Cohort Your Mobile Acquisition Channels to Determine LTV

01/26/12

At Apsalar, we’re focused on providing the most powerful set of discovery and actionable analytics for mobile app publishers to increase user engagement and revenue.  Our mission is to help our customers improve retention and increase monetization from engaged users.  We recently launched an educational blog series to help developers understand the various types of analyses available to better measure user behavior and increase user engagement.  Catch up by starting here.

For this week’s post, we’re continuing the discussion on the various uses for cohort analysis.  So far, we’ve shown how cohorts can be used to better understand user retention, engagement and monetization.  Now we’ll focus on acquisition sources and how cohort analysis can be used to better understand how users acquired through acquisition campaigns measure up against these three critical indicators.

Like most developers trying to increase the discovery and download rate of your apps, you’ve likely spent money on various acquisition campaigns.  In just a few short days or weeks, you may have added thousands of new users, and if you’re lucky, you may have hit the top end of the download rankings attracting other free organic users.  But what is the value of these users and which acquisition partner in the campaign is the best source of the highest-value users among them?  This is where cohort analysis can provide real answers.

Fig. 1 shows daily cohorts of users grouped together by the first time they launched the application.  It also calculates spending by this group each day for the next several days.  This is valuable revenue information and is key in determining whether the lifetime value (LTV) of a user exceeds the cost of acquisition.  Assuming these users were acquired at an average rate of ~$1.00-each, the “Campaign: January” had a positive ROI because the users acquired generated ARPUs ranging from $3-8.

Fig. 1 (Click image to enlarge)

Cohort Analysis

But perhaps you could learn from the data how to further lower the cost of acquisition to optimize campaign performance.   For this, you can create a segment of users acquired from the campaign with a specific acquisition partner.  The campaign may have used Tapjoy, W3i and other sources.  Who performed best?  You can find out by accessing the list of UDIDs from one of your acquisition channel partners.  This list is sent to our servers via our API and is categorized as a segment of users acquired from that partner in your campaign.  This segment is labeled “January: Tapjoy” and can be used to see if the ARPU of users acquired from that partner in your campaign is higher or lower.  If it is higher, this is where you will want to invest more of your acquisition budget.

Do yourself a favor, before you spend another dollar on acquiring users and boosting downloads, run a cohort analysis to ensure that your LTV is higher than your customer acquisition cost.

If you have any questions, feel free to drop me a line at ted at apsalar dot com.

Share Button