User acquisition is an important practice that helps mobile apps achieve their growth goals and build an active community that can be retained for longer and boost LTV. This should be a data-driven approach that identifies and targets high value users, boosting overall performance over time. In this guide, we share everything you need to know about user acquisition including key definitions, why user acquisition is important and which metrics are crucial for this marketing strategy.
What is User Acquisition?
User acquisition (UA) is the process of acquiring new users. For mobile apps, this means advertising your app to potential users who will then install the app. According to Statistica, the average cost to acquire an app user who registered with an app or created an account was 3.52 U.S. dollars as of August 2019.
The Statistica report also shows that the costs for mobile app user acquisition will vary depending on the user action and operating system: “Compared to the relatively low acquisition costs of a user registration, the user action that had the highest average acquisition cost for both operating systems, Android and iOS, was making an in-app purchase.” This cost was 77.45 U.S. dollars for Android and 86.72 U.S. dollars for iOS.
Paid media marketing vs owned media marketing
There are two types of user acquisition you need to know: Paid media marketing and owned media marketing. Paid media marketing is the practice of marketing on media channels to display direct response adverts (ads) which will encourage your target audience to install the app. For example, a mobile game can display banners in other apps and ads on social media. A user can see your creative, click the ad and be sent directly to the app store to install.
Owned media marketing is when an advertiser uses their own marketing assets to generate installs. For example, they can build a mailing list and use email marketing to target users. They can also use SMS marketing and loyalty programs – all of which would be owned media marketing because it directly utilizes the advertising resources of the advertiser. For best results, many advertisers will develop a mixed strategy that involves paid media marketing and owned media marketing to reach their audience and achieve their goals.
Why is user acquisition so important?
User acquisition is critical to driving growth and creating a large customer base, which in turn boosts LTV and generates ROI. Once you have built a great product, your user acquisition strategy will help you connect with your target audience and build brand awareness. If you want to grow your mobile app’s audience or want to retain users for longer, developing a user acquisition strategy will help you achieve these goals.
A successful UA strategy will also help you boost your app’s ranking in the app store and generate organic installs – which can often be the highest value users because they found the app due to their own interest. A user acquisition strategy will help you stay competitive in a saturated market.
You should continually develop your user acquisition strategy based on the latest information available to you. By tracking data and identifying behavioral trends you can make data-driven changes to your strategy and push towards your targets. You should also be aware of the number of users who download your app but never use it, which can decrease the percentage of users who are contributing to KPIs such as in-app purchases. This is only because you are bringing in more users, not because you have less purchases.
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User acquisition metrics
There are many app metrics you need to know when developing your user acquisition strategy. Here are 14 that every marketer needs to know and track for best results.
- Install: This is the number of installs generated as a result of your campaigns. When a user finds your app without advertising they create an organic install.
- Cost per Install (CPI): This is the price for generating each app install.
- Cost per Acquisition (CPA): This is a measurement of how much it costs to acquire each user.
- Click-Through Rate (CTR): This is the percentage of the people who were advertised to and clicked through to install. This metric is an indicator of the efficacy of your creative.
- Conversion rate: This is the percentage of users who convert, which could be in relation to any desired action you choose. For example, conversion rates typically refer to the percentage of people who clicked on your ad and installed, or users who completed a purchase.
- Retention rate: This is the percentage of users who have had a session in your app after a set period. For example, you can measure the retention rate of your app for Day 1, Day 7 and Day 30 to check how long users stay engaged with your app. The aim should be to prolong retention rates as long as possible, which in turn makes it more likely for users to complete in-app purchases and generate revenue through in-app advertising. A high retention rate is also an indicator of a quality in-app user experience.
- Churn: Your churn rate is the percentage of users who stop using your app after a set period. This will be the opposite of your retention rate. You can also look at retention and churn for different demographics by segmenting your audience. This can help you refine your target audience and advertise to high-value users.
- Uninstall rate: This is the percentage of users who have uninstalled your app completely.
- Lifetime Value (LTV): This is a projected net profit for users who have your app installed. It estimates how long the average user spends before they uninstall. LTV is considered to be a north star metric for many mobile marketers. It is the aim of a marketer to prolong LTV and get higher ROI per user.
