ROI

ROI and the Misleading Metrics of Mobile App User Acquisition

For a long time, the value of a mobile game or application was determined by metrics such as return on ad spend and return on investment. However, without the time dimension, ROAS/ROI is a meaningless metric.

Rather than focusing on problems without offering solutions, we created the mROI calculator to help marketers consider long-term return horizons and provide a structure for quantifying ROI on a monthly basis. This lets mobile marketers make better decisions based on a thorough understanding of the return profiles of different UA scenarios across channels and genres.

In order to assist UA managers in understanding a normalized metric for financial returns based on a common denominator, the calculator computes a monthly return on capital that is independent of the length of the LTV cycle.

Using the mROI metric, development teams and UA directors can zero in on the most profitable niches for their games and apps, taking into account risk, reward, and financial return.

When adding debt products to your funding mix, using mROI as a metric simplifies the cost-return calculation. The interest costs of servicing debt, such as on a revolving credit facility, are comparable to the financial return generated by advertising expenditures over the same time period. Adjusted for financing costs, the mROI on advertising expenditures in the preceding example would be 7% (8% return minus 1% financing cost). Because of the simplification of the calculation, finance teams and UA managers can now better understand the risks associated with introducing leverage.

read other article: How App Repackaging Can Be a Security Risk ?

One sign of the mROI calculator's value is the maximum bid an UA manager should think about in order to make the most of an UA opportunity while still making money.

Without a temporal context, traditional return on advertising expenditure (ROAS) and return on investment (ROI) calculations are meaningless. We want to help UA managers and finance teams better understand their metrics. We also want to give UA managers and finance teams a way to simulate different financial scenarios and build trust in user acquisition.

The time required to recover the user's lifetime value (LTV) and begin making a profit on ad spend varies significantly across mobile game and app categories. The financial return profiles of a short LTV game with a 130% ROAS (30% ROI) over 60 days and a long LTV game with a 140% ROAS (40% ROI) over 360 days, for example, differ significantly.

Leave a Reply

Your email address will not be published. Required fields are marked *