Mobile user acquisition 101: A beginner's guide

Despite increased smartphone saturation and usage, app user acquisition is more competitive than ever. According to Statista, the average user spends 96% of their time on their top ten apps. That means that 5.5M+ apps on the market are all vying for a top-ten slot. To reach your audience, you need a solid mobile user acquisition strategy.

To grow profitably in today’s market, UA managers now need to target key conversion events, optimize for returns, analyze user behaviors, and test diverse creative. Here are some essential considerations that will help you get started.

Jump to a section…

1. Get in the performance marketing mindset
2. Understand the difference between CPM and CPC
3. Treat CPI as your UA baseline
4. Analyze CVR and CTR for optimization insights
5. Reacquire lapsed users with dynamic retargeting techniques

Get in the performance marketing mindset

In the early days of digital advertising, impression-based media buying was the name of the game. Efficient ad spending was about casting a wide net to gain as many audience impressions as possible. However, this approach proved most effective for brand awareness and not necessarily for app growth. Today, the industry has shifted to focus more on performance.

In a performance-based model, advertisers pay for installs, actions, or engagements. It stands apart from traditional advertising because marketers don’t pay for impressions — displaying an advertisement — but for activities that drive a campaign goal. This approach lets marketers optimize campaigns around revenue-generating metrics, target narrow audience segments, and distribute ad spend far more efficiently, which is why it’s preferred by app marketers today. It also puts more onus on the advertiser and/or media source to match ad creative with audiences most likely to take action.

The exact goal of each campaign will vary slightly by app category. An ad-driven mobile game might emphasize a high install rate, while Ecommerce apps might target first-time in-app purchases. In most cases, however, it makes the most sense to simply optimize a campaign for net revenue. The ideal metric for doing so is what’s called  “return on ad spend”, or ROAS. ROAS is a percentage measurement calculated by dividing the revenue generated by a user, or segment of users, by the corresponding ad spend required to acquire those users, multiplied by 100.

• ROAS = (Revenue / Ad Spend) x 100

For more information on running successful performance marketing campaigns, check out “What Is Performance Marketing? 4 Tips For App Marketers.”

Understand the difference between CPM and CPC

While some view cost per mille (CPM) and cost per click (CPC) as legacy metrics that don’t apply in the world of performance marketing, app marketers will no doubt encounter them at some point in their media buying efforts. In particular, CPM and CPC are likely to come up if you’re advertising with big industry players like Google and Facebook.

CPM is the cost advertisers pay for every thousand impressions during an ad campaign. For mobile marketing purposes, an impression refers to any instance of an advertisement being delivered to a user. Exactly how much of the ad needs to be rendered to count as an impression, and for how long, can vary widely between sources. Facebook was notoriously generous with their own video impression metrics, resulting in a $40 million payout to affected advertisers who felt their self-serving definition of what constituted a video impression ultimately resulted in them overpaying for media.

Traditional desktop-based campaigns used clicks to track user engagement with web pages and advertisements, which are much easier to define. Today, mobile marketers use CPC to track similar behavior, expanding the term to account for video, interstitial, or playable ad interactions.

While app marketers typically opt for more profit-centric pricing model, CPM and CPC models suit certain goals:

• CPM campaigns are well-suited for brand building and driving visibility. If your app is based on a new IP, CPM campaigns will emphasize putting it on as many displays as possible. Measuring user segments by CPM can also help you determine which audiences are viewing your ad, letting marketers track user interest or A/B test ad creative.
• CPC prioritizes conversions and down-funnel events. These campaigns measure the number of users who are willing to install your app or learn more about it. Further analysis of this data can reveal audience segments who are most likely to convert and increase your revenue.

To better understand how CPM and CPC are used in mobile campaigns today, take a look at “CPM and CPC: Understanding Mobile Advertising Rates.”

Treat CPI with an abundance of caution

Among app marketers, cost per install (CPI) is perhaps the most widely used media buying model, but it’s also quickly becoming outdated. Installs alone are rarely indicative of a successful ad campaign due to the fact that resulting revenue is never taken into consideration. 

