Over the past year, app developers have started prioritizing other key performance indicators (KPIs) with respect to the ones that were trending before. Notably, return on ad spend (ROAS) has been replacing cost per install (CPI) as the preferred metric, while there has also been an increasing interest towards cost per action (CPA).
This shift shows how marketers are now more interested in acquiring high-quality users who can be profitable and bring constant revenue rather than obtaining a large number of new users without knowing if they will keep using the advertised app.
Keep reading if you want to find out why CPI has lost its appeal and how to leverage ROAS and CPA to improve your campaign and keep track of its performance!
- Why is CPI losing its appeal?
- The rise of ROAS. Choosing quality over quantity
- The growing importance of CPA
- How to implement and optimize ROAS and CPA in mobile marketing strategies
- Conclusion
Cost per install (CPI) has long been a useful KPI for mobile marketers as it measures the cost of acquiring a single app install, providing a straightforward and easily calculable metric for evaluating user acquisition campaigns. However, as the mobile app market matures, the limitations of CPI have become increasingly apparent:
- Short-term engagement. CPI is primarily concerned with the initial acquisition cost, neglecting the long-term value and engagement of users after they have installed the app. This can lead to campaigns that prioritize volume over quality, attracting app users who may not contribute significantly to revenue.
- Lack of revenue insight. CPI does not provide any information about the revenue generated from acquired users. As a result, it offers an incomplete picture of the campaign's financial performance, making it challenging for marketers to optimize for profitability.
Return on ad spend (ROAS) has emerged as the best KPI of 2024, offering a more comprehensive measure of campaign success by linking ad spend directly to revenue. The shift towards ROAS is driven by several key factors:
- Quality over quantity. By prioritizing revenue over the sheer number of app installs, ROAS encourages marketers to focus on acquiring high-quality users who are more likely to engage and keep generating revenue. This shift promotes sustainable growth and long-term user relationships.
- Revenue alignment. ROAS focuses on the financial return generated for every dollar spent on advertising. This metric aligns marketing efforts with broader business goals, making it easier to justify expenses and demonstrate the impact of marketing activities.
- Holistic performance measurement. Unlike CPI, ROAS considers the entire user journey inside the mobile app, from acquisition to conversion and beyond. It captures the long-term value of users, providing a more accurate assessment of a campaign’s effectiveness and profitability.
- Easier planning. ROAS helps to determine the efficiency of an advertising campaign, thus allowing advertisers to identify underperforming campaigns and consequently optimize them. It can also help to measure the effectiveness of other elements such as targeting strategies and creative assets.
Cost per action (CPA), which tracks the cost of a specific in-app event carried out by a new user, is also gaining importance as a KPI. CPA offers several advantages:
- Action-oriented measurement. CPA focuses on specific actions that drive business value, such as in-app purchases, registrations or subscriptions. This metric provides a clear understanding of the cost associated with obtaining meaningful user interactions, allowing for more targeted optimization efforts.
- Only paying for outcomes. This is the main advantage of CPA as advertisers won't be charged if they don't achieve the intended results. Therefore, it won’t be necessary to pay for users only installing the app on their mobile phones. In this case, users will be expected to carry out one or more in-app actions.
- Enhanced campaign optimization. CPA allows marketers to identify and optimize for the most cost-effective channels and strategies. By focusing on actions that generate the highest return, marketers can allocate resources more efficiently and improve overall campaign performance.
To effectively leverage and optimize ROAS and CPA, here’s what you should do:
- Set clear revenue and action goals. Define specific revenue targets and key actions for each campaign. Clear goals will help in measuring ROAS and CPA accurately and aligning marketing efforts with overall business objectives.
- Track your users’ in-app journey. It’s important to see how users act inside the app once they’ve installed it. This will help you optimize your campaign and identify the most appealing in-app events. After app developers have identified what in-app events (registration, subscription, deposit, first in-app purchase, reaching a specific level) qualify users as high-LTV customers, it will be possible to keep track of those events and use this data to optimize mobile app user acquisition by targeting the right audience.
- Focus on high-quality users. Prioritize strategies that attract high-quality users who are more likely to engage and generate revenue. This approach will improve the quality of acquisitions and maximize ROI.
- Test ad formats and platforms. Constant testing is essential to identify the most effective strategies to attract the right audience for your mobile app. More specifically, you should focus on creatives offering a CTA oriented towards specific in-app events you want to obtain rather than convincing people to merely install the app on their mobile phones.
- Create targeted audiences. Invest in detailed user segmentation to ensure ads are highly personalized and reach users who are most likely to engage.
In the past year, there has been a significant shift in the preferred KPIs for mobile user acquisition, with ROAS replacing CPI as the best metric and CPA gaining prominence as well. This shift reflects a broader trend towards revenue-centric and action-oriented performance measurement. That’s why you should keep up to date on the preferred KPIs and start focusing more on ROAS and CPA, so that you can gain a more comprehensive understanding of your campaigns’ effectiveness, optimize for profitability and drive sustainable growth.
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