User Acquisition 101: Marketing terms and KPIs you should know

The world of user acquisition and marketing is vast. If you’re diving into marketing for the first time, it can be overwhelming. Luckily, Upptic is here to help! Use this glossary of terms to aid you as you absorb everything there is to learn about this fast-paced industry. Without further ado, here are the top key terms you should know to get your bearings.

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Marketing industry terms
Marketing KPIs and formulas
Marketing media buying models
Further reading

Marketing industry terms

Below are general terms used frequently in the marketing space. These are baseline terms to know, so get to know them well!

User acquisition

User acquisition is the process of acquiring new customers, users, or players through the use of marketing campaigns and “organic” growth initiatives. User acquisition requires marketers to have a diverse set of skills to perform effectively – including creative development, creative production, marketing operation management, channel management, data science, data analysis, and relationship management.

Organic growth and organic marketing

The term “organic” in marketing refers to non-paid marketing initiatives – including things like content marketing, ASO, SEO, and social media marketing. Of course, this is still a bit of a misnomer, since writers, graphic designers, SEO experts, social media managers, et al must all be paid – but there is no traditional advertising involved: No paying ad inventory suppliers, MMPs, or the like. Additionally, “organic” marketing content tends to be more “evergreen” and has a much longer “tail” than ads – which means it remains continually useful long after publishing.

ASO and SEO

ASO is a tactic for increasing your app’s visibility in app stores – it stands for “app store optimization.” Similarly, SEO is a tactic for increasing your app or website’s visibility in search results – and stands for “search engine optimization.” These are both powerful organic levers for increasing app visibility and driving more conversions or installs.

Mobile measurement partner (MMP)

A mobile measurement partner, or MMP, provides attribution solutions for mobile marketing campaigns. Essentially, they are companies that collect and organize the raw data from from your advertising initiatives so you can better understand their performance and impact. Good attribution is also key to not getting overcharged for things ad inventory space, so having a trustworthy MMP is critical for your bottom line.

Attribution

Attribution is the process of assigning value to actions users take that lead to conversions or installs. This not only helps you understand what aspects of your marketing campaigns are most impactful, but also is used to properly credit and pay those who helped contribute to the install – such as ad inventory suppliers. Historically, attribution outside of the mobile ecosystem has been difficult – but companies like Gamesight, Spindl, and Upptic are working to make attribution more viable for PC, console, and web3 ecosystems.

Supply-side and demand-side

Supply-side and demand-side both refer to ad inventory space. Supply-side ad inventory providers / vendors are typically publishers – i.e. app and game developers who offer ad space in their apps and games. Since they want to make as much money as possible by hosting other people’s ads, they typically sell their ad inventory space for the highest price possible. Conversely, demand-side ad inventory providers / vendors seek out the lowest-cost ad inventory to help advertisers save as much money as possible in their advertising efforts.

Media and media buying

Media generally refers to the inventory space for ads in marketing – whether that be TV, websites, apps and games, billboards, etc. “Media buying” refers to purchasing ad space across one of more of these channels from supply-side and demand-side providers / vendors.

Impressions

Impressions are how many times people have viewed an ad or creative. Impressions are an integral part of many KPI formulas, such as click-through rate (CTR) – so it’s an important number to have on hand.

Churn rate

The churn rate is the percentage of users, customers, or players who uninstall your app or game after a specified period. Your churn rate can help you understand how “sticky” your app is. Churn impacts your retention and user LTV, so it’s important to keep it as low as possible.

Retention

Retention is the process of holding onto your users once you’ve acquired them. Since it costs more to obtain users and players than retain them, retention should be a key component of any long-term, sustainable marketing strategy. Key components of retention include customer satisfaction and player engagement. Retention impacts LTV, an important KPI, so it’s important to keep your retention rate as high as possible.

Key performance indicator (KPI)

Key performance indicators (KPIs) provide quantifiable measurement of the performance of your marketing initiatives and campaigns. KPIs are often used to establish goals and campaign objectives, as well as highlight marketing performance.

Whales

A whale is a lucrative high-value player. Whales spend vastly more than the average player, giving them a very high LTV.

Marketing KPIs and formulas

In addition to general marketing terms, here are some good key performance indicators (KPIs) to have on hand, as well!

