Mobile Customer Acquisition Costs: Which Price Is Right?
When it comes to the performance of mobile customer acquisition campaigns, which price is right?
The question above, as straightforward as it might be, has no simple answer. Many factors can indeed influence or even determine whether a performance-based customer acquisition campaign will be successful.
At AppLift, we’ve run performance cost-per-install (CPI) campaigns for over 500 mobile app advertisers. In our experience, here are the most important factors:
The First Step: Knowing How Much to Pay
The start of all advertising efforts should always be defining the campaign goals, together with the advertiser. For example, a large (and growing) majority of AppLift’s clients measure the LTV (Lifetime Value) of their app’s users. From the beginning, most advertisers establish clear goals in terms of performance.
The formula of LTV vs. cost-per-install (CPI) is a good way to figure out the value you should expect out of new users. This method can however only determine an average cap for the right CPI (where the advertiser breaks even) and does not guarantee an optimized return. Finding the right price means continually adapting the sweet spot to maximize ROI.
Mobile Customer Acquisition KPIs
The main factors likely to influence the CPI sweet spot comprise the availability/scarcity of inventory. If good inventory is rare, a higher CPI is needed in order to drive volume. Other apps (either directly competing or from the same app store category) may also contend for the same inventory and drive CPIs up. On top of this, the creative format and inventory type used can have a direct influence on both prices and quality. Other factors include existing customer penetration for a specific app, general vertical attractiveness, countries and geo targeting, and even time of the day/week.
The below table compiles the main KPIs likely to influence CPIs:
Most importantly, price as such can’t be a good proxy for the value of acquired customers. One should always compare price to the estimate as well as the actual return of new users. Furthermore, rather than pricing traffic on a one-off basis, a continuous assessment and readjustment of the price is needed to optimize returns.
6 Easy Steps to Determine Optimal CPI:
- Pick KPIs for success. Typically, lifetime value KPIs.
- Determine your expectations for ROI.
- Assess benchmarks of similar apps and targeting settings (geo, platform, timing, other pricing influencing factors).
- Set a CPI starting point.
- Fine-tune the CPI, based on quality returns and volumes delivered.
- Optionally, carry out selective pricing based on quality as well as total volume to maximize the absolute yield of the campaign.
In summary, pricing is a complex subject that needs to be addressed carefully. Finding the right mobile customer acquisition price is highly dependent the goal of the campaign, hands-on experience and adequate use of historical data. Now, pricing does remain an art, especially for new apps and geos. A thorough and flexible pricing process is paramount to optimize campaigns sustainably.
Which were the factors that mattered most for your campaigns?
A version of this article was originally published on the Applift Blog.
About the Author:
This article was submitted by Stefan Benndorf, from AppLift – a data driven app marketing platform that empowers mobile app advertisers to acquire and re-engage quality users at scale. Before AppLift, Stefan co-founded app performance marketing company appiris together with Hitfox Group and Hugo Gersanois. During 2014 he scaled the business as CEO on a global level and appiris was acquired by AppLift beginning of 2015. Prior to this, Stefan worked as CFO and COO in the Executive Team of mobile advertising company madvertise. Stefan’s hobbies include early 20th century German literature and his weekends are mostly spent with outdoor activities. You can read more posts from AppLift on their blog or follow them at @appLift for the latest in mobile marketing news.