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KPIs for Mobile App Advertising

27 Apr

Karina Vasiukevich, Head of UA, shares her key insights on how to choose and set KPIs before you start promoting your app.

KPIs for Reach Campaigns

Reach campaigns can help get attention to your business faster and cheaper than performance-oriented campaigns. Why? In 90% of the cases reach campaigns have no immediate financial result, which is why it’s cheaper. This type of campaigns is designed to increase brand or product awareness, so your KPIs should be different from performance campaigns. I suggest tracking the following basic metrics:

Basic Reach KPIs

 

? Impressions. This metric shows the number of times your ad is displayed on a screen, no matter if it was clicked or not.

? Frequency. The metric is important to measure unique reach, and make sure your impressions don’t come from the same people who saw your ad numerous times.

? CPM (Cost Per 1000 Impressions). This metric shows how much you’re already spending on impressions, and how much more you are about to spend.

To avoid failures, you need to know the minimal CPM benchmarks for your selected traffic channels, since not all the sources will be as efficient as you’d like.

Keep in mind which CPC/CPI you are aiming for.

CPM reach campaigns are not meant to attract users to your app or website, but you need to track organic growth. If your product shows no organic growth after a reach campaign thanks to increased brand awareness, the campaign was in vain.

Other metrics that you can track include:

 ? CTR (Click Through Rate)/VTR (View Through Rate) to understand how users react to your creatives.

? Engagement Rate, if you promote in social media, you can track reactions, subscriptions and comments.

? Search Volumeto track product search inquiries before and after the reach campaign.

Performance KPIs

This is where things get interesting, since we’re talking about the efficiency of your investment. There are no universal KPIs for different business models. Let’s take a look at the most popular ones, namely:

  1. Microtransaction;
  2. Subscription model;
  3. In-app purchases;
  4. In-app advertising.

01. Microtransaction

This is a common business model for the gaming industry that can work for different categories, like Hyper Casual or Hard Core Gaming. And the KPIs here are:

KPIs for microtransaction apps

? ROAS(Return on Ad Spend) is the most critical metric for these types of games. As a business owner or marketer, you are the only person who will see the overall picture of these metrics for your business.

To calculate ROAS use the following formula: ROAS = Revenue from Ad Campaign/Cost of Ad Campaign.

When setting KPIs for your ad campaign, you need to understand your expenses and maximum payback period. Therefore, I suggest testing and optimizing (or, if you do not have this data, calculating unit-economics) your reasonable 7-day ROAS, 14-day ROAS, 21-day ROAS, 30-day ROAS to set KPIs. If your traffic meets these KPIs — it will pay off.

You don’t have to set 30-day ROAS = 100%, since your business model may have a longer payback.

We could stop here, since this metric itself indicates payback, and how you reach it is a matter of creatives and strategy. But we could also mention such metrics as Retention Rate (RR)and Conversion Rate (CR)for the 1st cohort purchase. Thus, if you want to set KPIs for CR, here’s the universal indicator: CR 10% + the first purchase by a new user in the 7 days after app install.

Additional metrics help you analyze traffic better. If you notice that your campaign ROAS is lagging, but you have average RR and users purchase with the right CR at the right moment, you can still give it a try, since it can pay off a little later.

02. Subscription model

Subscription model is common for apps in the Entertainment category. Here, we are talking about the apps with the following User Flow:

Install ➡️ Trial ➡️ Subscription purchase ➡️ 2nd month subscription & further

The specifics of the subscription-based model is that you already know how much you are ready to pay for a user, since you know your subscription price.

The KPIs here are classic:

? Cost Per Action (CPA)

? Conversion Rate (Trial)

? Conversion Rate (Subscription)

? Retention Rate, % (2nd month subscription and further)

 

Now only 2 questions remain:

  1. What CPA should you set and for which action?
  2. What’s a reasonable RR if you have no historical data?

One question directly impacts the other. It is about time we give up the hopes that CPA can be equal or lower that subscription cost. If you look at the market and statistics, the average CPA is worth 3–6 months of subscription. Some companies that are well aware of their metrics, set CPA for trial since it is easier to reach, and set CR for subscription as Hard KPI.

It’s up to you what to choose based on historical data or unit economics in terms of payback.

03. In-app purchases (Shopping, Food & Drinks, Taxi)

This is the most interesting category as there are plenty of indicators you can track and therefore numerous ways to approach your KPI system.

Let’s look into KPI configurations I’ve encountered most often.

The first case has the shortest and most complicated KPI combination. You only take into account Cost Per Install(CPI), payback is your main metric:

KPI: CPI cost no more than X

Hard KPI: DRR/CIR/30-day ROAS

Now, let’s explore in more detail the indicators and abbreviations from this formula and clarify how to do calculations.

? DRR(Difference in Rejection Rates) is calculated as follows:

DRR is the share of advertising costs, which shows the ratio of costs and real money that an advertiser receives.

? CIR, or Continuous Improvement in Return, has the following formula:

You calculate the Spend/Gross Income Ratio, i.e. the final revenue received is taken into account. Canceled purchases do not count as income. The lower the CIR, the better.

As we said before, ROAS, or Return on Ad Spend, is an indicator of the profitability of advertising campaigns, that is, the indicator shows the profit from advertising.

The second case is considering Customer Acquisition Cost(CAC).

You calculate your acceptable CAC and launch campaigns with this cost in mind.

This KPI often goes together with ARPPU(Average Revenue Per Paying User), since CAC is usually equivalent to first purchase, but the purchase amount can be different. Because of this discrepancy, some customers build a gradation where CAC is directly proportional to 30-day ARPPU.

The 3rd case is Revenue Share. Everyone likes working with this KPI, but few traffic partners agree to do so, thus I recommend you focus on the first two.

It is important to understand that if we are talking about the Shopping category, advertising can potentially pay off in the first month. If we are talking about Delivery and Taxi services, payback time is similar to subscription models in Entertainment: a new user will hardly pay off with one taxi ride, so I recommend setting RR and sticking to the second type of KPIs.

04. In-app advertising monetization

In-app advertising monetization has the simplest KPIs, as long as you keep low CPI. This monetization type is typical for Casual and Hyper Casual Gaming.

An example KPI could be the following: set a maximum CPI, with 30-day ARPPU as a hard KPI. The results of these calculations can help you understand whether users paid off in a month and if it is worth paying contractors for traffic.

Other KPIs

KPIs used to be built solely on the basis of payback and I would not recommend expanding them indefinitely, since you can cut off good traffic. Here are a few tips on how to control traffic quality using KPIs.

Of course, you can install an anti-fraud tool to analyze traffic, but a large number of sources have learned how to deceive anti-fraud, so you can’t do without additional KPIs.

Here’s what we suggest:

  1. Track CR from click to install.If the rate is below 0.50–1%, then the traffic is click spamming. This means the source is stealing your organics. Usually, low CR goes together with abnormal CTIT values.
  2. Track Retention Rate jumps.Good traffic is stable traffic!

It’s a good idea to set additional KPIsin this case. You will be able to measure the success of your performance campaign against the Conversion Rate. In other words, your users have done the implied action which will guide them through the sales funnel. Consequently, these figures can be used as performance metrics.

Now that you know some of the essential KPIs for your app promotion, you can make better decisions, track performance and navigate your way to success and growth. 

If you need help in the process, don’t hesitate to get in touch?