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User Acquisition: Why The Lowest Common Denominator Isn’t Always Best

Posted Jun 30, 2014

Not too long ago, brands were getting reprimanded about buying Facebook Likes. Agencies were getting slapped on the wrist for buying Twitter followers. Now, it seems like app developers and mobile publishers are getting the message too:

You Get What You Pay For …

VentureBeat Insight’s new Mobile User Acquisition study has proven what most smart user acquisition specialists know to be true: Aiming for the lowest cost-per-install (CPI) isn’t necessarily the best way to grow your user base.

VentureBeat surveyed well over 200 developers to find out what their go-to user acquisition tools and strategies were. Not surprisingly, the majority of developers, or 52 percent, chose the CPI model first. And while it makes sense at face value, the study found that making the lowest CPI the ultimate benchmark led to an abysmal rate of long-term success. To quote John Koetsier:

Over two-thirds of the users you acquire via CPI have sub-$10 LTV, and almost one in six have profitability-dooming LTV of precisely zero.”

Keeping user acquisition costs down is a must for any app marketer – from games and entertainment companies, to lifestyle publishers and even financial services providers – but when that low cost comes at the expense of the lifetime value of a user, then the whole business model is in jeopardy. Add in the fact that a third of VentureBeat’s survey respondents said that they’d been cheated when working with shady user acquisition partners, and you’ve got the makings of a very real, very big problem.

The solution? Work with trusted partners that offer quality traffic and multiple options for acquiring users – including CPI. Not to toot our own horn (but we kind of have to …) It’s no surprise that AdColony got featured as one of those trusted partners. In fact, out of a market crowded with well over 70 companies, we were include as one of the top five.

The bottom line is that a smart user acquisition strategy is focused on attracting users who monetize – but also getting them to monetize well, and for the long haul. To do that effectively, developers need to find platforms and partners that help them think of value beyond just the lowest possible CPI. At AdColony, we’re happy to say that we’ve got you covered.

You can purchase the full Mobile User Acquisition study by VB Insight here.

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