LC033: Paid Acquisition for Mobile Apps

launchpeer - July 11, 2018 - 0 comments

Today’s question:

Today’s question comes from Timothy. There are a lot of factors that go into conversions, but in the app marketing ecosystem, where have you found the highest returns and retention?

Jake’s answer:

With most paid acquisition channels, you should try to define what your customer is worth to you. Companies too often go into paid acquisition mode because they feel like they have money to spend but they never decide what a customer is worth.

Companies too often go into paid acquisition mode because they feel like they have money to spend but they never decide what a customer is worth. Click To Tweet

Know What a Customer is Worth

You should always consider what you should be spending in order to gain new customers with regard to their value to the business.

For example, let’s say you are doing a subscription based service. For a normal user, I can have ten people use it and one will turn into a paid customer. That customer will pay me $5/month for 6 month before they stop using the service or are no long a paying customer. Those 10 customers are now worth $30 to me, meaning each individual customer is worth $3 to the business.

With that number, now you can define whether or not a paid acquisition channel is worth it. You can easily tell if what you’re spending on ads is actually improving your bottom line. If there’s one number to use to judge a startup as an investor it’s how much are you spending vs. how much are you gaining from a customer.

Total Expenses

You not only have to factor in how much you are spending on the ads, but how much are you spending on company expenses? The number you make from the customers has to be higher than what your total expenses are. That’s when you are going to see a lot of traction and are going to have an easier time raising money.

If you can tell an investor that you will turn their $500k into $2M, then that’s an easy deal for them to make.

Paid Acquisition Channels

We’ve seen Facebook work the best for mobile apps. Mobile use for Facebook users is very high. 60-70% of sessions on Facebook are now mobile. This means that those users can click through your ad and go straight to downloading your app.

Twitter and Google work OK for paid acquisition. Google is better for B2B or ecommerce type businesses though. If you have a limited budget for marketing, then we would recommend starting with Facebook. If you have a specific question on this, you can always reach out to us to discuss. Check out Launchpeer if you’re ready to start marketing and gaining traction. We have a service dedicated to getting your startup traction, fast.

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