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The Most Important Metrics for Scaling Your User Acquisition

The Most Important Metrics for Scaling Your User Acquisition

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As app marketing gets more sophisticated, there’s an increasing focus on metrics of every sort. Having a clear understanding of your unit economics is extremely important specifically customer acquisition cost (CAC) and user lifetime value (LTV) – how much a customer costs to acquire and the expected value of that customer over time from your app or game.

Marketers are rightly highly focused on these metrics, but sometimes fail to see the bigger picture of what that data is telling them in terms of how to visualize growth potential.

As app marketing gets more sophisticated, there’s an increasing focus on metrics of every sort. Having a clear understanding of your unit economics is extremely important specifically customer acquisition cost (CAC) and user lifetime value (LTV) – how much a customer costs to acquire and the expected value of that customer over time from your app or game.

Marketers are rightly highly focused on these metrics, but sometimes fail to see the bigger picture of what that data is telling them in terms of how to visualize growth potential.

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The Most Important Metrics for Scaling Your User Acquisition

  1. 1. The Most Important Metrics for Scaling your UA 2nd October 2019 Martin Macmillan - CEO
  2. 2. The Most Important Metrics for Scaling your UA About Pollen VC Now! 2 We provide lines of credit to developers which enable them to fund their business better and grow using paid UA Our model is a flexible and non-dilutive alternative to equity financing, allowing developers to retain control while growing their business Our mission is to get start-ups to think about capital efficiency, using the right type of funding for the right purpose
  3. 3. The Most Important Metrics for Scaling your UA Three Fundamental Questions 3 Do I have a machine? 1. How do I fund the machine? 2. How do I know when my machine is running at full capacity? 3.
  4. 4. The Most Important Metrics for Scaling your UA CAC and LTV Now! 4 Acquisition cost CPI, CPA, CPE etc. Whatever makes sense for your game LTV “North Star” metric How much will you earn from a player IAP/Ad revenue
  5. 5. The Most Important Metrics, When to Scale your UA How to calculate LTV 5 https://ltvcalculator.pollen.vc
  6. 6. The Most Important Metrics for Scaling your UA Your UA Recipe 6 $1.00 invested results in $1.89 of LTV after 90 days
  7. 7. The Most Important Metrics for Scaling your UA Focus on ROAS Now! 7 $0.00 $0.50 $1.00 $1.50 $2.00 April 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 50% ROAS 75% ROAS Breakeven 100% ROAS 125% ROAS 150% ROAS 175% ROAS LTV Cut-off $1.89
  8. 8. The Most Important Metrics for Scaling your UA Most Expensive $ Least Expensive $Exhaust the least expensive bucket before moving onto the next one How do you fund the machine? Now! 8 Credit Line from Ad Network Cash at Bank (eg from free cashflow of an existing app) Credit Cards Lines of Credit secured against accounts receivable (AR) VC Funding
  9. 9. Factor in the cost of financing ROAS Break out ROAS to a monthly return Important to consider financing cost on the same basis Focus on the return… ROAS 20% Financing 2% PROFIT 18%
  10. 10. The Most Important Metrics for Scaling your UA Focus on investment and return Now! 10 Increasing Ad Spend - Externally Financed Monthly ROI Monthly ROI 20% 15% 1 Monthly ROI Decreases 2% 3% Cost to Finance Cost to Finance 2 Financing Cost Increases 18% 12% Profit Profit 3 Still Generating Healthy Profit
  11. 11. How to know when your machine is running at full capacity
  12. 12. The Most Important Metrics for Scaling your UA Now! 12 LTV CAC Acquisition Costs Rise over time LTV falls as you scale Model the shape of your curve - this defines how much you can use paid UA to scale Feed this into your overall strategy of what games you are building and for whom… Now! Installs $ Economics of UA
  13. 13. The Most Important Metrics for Scaling your UA Now! 13
  14. 14. The Most Important Metrics for Scaling your UA Takeaways… 14 Get realistic estimates of CAC and LTV 1. Figure out how you are going to finance your growth 2. Keep monitoring and measuring your machine to keep it working at full capacity 3.
  15. 15. Thanks! martin@pollen.vc

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