As app marketing gets more sophisticated, there’s an increasing focus on metrics of every sort. Having a clear understanding of your unit economics is extremely important specifically customer acquisition cost (CAC) and user lifetime value (LTV) – how much a customer costs to acquire and the expected value of that customer over time from your app or game.
Marketers are rightly highly focused on these metrics, but sometimes fail to see the bigger picture of what that data is telling them in terms of how to visualize growth potential.
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The Most Important Metrics for Scaling Your User Acquisition
1. The Most Important Metrics
for Scaling your UA
2nd October 2019
Martin Macmillan - CEO
2. The Most Important Metrics for Scaling your UA
About Pollen VC
Now!
2
We provide lines of credit to developers which enable them
to fund their business better and grow using paid UA
Our model is a flexible and non-dilutive alternative to equity
financing, allowing developers to retain control while growing
their business
Our mission is to get start-ups to think about capital efficiency,
using the right type of funding for the right purpose
3. The Most Important Metrics for Scaling your UA
Three Fundamental Questions
3
Do I have a machine?
1.
How do I fund the
machine?
2.
How do I know when
my machine is running
at full capacity?
3.
4. The Most Important Metrics for Scaling your UA
CAC and LTV
Now!
4
Acquisition cost
CPI, CPA, CPE etc.
Whatever makes sense for
your game
LTV
“North Star” metric
How much will you earn from
a player IAP/Ad revenue
5. The Most Important Metrics, When to Scale your UA
How to calculate LTV
5
https://ltvcalculator.pollen.vc
6. The Most Important Metrics for Scaling your UA
Your UA Recipe
6
$1.00 invested
results in $1.89 of LTV
after 90 days
8. The Most Important Metrics for Scaling your UA
Most Expensive $
Least Expensive $Exhaust the least expensive
bucket before moving onto
the next one
How do you fund
the machine?
Now!
8
Credit Line from Ad Network
Cash at Bank (eg from free cashflow of an existing app)
Credit Cards
Lines of Credit secured against accounts receivable (AR)
VC Funding
9. Factor in the cost of financing
ROAS
Break out ROAS to a monthly
return
Important to consider financing
cost on the same basis
Focus on the return…
ROAS
20%
Financing 2%
PROFIT
18%
10. The Most Important Metrics for Scaling your UA
Focus on investment and return
Now!
10
Increasing Ad Spend - Externally Financed
Monthly
ROI
Monthly
ROI
20% 15%
1
Monthly ROI
Decreases
2%
3%
Cost to
Finance
Cost to
Finance
2
Financing Cost
Increases
18% 12%
Profit
Profit
3
Still Generating
Healthy Profit
11. How to know when
your machine is running
at full capacity
12. The Most Important Metrics for Scaling your UA
Now!
12
LTV
CAC
Acquisition Costs Rise over time
LTV falls as you scale
Model the shape of your curve - this
defines how much you can use paid UA to
scale
Feed this into your overall strategy of what
games you are building and for whom…
Now!
Installs
$
Economics of UA
14. The Most Important Metrics for Scaling your UA
Takeaways…
14
Get realistic estimates
of CAC and LTV
1.
Figure out how you
are going to finance
your growth
2.
Keep monitoring and
measuring your machine
to keep it working at
full capacity
3.