How to Balance Driving Installs with Driving Revenue

How to Balance Driving Installs with Driving Revenue

August 5, 2014

As mobile marketers, our goal is always to acquire the highest quality customers at the lowest possible cost. You need customers, but you also need to stay in the black.

Cost per install, revenue per install, and return on ad spend are all a part of the same equation (revenue/installs x installs/spend = revenue/spend). Unfortunately, users who are cheap to acquire — those who are more likely to install your app — will not spend much within apps. On the other hand, users who have been identified by Facebook as prolific gamers or big spenders cost more to reach. Because it is so difficult to find pockets of users who are both cheap and likely to convert, CPI and ROAS act as counter-acting forces.

So which is more important? Should I care more about driving large quantities of cheap installs or about the revenue those installs will drive to my business? Our answer remains pretty consistent — it depends on the business objective.

Below, we walk through each of three possible strategies – drive more installs, drive more revenue, and balance both – highlighting the pros and cons, and how to setup your campaigns to achieve these goals.

1. Drive more installs

When to Use This Strategy

Considering beggars can’t be choosers when it comes to building a customer base, prioritizing installs is the common starting objective for most apps. Most apps would prefer to have some lower quality users (at least to start) rather than one or two quality users. More users means more word of mouth and general awareness, which are exactly what a newborn app needs. Driving installs at volume is also essential to ranking in the app store and increasing visibility of the app. Who doesn’t love free marketing?

What’s the harm?

Low CPIs are just a piece of the equation. If an advertiser focuses on this strategy for the long haul, user retention, app engagement, and eventually revenue are likely to suffer. You may have thousands of installs, but if only a handful keep the the app installed and of that handful only one or two make an in-app purchase, then you can expect a painful call from your finance team.

How to Do It Right

To drive lots of installs quickly and at scale, simply ensure lots of people see your ad. Target a broad audience – thankfully Facebook and Twitter have a combined 1.7 billion users – by limiting qualifiers to age range, location, and gender. A second option: target Tier 3 countries like Thailand, Mexico, and Indonesia that are known for having “cheap” users to keep CPI even lower.

2. Drive More Revenue:

When to Use This Strategy

Driving revenue should be a focus only after you’ve established a user base and you know what makes these customers tick. Driving installs at scale is a great way to collect mounds of data about your customers – what demographics or location perform best, how long a person is likely to keep your app installed, what time of day they are most likely to see your ad, and so forth.

Spend a few weeks running mobile advertising campaigns – collecting this data all the while – to get a pulse on user quality and lifetime value for key audience segments. Once you’re armed with the necessary data to better determine max bids, then you want to focus your strategy on maximizing revenue.

How to Do It Right

Shift efforts to only the demographic groups, countries, and audiences that drive the highest revenue and ROAS. Use first party data from your CRM or website to identify current or potential customers that are already interested in your brand and retarget them with ads. This will drive existing or high-potential users back to your app and encourage them to make purchases.

What’s the harm?

You guessed it — high quality users cost more. But if you’re acquiring the right users and measuring for in-app purchases and other downstream metrics, it will be easy to see that the return validates the cost.

3. Drive More Revenue & More Installs

When to Use This Strategy

You’ve bounced from one end of the spectrum (lots of installs but low revenue) to the other (lots of revenue, but dwindling user numbers) and find that you need to prioritize both initiatives in order to drive long term success. All companies should strive to use this strategy once they’ve established a user base and have collected enough campaign data to understand the value of their customers.

How to Do It Right

Keep the two strategies and goals as two separate initiatives. Like we said, it’s impossible to get big spenders to install your app for pennies, but if you run two campaigns – one to that focuses on acquiring new users at volume and the other on re-engaging existing quality users – your business can achieve both goals.

What’s the harm?

Absolutely nothing! Just make sure you define your separate key performance indicators as clearly as possible.  If driving reasonable CPIs while also driving specific ROAS level is the desired outcome, allocate separate budgets (for example, 80% towards ROAS and 20% towards CPI) towards each separate initiative.

This should provide a better guide as to when each objective – installs and ROAS – should be prioritized and how to use the two in tandem to achieve the most optimal results.

Need some extra guidance? Our in-house team of strategists (like myself) are happy to help. Leave a comment below or reach out to your contact at Ampush with questions.