Guest author Farzana Nasser is the co-founder of Gallop, an audience intelligence marketing platform. She is also a member of Young Entrepreneur Council (YEC).

Mobile app advertising is a complex and incredibly fragmented space. Marketers are under pressure to grow a business, build a valuable user base and prove a return on their ad spend. Having worked with hundreds of app publishers, the most common question I hear is: how do I measure the success of my marketing efforts? 

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With hundreds of metrics available today to mobile app marketers from clicks and impressions to installs and logins—what is the metric to optimize for? Should you care about growing your number of users and just drive efficient growth for as low a cost as possible? Are you measuring whether or not these users engage with your app, retain over time or purchase?

Avoid The Race To The Bottom

It doesn’t matter how low the cost of your install, click or impression is if the user isn’t active on your app. Installs don’t drive a return on investment (ROI); only in-app monetization provides a return.

If you are only optimizing for an install, you’ll get installs that are incredibly inexpensive and achieve short-term success. However, if this is all you are doing and not measuring downstream user actions and optimizing for that, you’re in trouble.

Here are five reasons why:

  • 25% of new app users leave after the first day they install an app, leading to a significant loss to their entire user base within the first few months (Google).
  • On average, app users who retain for at least seven days tend to remain much longer, making the first three- to seven-day period a critical one (Quettra).
  • 38% of people are more likely to download an app when it’s required to complete a purchase. However, over half will uninstall this app once they have made their purchase (Google).
  • 60% of app users are turning off notifications, signifying that more may need to be done by developers to reach those who download their apps (Pymnts).
  • Repeat customers tend to spend 33% more than existing ones (CMO).

The Solution: Leverage Your User Data

You hold the keys to a untapped marketing gold mine: your user data. Use it to target people in an intelligent manner, so you can reach the right user at the right time with the right message. Recent advances in mobile app technology have now made this possible in unprecedented ways.

A new user is only as good as the actions they take to interact and/or complete a purchase in your app. Focusing on the first week a user installs your app to understand what actions you need them to take can help you mitigate the drop-off and potential loss of valuable users.

Consider these key metrics when measuring user value by acquisition channel:

  • Customer lifetime value: Understand how much the average customer will spend in your app over their lifetime, and use this understanding to create a benchmark for an acceptable user acquisition cost.
  • Cost per monetization: Identify the key behaviors in your application that drive value, and determine what your acquisition cost is for that specific behavior (ad click, in-app purchase, etc.).
  • Retention rate by day: Review retention rates by channel to understand where you are deriving users who stay engaged in your application. At a minimum, review day one retention (as this is where the highest drop-off normally occurs) and day seven retention (another key user drop-off point).

Depending on your industry category and the user experience of your app, you will want to get very granular with the approach you take to measure these key metrics and then take action. For example, if you have an e-commerce app, you can optimize for in-app purchases or even users who add items to the cart and then re-target them to purchase. In the publishing space, optimize for subscriptions or in-app advertising clicks. Gaming companies tend to optimize for day one and day two retention, as well as in-app purchases.

Long-term, high-quality users are more valuable than inexpensive users, so figure out what drives value for your business and measure that. If marketers start thinking more like product people and leverage user data to drive action for new and current users, it would improve the user experience for us all—and possibly save millions of ad dollars on targeting the wrong people. 

Lead photo by AFS USA