The ability to plan and execute user acquisition campaigns is an essential component of growing a mobile game business.
Rarely discussed is how the most successful companies plan their UA budgets and spend – it’s often assumed that industry leaders have a bottomless bucket for their marketing budget.
While sometimes true, most businesses don’t have mountains of capital set aside for user acquisition (UA). Most developers are left questioning: “How do you succeed with a modest marketing budget?”
The answer lies in metrics, and in specifically an app’s lifetime value (LTV). Simply put, LTV is the amount of revenue developers expect to generate in aggregate from users in the time between downloading the app and abandoning it.
Understanding the different factors that influence LTV throughout the app marketing funnel is key, and calculating future profits confidently requires detailed analysis of cohorts.
To make it easier to quantify LTV, we’ve released the Financial Forecaster, which calculates LTV and an app’s cashflow for 365 days, helping developers decide when and under what conditions paid UA makes business sense.
With the Financial Forecaster, developers can evaluate their CPI (cost per install) and LTV relationship, allowing them to create a metrics-driven UA strategy for all marketing budgets, big and small.
The calculator helps keeps things simple and easy for even the greenest marketing managers. Using readily available metrics that app developers can access through their analytics or attribution partner, or directly from the app stores.
The Financial Forecaster can:
- Visualize an app’s LTV curve using its Retention, ARPDAU (average revenue per daily active user) and Organic Uplift.
- Generate a marketing projection evaluation up to day 365, allowing developers to understand potential revenues of their app.
- Calculate how the app’s net cash position would compare if app store revenues were recycled more rapidly back into additional marketing every seven days rather than waiting for the app stores to pay out up to two months later.
- Determine if UA spend is profitable or not.
In layman's terms, instead of following a “see what sticks” model, developers leverage readily available metrics, plug in the numbers, and see immediately the viability of UA spending on their game as it stands today and up to a year in the future.
If a product’s metrics are good and developers can acquire users profitably (LTV > CPI), then the developer can decide their financing strategy.
Do they self-finance via credit cards? Look to an outside investor and dilute their equity holding? Or do they wait up to 60 days for their app store partners to provide them their earnings - but miss out on leveraging those earnings at the beginning of a game’s window of profitability?
Pollen provides a financing solution for developers who can spend profitably on UA, by enabling early access to their app store revenues and using these as a way to double down on UA campaigns.
This is a much quicker and more efficient way to fund growth than going back to existing equity investors and further diluting the founders by raising additional equity capital.
Pixonic utilized this strategy by recycling their weekly revenues into paid user acquisition campaigns combining Facebook, Google Universal App Campaigns and video install ads and achieved a 300% increase in DAU, growing their revenue five times in a six month period.
When metrics are understood and users can be acquired profitably, Pollen injects additional capital to fuel the app’s growth in a capital efficient way.