• Cost per install = Total campaign ad spend / Total app installs during a campaign

Marketers that do choose to use CPI are often able to segment and analyze results by region, ad network, and platform to determine key trends that would otherwise be invisible. If these insights correlate with user data, marketers also gain granular insights that help them find lookalike audiences or create niche personas.

Here are a few common examples of the mobile user acquisition insights you can obtain using CPI:

• Apps published in the United States have an average CPI of $1.75 - $2.00 — an expensive rate that is common for developed app ecosystems. On the other hand, growing app economies like Brazil and Mexico have CPIs closer to $0.10, making it cost-effective to soft launch your app in these regions.
• Android and iOS devices each have their own built-in audiences that can influence CPI. Most notably, iOS CPI tends to be higher ($0.86 globally) while Android costs are lower ($0.44).
• Advertising networks can segment CPI further. On social media, Facebook ads have a $1.80 CPI, while Instagram ads have a more expensive $2.23.

CPI may not be the KPI that drives revenue for your app, but it does quickly summarize your mobile user acquisition efforts into a single metric. For that reason, it is a valuable consideration for any mobile marketing campaign.

For more information on CPI campaigns, read our blog post “Cost Per Install — The Benefits and Drawbacks of App Marketing’s Best-Known KPI”

To learn more about why CPI might not be the metric for you, check out “Cost Per Install Is Dying: Why Revenue is the Only UA Metric That Matters”

Analyze CVR and CTR for optimization insights

Mobile user acquisition is crucial, but it’s only the first step of a successful marketing campaign. The next is to take the users you’ve acquired and convert them into full-fledged customers and fans. Marketers can track their progress by measuring converted and unconverted user groups, which is where CVR and CTR come into play.

CVR stands for conversion rate. It refers to the percentage of users who view a mobile ad and click on it before completing some conversion activity. This event will be rooted in campaign goals and the ad pricing model of your campaign. In mobile marketing, CVR can refer to a variety of events, such as:

• Installing the app after seeing an ad
• Playing the first level of a mobile game after installing
• Registering or signing into an online account post-install

Meanwhile, the click-through rate (CTR) tracks how many users engage with an ad, even if they do not convert. CTR tends to be a small percentage of any given audience.

These metrics can be used in tandem to analyze where a campaign is succeeding and where optimizations may be required. A high CTR and low CVR, for example, suggest that an ad is eye-catching, but targeting disinterested users. A low CTR and high CVR, however, suggests users are finding value in the app that isn’t communicated effectively in your ad.

For a closer look at CVR and CTR, read our blog post “What is the CVR Formula? Use These Tips to Assess Campaign Performance.”

Reacquire lapsed users with dynamic retargeting techniques

Acquiring users is the first stage of mobile marketing — the next challenge is keeping them around. Of the 4,000 new apps launched every day, less than 0.01% gain enough users to become profitable. One reason for this is churn, the natural process which draws users away from your app. While combating churn is typically a retention issue, UA specialists can use retargeting techniques to bring recently lapsed users back into the fold.

Retargeting is the practice of deploying ads for users who installed or otherwise engaged with an app. Perhaps your user isn’t engaging with conversion events, leaves items in their checkout bin, or simply uninstalled the app. In all cases, retargeting is an effective method of reminding users that an app they previously showed interest in still has value.

Traditional static retargeting uses pre-designed ad campaigns that target a specific audience segment. Dynamic retargeting, on the other hand, uses machine learning to auto-optimize ad creative at the user level — an automated, highly-personalized process. Dynamic retargeting models tend to have higher conversions than standard retargeting because it can correlate with app activity. For example, if you abandoned an in-app eCommerce cart, you may start seeing ads suggesting you return to complete the purchase!

To learn more about dynamic retargeting campaigns, read “Dynamic Retargeting: How to Bring Lapsed Users Back To Your Mobile App.”

As you can see, mobile user acquisition requires a nuanced, performance-driven strategy. That’s why MOLOCO makes the job easier by giving you access to a vast programmatic ecosystem, and the guidance of a dedicated team of mobile experts. Our proprietary real-time bidding technology can help you hit growth goals, improve ROAS, and optimize for quality without sacrificing scale. Get in touch with MOLOCO to find out more!