- Return on Investment (ROI): This is the measurement for how much revenue you will get in return for your marketing investments.
- Return on Ad Spend (ROAS): This is the return on investment for your ad spend. This is an important metric for identifying the most successful campaigns and how to move forward to reach your revenue targets.
- Average Revenue per User (ARPU): This is the average revenue generated per users for each campaign. You can also look at ARPU for different demographics and geos to refine your target audience.
- Average Revenue Per Daily Active User (ARPDAU): This is the ARPU for a 24 hour period. This can also be used to observe how recent changes made to your app have changed your daily revenue.
- Cost per Mille (CPM): This tracks the price of generating one thousand impressions with your ad.
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How does user acquisition work?
User acquisition campaigns are a continuous loop of data tracking and analysis for best results. It requires marketers to rest the efficacy of their campaigns and make changes based on the results of their A/B tests. The nature of your user acquisition strategy will depend on your app vertical, but there are also commonalities across all verticals.
1. Identify your target audience and how to reach them
The first step towards developing your user acquisition strategy is to know who you want to target and find ways they can be reached. This requires you to learn which types of users will be most likely to convert and generate revenue for your business. Note that this could include your existing users in addition to potential users you want to target. Market research and data analysis will enable you to narrow your focus and identify your target audience.
For best results, this is considered from the very early stages of developing your product. For example, what is your unique selling point and who needs it? These questions already give you an idea of who to target. Your data analysis will reveal details such as which geos could be lucrative and which operating system is best for you. You can also create user personas to help you define different types of users that are likely to convert.
2. Build lookalike audiences
Once you know the types of users who are most valuable to you and your targets, lookalike audiences empower you to reach more high-value users. It is important for these segmented audiences to be defined by data-driven insights.
3. A/B test your creative
Testing your creative and developing it over time is a best practice that can push you towards your most ambitious targets. This is the process of segmenting audiences and testing a variant of your creative to see if you can improve your CTR and conversion rate. By diving deeper into your analysis you may also find that a variant delivers the same number of users but generates more in-app purchases. Once you have a successful variant, you can continue to A/B test for best results.
How do you acquire more app users?
There are several ways you can acquire more app users. As we previously outlined in this article, you have the option to perform paid media marketing and owned media marketing. Here are some examples that will help you acquire more app users:
- App Store Optimization (ASO): Similar to SEO, this is the practice of making changes to your app store entry to improve visibility and drive organic installs. This includes making changes to your primary and secondary categories, app name and description, and including media such as images and videos to engage app store users.
- Paid advertising: This is a traditional method of advertising with inventory such as in-app banners and video ads. This enables you to tailor your ads for different demographics and A/B test for best results.
- Influencer marketing: As users become increasingly influenced by public figures rather than traditional brand messaging, this type of marketing has taken the app marketing industry by storm. Influencer marketing requires you to work with an influencer who is popular with your target audience. There are several ways to collaborate with these public figures, from offering free products to social media takeovers. How you choose to work with influencers will depend on the nature of your app. It is also smart to communicate with your chosen influencer at length about what you want to achieve. They will have a deep understanding of their audience and how your campaigns can be successful.
- Press coverage: Getting your mobile app into the media is still an effective way to raise brand awareness and drive installs. This could be through sending press releases to relevant sources or pitching by-lined articles to magazines looking for content in your industry. With the right brand messaging this can be particularly effective when launching your app – gaining exposure to your target audience from day 1.
- Email marketing: It’s smart to set up a mailing list for users interested in hearing more about your mobile app and your products. This enables you to communicate directly to users without paid marketing. You should also A/B test the efficacy of your email marketing and refine your messaging and loyalty rewards over time.
- Loyalty programs: This can be used in conjunction with other types of user acquisition strategies. For example, you can reward your users for signing up to your mailing list by offering a discount on your products or – if you have a mobile game –giving them free in-app purchases.
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Summary
User acquisition is critical for mobile marketing because it helps mobile apps achieve their growth goals and build an active community. It helps you track and improve upon metrics such as LTV, ARPU, retention rate and ROAS. There are two types of user acquisition: Paid media marketing and owned media marketing. They can be used in a mixed strategy for best results. Some of the best ways to acquire new users include email marketing, influencer marketing, paid advertising and ASO.