To have effective plans to optimize marketing campaigns, business owners need to clearly understand the goals and desired results to achieve? And with what indicators will the results be measured?
What you need to do is to set clear KPI indicators. KPIs are the metrics that you and your partners have determined are most important for the success of your campaign. These are goals that you must follow carefully and consistently to ensure your campaign achieves all its goals and gets the most out of your budget. To help readers better understand marketing campaign optimization, the 6 User Acquisition metrics below can help you build a more perfect plan!
With over 4 million apps on the top app stores, UA developers and managers need a solid plan to attract users. That plan may include a strategic and well-crafted mix of organic and paid channels, but no matter how smart and effective it is, there's always room for improvement. That's where campaign optimization comes into play. But to optimize your campaigns, you need to clearly understand the goals you're optimizing for. What results are you looking for? And how are you measuring those results?
You need a clearly defined set of Key Performance Indicators (KPIs). KPIs are the metrics that you and your team determine are most important for your campaign's success. These are goals that you must track carefully and consistently to ensure your campaign is achieving all of its goals and you are getting the most out of your budget.
Although different UA campaigns may have different KPIs, below are the six most common and useful metrics.
1. Return on Ad Spend (ROAS) – Revenue over Advertising costs
Revenue based on advertising spend (ROAS) is a measure of the effectiveness of your advertising campaign spending. ROAS shows how much you earn for each ad dollar. To determine ROAS, you need to divide the gross revenue from a campaign by the cost of that campaign. Ideally, you want to spend as little as possible while achieving maximum results, so a high ROAS is a good thing. this is a key performance indicators (KPI) It's really important to keep in mind when you're optimizing your campaigns.
How to calculate ROAS:
Basic ROAS calculation formula:
ROAS = Advertising Revenue / Advertising Expenses
For example:
- Let's say you spend $1,000 on an advertising campaign and earn $2,000 in gross revenue.
- Your ROAS will be: $2,000 / $1,000 = 2
- This means you earn $2 for every $1 you spend on advertising.
Meaning of ROAS:
- A high ROAS shows that your advertising campaign is effective and profitable.
- Low or negative ROAS indicates your advertising campaign may not be effective and you need to adjust your strategy.
How to improve ROAS:
- Target users who are more likely to convert.
- Optimize your ads to increase click-through rates (CTR) and conversion rates.
- Monitor your campaign's performance and make adjustments as necessary.
- Use analytics tools to track ROAS and other performance metrics.
Note: ROAS is just one of many factors to consider when evaluating the effectiveness of an advertising campaign. You should also consider other factors like user retention rate and customer lifetime value (LTV).
2. New customer acquisition cost (CAC)
Customer acquisition cost (CAC) is the amount of money you spend to attract a new user to your app or game. CAC includes the total amount invested in sales and marketing to attract new customers over a given period of time. This is an important metric that helps you make budget decisions and calculate your return on investment (ROI).
To calculate CAC, you need to divide the total spend on new customer acquisition (including advertising costs, sales staff costs, etc.) by the number of new customers acquired during the same time period.
Recipe:
- CAC = Total New Customer Acquisition Cost / Number of New Customers
For example:
- Let's say you spend $10,000 on app advertising and $5,000 on sales staff in January. In January, you acquire 1,000 new users.
Your CAC for January will be: ($10,000 + $5,000) / 1,000 = $15
Meaning of CAC:
- A low CAC shows you're effectively attracting new customers.
- A high CAC indicates you may be spending too much money to attract new customers or your conversion rate is low.
How to reduce CAC:
- Target users who are more likely to convert.
- Optimize your app landing page to increase conversion rates.
- Use more effective ad formats.
- Improve your content marketing strategy.
- Offer a refer-a-friend program.
Note: CAC is just one of many factors to consider when evaluating the effectiveness of an app campaign. You should also consider other factors like user retention rate and customer lifetime value (LTV).
3. Cost per install (CPI):
Cost Per Install (CPI) is the model payments in app marketing, where developers and UA managers only pay for ads when their app is actually installed. This makes calculating ROI (Return on Investment) easy and accurate, allowing you to set a price per install that matches your campaign goals and optimize to that number or lower. CPI is very similar to CPA (Cost Per Action), a widely used model in digital marketing, but CPI is specific to mobile apps.
