It should be simple: if you bid higher and spend more, you’ll get more traffic, more installs, and more revenue.
If you work in user acquisition, the increasingly competitive landscape for new customers is a fact of life. Each day you compete with other UA managers to get your ads in front of potentially valuable users across a large network of channels.
But how does the cost of traffic translate into the quality of the users? How do you optimize spend to acquire the highest value users?
“The First Three/Wait and See Option”
One way to understand user value is to assume that users’ early spend informs how much they’ll spend in the their lifetime. Unfortunately, the majority of users acquired through marketing will not make a purchase on the first day, so estimating lifetime spend based on those first three days is not always an option. It can take weeks to see spend and months to determine ROI. In the meantime, you could be wasting thousands of dollars on sources that perform poorly and provide low quality users.
The Early Event Option
This approach requires UA Managers to identify early user events, such as completing the tutorial or reaching a certain level, to indicate a potential high value user. However, this approach is still nothing but a best guess, as customer lifetime values can change daily due to shifts in marketing mix, product changes, and customer demographic profiles.
The Predict and Profit Option
Ultimately our analysis led our data science team to the conclusion that there is a huge competitive advantage for marketers to understand user behavior and forecast spend as quickly as possible once the user has been acquired. So we got down to work. We’ve spent months analyzing user behavior and developing predictive algorithms to remove the uncertainty around a users’ predicted lifetime value.
By analyzing the behavior of every user in an app to understand what outlier markers correlate with high spend or desired action, we’ve built the analysis to be “self-learning”, meaning that it will refine based on changes in user behavior.
UA is difficult and the world of mobile marketing moves fast. To scale confidently and efficiently, having an accurate forecast for lifetime value is the only way to truly justify your marketing budget.
Becky is the Senior Content Marketing Manager at TUNE. Before TUNE, she led a variety of marketing and communications projects at San Francisco startups. Becky received her bachelor's degree in English from Wake Forest University. After living nearly a decade in San Francisco and Seattle, she has returned to her home of Charleston, SC, where you can find her enjoying the sun and salt water with her family.