Are average user acquisition costs relevant or actionable?

Question

Between September 2018 and 2019, the average CPI for iOS apps was at $3.60, average costs per app event ranged from over $7 per registration to about $80 for an in-app purchase - according to Statista. Average obviously means that there is a significant amount of advertisers paying much more to acquire mobile users.

Many subscription-based apps charge about $35 per year for Premium. Let's say 5% of their users convert to Premium. That's $35*0.05=1.75. After the Apple tax of 30%, this is a (1-year) LTV of $1.23. As far as I know, paid UA still positively affects the App Store ranking (e. g. more app ratings), but the impact is way smaller than it was in the past.

How do app developers even have a chance to scale user acquisition at a profit? It has to be almost impossible by default - or what am I missing here? Thank you.

Answer 1

in my experience, these averages arent super-accurate or actionable - so your estimates can be somewhat off. I think the CPI(~$3.60) and cost per free trial(~$7) you mention are somewhat in the ballpark of what we've seen, but the conversion to premium is significantly higher. here are rough ballparks for a couple of subscription apps we've seen:

CPI -> ~$2.50 - $4(this is a function of audience and targeting)

Cost per trial -> ~$7-~$8(so ~40-50% conversion from install to trial)

Cost per paying subscriber -> ~$17-~$25(~33% conversion from trial to subscription)

outside of tier 1 geos, we see CPI and CPT to be roughly 40-50% of the above -> but cost per subscriber to be roughly similar(so trial to subscription % tends to be lower outside of tier 1).

this generally seems to work out for many subscription based apps that we've worked with. obvi: each app is different and so is their LTV curve - but the above funnel hopefully offers ballpark numbers in which UA can be profitable.

Comments

"~40-50% conversion from install to trial": you're hired Shamanth! can only dream of such numbers.

As of the general discussion
- positive unit eonomics on paid UA are hard
- average are useless. geo/OS/vertical/channel split vary massively

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umm - dreams?

some indicative numbers from one of our accounts:
https://drive.google.com/file/d/1L0DtWtjrBaD1GhCLZsXkbWXvBUwtDPMT/view?usp=sharing

I'll add -> these are perhaps dependent on vertical/genre - so I'm not insinuating that these are replicable across any/all apps.

I'd definitely be curious to see what sort of metrics you are seeing.

Answer 2

No, external average UA-related metrics aren't actionable.

Your own proprietary, average UA-related metrics can be actioanble for the purposes of modeling out cash flow. But I wouldn't use any general, universal, average metrics for the purposes of optimizing UA campaigns.

You should strive to use dimensionalized metrics wherever possible; more here: The "average user" doesn't exist in freemium gaming (and a diagram for user segmentation)