The practice of UA (User Acquisition) is a crucial stage in the process of launching a mobile game and, equally as important, making it grow constantly. It is also true that, while it has always been an essential part concerning the growth of a mobile game, in more recent times companies’ focus has switched from the raw volume of new acquired users to the concepts of ROI and ROAS.
These have been used as indicators for the success of an install campaign and for its improvement, with the latter widely recognized to be the best and most useful metric when correlated to user acquisition.
What is user acquisition ROI?
User acquisition ROI (Return On Investment) is a parameter used to determine the profit generated after an investment. It is calculated very simply by subtracting the marketing costs to the profit and then dividing the result by the marketing costs. User acquisition ROI takes into account everything from the beginning of the development of a mobile game, therefore includes every single resource employed, such as app designing and software costs, just to name a few.
Profits generated through user acquisition can vary in terms of quantity and most importantly in terms of the way they are generated, whether from IAPs (In-App Purchases) or IAA (In-App advertisement).
Developers may prefer one way to the other according to their monetization strategy and to the game’s category, with recent studies conducted on the matter that show how many developers choose to take advantage of both modalities to outperform both IAPs or IAA monetizations alone.
What is user acquisition ROAS?
In mobile app marketing, to understand the success of an app install campaign, user acquisition ROAS (Return On Ad Spend) has climbed the rankings to become the principal method of measurement.
User Acquisition ROAS is fundamental because it allows to calculate the revenue of everything spent into the app install campaign by simply dividing the revenue coming from user acquisition by the amount spent for the ad. It is therefore able to isolate the result of this investment from every other expense that may have taken place.
Which one should you choose for user acquisition?
When drawing conclusions about UA performance, user acquisition ROAS is able to effectively show if an app install campaign is successful or not, and that is something that user acquisition ROI cannot do, since it assesses the overall profit of the operating expenses. User acquisition ROAS is much more specific, it only looks at the revenue generated on advertisement spending, but at the same time it doesn’t say if your ad campaign is profitable for the developer.
ROAS also becomes useful when we want to increase our UA performance, as it makes us able to pinpoint users that deliver high ROAS, so we can retarget them and persuade them to make more in-app purchases. Consequently, we become more and more aware of the right budget to invest on an app campaign while still being able to raise users’ LTV (LifeTime Value).
It is important to say that both indicators gain even more significance when calculated in periods of time (such as ROI at day 0, at day 7, at day 30, etc.) which is something that developers tend to do. As a matter of fact, developers use softwares that allow the forecast of the values of these indicators, consequently helping them to predict possible revenues and possible expenses of their users.
Always connected to user acquisition, many companies also calculate the ROI on a monthly basis, referring to it as mROI. That helps them to understand better the best genres to create games for based on the financial returns.
Mobile UA can only be done right and improved with a well-planned app install campaign, and equally importantly with a good follow-up, which allows an improvement of the resources spent on the campaign. Given these premises, there are a few conclusions that can be drawn.
· ROI is a very useful metric but does not allow for a good understanding of the revenue generated solely from an app install campaign, since it takes into account every other cost employed.
· User acquisition ROAS is a globally accepted key indicator and one incredibly useful when calculating and adjusting the efforts of acquiring new users. It owes its importance to its specificity, as it isolates the costs of user acquisition to every other cost employed in the development of a game.
· An analysis of the changes of user acquisition ROAS in a given period of time allows for a better understanding of the users and to a better targeting aimed at increasing their LVT.
· This analysis is also very useful in planning changes in an app install campaign by relocating the budget on the top performing sources or channels.