that your user base grows in numbers, quality, and profitability.
Cost Per Install, commonly referred to as CPI, is a metric that represents the expense an advertiser incurs each time a user installs their app as a direct result of viewing an advertisement. CPI provides a clear picture of the financial efficiency of advertising campaigns geared toward driving app installations. With mobile developers increasing their marketing budgets by nearly 65% this year, according to the Business of Apps, understanding and optimizing CPI is crucial for a campaign's success.
The formula for calculating CPI is straightforward. It's the total ad spend divided by the number of app installs. For example, if an advertiser spends $1000 on an ad campaign and receives 500 app installs as a result, the CPI would be $2.
Having a low CPI indicates that the campaign is cost-effective, allowing wider reach with the same budget as a campaign with a high CPI. However, it's essential to balance the CPI with the quality of users being acquired. For instance, a low CPI is beneficial, but if those users aren't engaging with the app or making in-app purchases, the overall return on investment might still be low.
CPI may vary based on several factors, including location, platform, genre, seasonality (Holidays are usually a high-demand time for advertising), and media channels. For example, the average mobile CPI ranges from $0.93 in the Asia-Pacific region to $5.28 in North America, according to a report published by the Business of Apps. Similarly, the average CPI for iOS apps stands higher at $3.6 compared to Google Play apps at $1.22 globally. Likewise, the CPI may be higher during the holiday season as advertisers are more likely to increase their budgets during this period.
Understanding and optimizing CPI is not just about reducing costs but ensuring that every dollar spent results in valuable user acquisition, setting the stage for long-term app success.
Install Rate (IR) is a metric that quantifies the efficiency of an advertisement in driving app installations. Specifically, it measures the percentage of users who install an app after viewing or clicking on an advertisement. IR is crucial in mobile user acquisition because it provides insights into the effectiveness of ad creatives, placements, and targeting strategies. An optimal IR indicates that the advertisement resonates with the audience, compelling them to take the desired action of installing the app.
Install Rate represents the number of app installs resulting from an ad campaign divided by either the total number of ad clicks or ad views, depending on the specific metric in focus. Two primary metrics related to IR are click-to-install rate (CTI) and impression-to-install rate (IPM). CTI measures the conversion from ad clicks to installs, while IPM measures the conversion from impressions to installs.
Several factors can influence the IR of an ad campaign:
Mobile user acquisition campaigns can be significantly enhanced by understanding and optimizing these factors, resulting in ads that reach a wide audience and drive action.
Lifetime Value, often abbreviated as LTV, represents the estimated average revenue that a player will generate throughout their lifespan as a customer. In the context of mobile apps and games, LTV is a reflection of the long-term value of a user, encompassing not just the initial purchase or download but all subsequent interactions, in-app purchases, and engagements.
The calculation of LTV can vary based on the business model. In subscription-based models, a common method is to take the average monthly revenue expected from each customer and divide it by the churn rate (the rate at which customers discontinue their subscription). For non-subscription models, LTV is determined by multiplying the average purchase value by the number of expected purchases and the time of engagement.
By understanding the potential long-term revenue from each user, developers can make informed decisions about how much to invest in acquiring them. Specifically, the Cost Per Install (CPI) should always be lower than the LTV to ensure profitability. If the LTV of a user segment is lower than the current CPI for that segment, it signals a need for reevaluation and optimization of acquisition strategies. Moreover, segmenting customers based on their LTV allows developers to allocate resources more effectively, focusing on acquiring and retaining high-value users.
Retention rate is a pivotal metric that calculates the percentage of players who continue to engage with a game over a specified duration. A high retention rate indicates that players are finding the gameplay compelling, leading to consistent in-game activity and potential monetization. On the flip side, a low retention rate suggests that players might be losing interest quickly.
This is particularly concerning when considering that during Q3 2022, games witnessed a 20% decline in Day 30 retention rates compared to Q3 2020, according to AppsFlyer. In such a scenario, even the most aggressive user acquisition strategies can falter if retention isn't prioritized. That said, some strategies that can help boost retention rate in mobile games include:
ROAS, or Return on Ad Spend, is a metric used to evaluate the revenue generated for every dollar spent on advertising. It is calculated by dividing the ad campaign's revenue by cost. For example, if a game developer spends $2,000 on an ad campaign and it results in $8,000 in revenue, the ROAS is 4:1. This means that for every dollar spent on advertising, the game earned $4 in revenue.
In mobile gaming, where marketing budgets can be tight, ROAS helps determine the success of ad campaigns. A high ROAS indicates that the campaign was effective in generating revenue relative to its cost. However, a low ROAS suggests that the campaign might not have been as cost-effective.
It's also essential to consider ROAS alongside other metrics like Cost Per Acquisition (CPA), Lifetime Value (LTV), and Average Revenue Per User (ARPU). In mobile gaming, where revenue can come from various sources like in-app purchases or ads, understanding ROAS is crucial. For instance, a high ROAS is good, but the overall profitability might be limited if the acquired users don't engage with the game long-term.
While each metric offers individual insights, they are deeply interconnected. For instance, a high CPI might be justifiable if the LTV of the acquired users is significantly high. Similarly, a high ROI might be driven by both a low CPI and a high retention rate. When viewed collectively, these metrics provide a comprehensive picture of the acquisition process's effectiveness and profitability. Balancing them ensures that the acquisition strategy is not only attracting users but also retaining them and doing so profitably.
Overall, these metrics serve as the compass for refining user acquisition strategies. Developers can optimize campaigns for maximum effectiveness by understanding and analyzing these metrics. Here are a few ways they can guide optimization:
Navigating the intricate landscape of user acquisition can be challenging. But with the right insights and strategies, you can maximize the return on your investment and ensure sustained success for your mobile game or app. If you're looking to elevate your user acquisition efforts, our team at GameBiz Consulting is here to help.
Don't leave your user acquisition to chance. Tap into the expertise of our seasoned UA professionals at GameBiz Consulting. We'll work closely with you to refine your strategies, optimize your campaigns, and ensure you're getting the most out of every dollar spent.
Book your consultation now and unlock the full potential of your user acquisition budget.
