App marketing has seen three big waves. First, there was the user acquisition wave. It was all about acquiring users at scale; about quantity rather than quality.
The second wave is centered on app engagement. With the understanding that competition has intensified and retention rates have dropped, and the fact that the app space is dominated by the freemium model, app marketers are now realizing that they need to focus on getting quality users who will actually use their app over time so they could properly monetize them.
The third wave is the ROI wave. However, most app marketers have yet to catch it. The savviest ones are already riding it, and know exactly how much money they are spending and how much money they are earning from their mobile activities. Depending on their ability to connect as many dots as possible across multiple touchpoints, these marketers also measure the impact of their cross-channel promotions.
The advanced crowd already knows the reality of mobile measurement, which is that mobile is actually the most measurable ecosystem ever created. With multiple persistent identifiers, any app marketer – beginner or advanced – can accurately measure their campaigns from start (impressions) to finish (ROI).
To help you catch the perfect ROI wave, we’ve just released The Complete Guide to Measuring Mobile Marketing LTV & ROI. This comprehensive guide covers everything you need to know about how to measure the bottom line of your mobile activities.
Revenue Measurement
The first thing you need in order to calculate your LTV is to granularly measure how much revenue your app is generating and from which sources. This will put you in a position to properly optimize your revenue streams as you’ll have plenty of data to work with.
The best course of action is to properly define and track all your revenue events with your mobile measurement and attribution partner. By connecting the revenue data to specific media sources, you’ll have a complete of picture of which source can be credited for which revenue.
But what exactly is a revenue event and what types can be measured? Let’s break it down.
1) Standard in-app purchase event: To get things started, make sure that one of the in-app actions you measure is a standard purchase event. If you want to run an action-driven CPA campaign, you’ll need to set this up to get proper reporting on post-install conversions.
2) Rich purchase events: Measuring user purchases is important but it will only get you that far. Going deeper will generate deeper insights, and when it comes to revenue optimization, it is highly recommended to have an in-depth knowledge as every cent counts. Enriching standard revenue events by adding more parameters will tell you not only that a purchase was made, but also what was bought, for how much, and by which user – all with great detail.
3) Custom revenue events for paid apps and subscriptions: If your app is right for these models, set up a custom revenue event to measure incoming revenue and understand how successful your strategy is (or isn’t…).
LTV modeling is easier for subscription apps because their revenue stream is more predictable. When you have more of an idea about money coming in, it becomes easier to spend money profitably on paid marketing. Also, don’t forget to dedupe activations from different devices that go through the same account because in most cases, charges are per account, not per device.
4) Out-of-app revenue events: When app consumers make purchases in other touchpoints (online or offline), LTV calculations can significantly change. When a paid app user goes on to make purchases in the brand’s desktop site or even its physical store, that user’s LTV and the LTV of the acquiring source obviously change, and with it your performance data. As such, you’ll want to connect as many out-of-app revenue events to your app marketing data.
How is this done? By setting up a server-to-server In-App Events API, which will allow you to automatically send these events to your measurement partner. The idea is to match and merge the attribution ID (sent by the attribution company upon install) with the developer’s own unique identifier (email, loyal card number etc.) as soon as the user registers for the app. Once the connection is made, any activity recorded for that user out-of-app is automatically sent to the measurement partner so you can calculate the real LTV.
5) Revenue postback: Although not an actual in-app revenue event, it is important to ensure that your media and service partners (i.e. analytics, A/B testing, automation) are integrated with your measurement provider, and that revenue data is sent to them for the purpose of optimization and the ability to use the data in advanced audience targeting campaigns (with select partners).
With revenue properly measured, you’re halfway there! Download the full guide to get the complete picture, including ad monetization, cost measurement, in addition to practical tips on how to optimize your LTV and be as efficient as possible in your media buying.