There are many factors that influence CPI, including geographic location and device operating system (iOS or Android). You can calculate CPI by dividing your ad spend by the number of new installs over a certain period of time.
CPI = Total cost of the campaign / Total number of app installs resulting from the campaign
For example:
- Let's say you spend $100 on app ads and get 100 new installs. Your CPI will be $1 ($100 ad spend / 100 installs).
- If you want to reduce CPI, you can try the following strategies:
Target users who are more likely to convert.
Optimize your app landing page to increase conversion rates.
Use more effective ad formats.
Note: CPI is not the only factor to consider when evaluating the effectiveness of an app campaign. You should also consider other factors like user retention rate and customer lifetime value (LTV).
4. Average revenue per daily active user (ARPDAU)
Average Revenue Per Daily Active User (ARPDAU) is a measure of the effectiveness of your monetization strategies on a daily basis. It tells you how much revenue your active users generate for your app or game each day from a variety of sources, including ads, in-app purchases, and subscriptions.
While this metric may not be useful for a newly launched app, it becomes much more important over the app's lifecycle. As UA campaigns continue long after launch, ARPDAU becomes an important tool to help you understand which users are most valuable. Once you have that information, you can target more users like them. Where do your highest-grossing customers come from – which networks, applications, ads? Once you know, you can invest more in those creative elements and channels to attract and win more high-value users like them.
For example:
- Suppose your application's ARPDAU is $0.5. This indicates your average active user generates $0.5 revenue per day.
- If you have 10,000 active users, you will generate $5,000 revenue per day from active users.
- This number can help you evaluate the effectiveness of your monetization strategies and identify areas for improvement.
5. Customer lifetime value (LTV)
Lifetime value (LTV), as the name suggests, is a prediction of the net profit you will earn from an average app user over the time they use your app. This is arguably the most important campaign key indicator (KPI) because it takes into account all factors related to revenue.
Similar to ARPDAU, LTV is a difficult metric to calculate accurately until your app has a certain number of users. However, once you determine a user's LTV, you can measure many other factors that help increase the effectiveness of your campaigns. Here are a few important benefits of tracking LTV:
User grouping and targeting: Once you estimate the average value a user brings over their lifetime, you can group and target users with similar characteristics. with user groups with high LTV.
Set a more accurate campaign budget: Knowing your LTV helps you estimate the maximum cost to attract new customers while ensuring a positive return on investment (ROI).
Determine when to pause UA campaigns: LTV is what helps you decide when to pause user acquisition (UA) campaigns – at least until the app is updated to a new version.
LTV calculation formula:
The most common formula to calculate LTV is:
LTV = ARPDAU * Average user lifespan
…However, there are other ways to calculate LTV.
- For example:
Let's say your app's ARPDAU is $0.5 and the average user lifespan is 1 year (365 days). In this case, your LTV will be $182.5 ($0.5 x 365).
This says you can spend a maximum of $182.5 to acquire a new user and still make a profit.
Note that this is just a simple example and average user lifespan may vary depending on industry and application type.
6. App Store Optimization Metrics – App Store optimization metrics
Besides the key metrics of running a user acquisition (UA) campaign mentioned, app store optimization (ASO) is also an important factor affecting user acquisition. ASO is considered a separate field in applied marketing, with its own set of performance indicators (KPI). Here are a few important ASO metrics you should keep in mind:
Keyword Ranking: Where in the search listings are your key keywords helping to show ads for your app? For users to easily find your app, your app title needs to appear on the first page of search results.
- For example: SensorTower research shows that 60% of app installs came from keyword searches on the app store. Therefore, keyword optimization to improve rankings is very important.
Views before install: The number of times a user viewed or interacted with your brand before installing your app (a good metric to measure ad and brand effectiveness).
- For example: Suppose you are running an advertising campaign displayed on another application (banner ads). You can track the number of views before installation to evaluate the attractiveness of the advertising banner.
Install source: The origin (channels) that referred users to your app and resulted in an install.
- For example: By tracking install sources, you can determine which channels bring in the highest quality users. For example, you may find that users coming from blog reviews have a higher retention rate than users coming from banner ads.
Bottom line: When starting to optimize your UA campaigns, you need to determine which metrics are truly important KPIs. Once you've prioritized your metrics, you can adjust different factors to get the most out of all your campaigns.
