The best way to measure the success of an app and its mobile advertising strategy is to measure the quality of your customer lifetime value (LTV). LTV is one of the most effective metrics because it takes into account the overall profitability of a user, rather than just the initial return on ad spend. LTV is a more comprehensive metric that is focused on the big picture. Taking into account the net profit a user will bring in is far more informative and valuable than initial gains.
Oftentimes, advertisers will evaluate their success based upon revenue gains; however, this is not the best metric for calculating success. If revenue is being driven by new user acquisition, there is a risk that your revenue bubble will burst as soon as new user acquisition slows. The best way to measure success is tracking new user quality and engagement over time, which can be measured by LTV.
Although there are various ways to calculate LTV, ForEntrepreneurs.com recommends the use of this formula: LTV = ARPA (Average MRR per account) * customer lifetime. ARPA displays the average monthly revenue per customer.
Another important aspect of LTV calculation is collecting and passing post-install data. These analytics can be used to provide insight into the segments of users that are providing the best LTV. Post-install data is critical for qualitative analysis of users and traffic segments. These insights will reveal sources and campaigns that are performing best. That data can lead to more specific targeting that will garner more high quality LTV users, increasing average LTV.
As a benchmark, ForEntrepreneurs.com says that LTV should ideally be 3 times greater than cost of acquisition in order to create a strong revenue model. Targeting high LTV audiences will increase the overall success of your ad campaigns and your app in the long run. Post-install data is an easy way to track and measure user engagement, and in turn calculate user LTV.
Oftentimes, advertisers will evaluate their success based upon revenue gains; however, this is not the best metric for calculating success. If revenue is being driven by new user acquisition, there is a risk that your revenue bubble will burst as soon as new user acquisition slows. The best way to measure success is tracking new user quality and engagement over time, which can be measured by LTV.
Although there are various ways to calculate LTV, ForEntrepreneurs.com recommends the use of this formula: LTV = ARPA (Average MRR per account) * customer lifetime. ARPA displays the average monthly revenue per customer.
Another important aspect of LTV calculation is collecting and passing post-install data. These analytics can be used to provide insight into the segments of users that are providing the best LTV. Post-install data is critical for qualitative analysis of users and traffic segments. These insights will reveal sources and campaigns that are performing best. That data can lead to more specific targeting that will garner more high quality LTV users, increasing average LTV.
As a benchmark, ForEntrepreneurs.com says that LTV should ideally be 3 times greater than cost of acquisition in order to create a strong revenue model. Targeting high LTV audiences will increase the overall success of your ad campaigns and your app in the long run. Post-install data is an easy way to track and measure user engagement, and in turn calculate user LTV.
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