Is There Life After Install? Measuring User Engagement and App Profitability

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Partner Post - GoWide - Tailor-Made user Acquisition expertise

Posted: October 20, 2015

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In order to succeed on highly competitive market, app developers have to find the right balance of organic and paid traffic to reach desired amount of installs. Many developers build their marketing strategy on finding the lowest CPI channels and acquiring as much users as possible. Thus, they are measuring and optimizing campaign against cost per install (CPI). This approach is horizonless, because it does not imply measuring actual user engagement.  Concentrating your marketing efforts on pre-install activity is like preparing Cinderella for ball: the magic is happening, but it all will end by the midnight. In this post, GoWide tells how to measure post-install engagement and build and active and profitable user base.
App developers spend a lot of money and time acquiring users. However as much as 20% of apps downloaded are never used more than one time. Even if your acquisition cost is low, you are just losing money if users are not using your app. App install is just the first step in marketing journey. Tracking app engagement and conversion metrics will help to optimize marketing strategy, determine target audience and reach revenue goals.
Engagement metrics in general show the loyalty and activity of acquired users: how often they open your app and how long they keep it open. Depending on app’s monetization model, different engagement metrics will be used. For example, if app depends on advertising revenue, it’s extremely important to track app screens per session and session length. Whereas for travel app, session length may not be important, as long as users complete reservations.
Retention rate is calculated by dividing the number of users who opened an app every day by the total number of users who installed the app. As 2014 eMarketer report shows, around 39% of average app`s monthly active users open app 11 or more times during month. It`s an important metric that helps evaluate user lifetime and LTV (lifetime value of a user). Churn rate is the opposite of retention rate and shows the percentage of users who do not return to app.
Outcome metrics are ones related to revenue. They help to analyze profitability of an app and effectiveness of a marketing campaign. In general, they show how much money user spends through in-app purchases, subscriptions or other revenue-generating activities.
ARPU (average revenue per user) is calculated by dividing the total revenue driven by an app by the number of installs (total installs, paid installs, organic installs) for a particular period of time. APRU is a very useful metric that shows the app viability and quality of traffic. There is also ARPPU (average revenue per paid user), that is mostly used for subscription-based apps and shows the quality of paying users. Although average APRU may be completely different for particular app categories and business models, there is estimated standard of $0.04 per active user per month.
LTV is one of the main metrics that defines the profitability of an app. It is calculated based on the revenue each user generates during his lifetime (starting from app install to final interaction with an app). There is no established LTV formula that can be suitable for all apps, since it depends greatly on app`s monetization model. Your marketing strategy can be considered successful, if LTV of acquired users is greater than the CPI. ROI (return on investment) is one more metric that helps app developers and marketers evaluate profitability and adjust marketing spend. ROI measurement is a starting point for any campaign optimization.
K-factor is a virality metric that can be actually really useful in lowering the cost of user acquisition. Think this way: if user brings one more user, the price of one user acquisition can be divided between this two users. It is based on the evaluation of users` number who came through viral channels, like social networks, and number of daily active users, user lifetime and new users.
The most important thing in analyzing user engagement and app profitability is to utilize metrics that is right for your business model and app category. For social networking apps, critical user engagement metrics will be registration and content sharing. Purchases is the most important event for retailing app, while dating apps concentrate on subscriptions.  App platform also matters: Android users cost less to acquire, they register and share content more often, while iOS users are better engaged in revenue-generating activity, like buying a subscription or making a purchase.
As was said earlier, app install is the first step on long marketing journey, and it’s crucial to ensure this first step initiates profitable user engagement. It`s always good to have a professional by your side who will take care of providing relevant traffic. GoWide`s service App Installs raise user acquisition to a new level: it will find valuable users for your app from the most trendy and effective traffic sources. Having reliable marketing partner and optimizing campaign with right metrics is the key to happily ever after with your users.
Check out the GoWide website here for more.