Lifetime value (LTV)

Lifetime value (LTV) is used to understand how much revenue a customer, user, or player generates over the lifetime of using your app or playing your game – whether that revenue come from in-app purchases, ad revenue, subscriptions, premium purchases, or a mix of these. You always want your LTV to be higher than the cost of acquiring a player – and high-quality users / gamers greatly lift LTV (which retention plays a key role in).

Formula: average revenue per user per day x average number of days user is retained = LTV

Customer acquisition cost (CAC)

The customer acquisition cost, or CAC, is, unsurprisingly, how much it costs to acquire a user. The aim should always be to keep this as low as possible, and to definitely keep it lower than LTV.

Formula: total marketing costs / total new customers = CAC

Conversion rate (CVR) / install rate (IR)

The conversion rate (CVR), sometimes known as the install rate (IR), of your ad campaign is the percentage of people who download and install your app or game after seeing your ad. It’s a useful metric for identifying effective ad creatives.

Formula: (conversions / impressions) x 100 = CVR

Return on ad spend (ROAS)

Return on ad spend is, essentially, what you get back in revenue from an ad campaign. Generally, speaking, you want to at least achieve 100% ROAS on an ad campaign, otherwise, you’ve lost money on it. The higher you can push that percentage though, the better.

Formula: (user generated revenue over a specific timeframe) / (ad spend over the same timeframe)

Average revenue per user (ARPU)

ARPU measures your total revenue, divided by your total number of installs. Keeping tabs on ARPU can help you understand how your game is monetizing – allowing you to optimize it for higher revenue. You always want ARPU to be higher than your CPI.

Formula: (total revenue) / (total users)

Average revenue per paying user (ARPPU)

Similar to ARPU, but focused solely on paying users. This can help you better gauge how well your most loyal players contribute to your bottom line. Keeping an eye on this KPI as you make changes to in-app purchases, loyalty programs, and other engagement and monetization levers, can help you identify what is and isn’t working.

Formula: (total revenue) / (total paying users)

Average revenue per daily active user (ARPDAU)

ARPDAU measures how much revenue you make from each user, on average, on a daily basis. This can be a useful KPI for understanding the effectiveness of your monetization strategies – but is also limited in its use due to the fact that several factors (such as timing and outlier user behavior) can skew its results. Still, by watching it over time, you can better understand the ebbs and flows of your monetization strategies and the impacts of game updates – allowing you to quickly catch big changes and adapt to them.

Formula: (day’s revenue) / (number of active users that day)

Marketing media buying models

There are several different methods for calculating what you should pay for your top-of-funnel ad campaigns – based around specific KPIs. These are known as media buying models (or, sometimes, media billing models). Here is a look at some of the most popular models.

Cost per click (CPC)

Cost per click, or CPC, is one of the most common media buying models. With the CPC model, advertisers pay inventory providers – such as game developers or ad networks – for every click on their ads. CPC is common for UA campaigns where the goal is to drive traffic to a website or app landing page.

Formula: ad cost / ad clicks = CPC

Cost per mille (CPM)

Cost per mille (“mille” being Latin for “1,000”), or CPM, is another common media buying model. In CPM ad campaigns, advertisers pay for every 1,000 impressions an ad gets. CPM campaigns are great for raising awareness, but are not effective for driving installs or other lower-funnel actions.

Formula: (ad spend / impressions) x 1,000 = CPM

Installs per mille (IPM)

Installs per mille (“mille” being Latin for “1,000”), or IPM, is often a better way to measure an ad’s effectiveness than CPM or CPC, as they are based on installs, instead of simple ad views or clicks – which are not always intentional. In IPM campaigns, advertisers pay for every 1,000 installs.

Formula: (installs x 1000) / impressions = IPM

Cost per install (CPI)

In CPI campaigns, advertisers pay inventory providers / vendors for every install that can be attributed to an ad placement. While this can be good for your overall conversion rate / install rate, the quality of installs can vary from vendor to vendor – which can impact your overall retention and LTV. Because of this, CPI campaigns are generally higher cost – especially over the long-term – and are best utilized with highly specific granular targeting.

Formula: campaign spend / installs = CPI