The cost to obtain new users can be calculated in different ways. The three important KPIs (key performance indicators) here are CPI, CPA, and CAC. They are all closely related and choosing which one to measure often depends on the type of UA (user acquisition) campaign.
- Cost per install (CPI) determines how much was spent to achieve a specific number of installs.
- Cost per action (CPA) determines how much was spent to achieve a specific number of actions. The action can be defined from a variety of post install in-app events e.g. payment, app launch
- Customer acquisition costs (CAC) is the average cost related to acquiring one new user. In other words, CAC refers to the resources and costs incurred to acquire each additional customer.
CPA is primarily used to measure paid marketing results from PPC, social media marketing and other ad channels. CPI and CPA are core metrics for evaluating individual campaign success. Impact CAC provides a measure of the complete user journey from first contact to acquired user. Customer acquisition cost can be used to understand LTV:CAC ratio which tells you if the lifetime value of a user is higher or lower than the marketing and sales costs to acquire that user. If CAC is less than LTV, in the long term you will make revenue.
Significance to Strategy Development
By providing financial measures for performance of user acquisition and engagement campaigns, marketing managers gain vital data to guide monetization strategy.
Calculating CPI, CPA, and CAC follows the same formula over specific timeframes.
CPI = Total cost of ad spend ÷ Number of Installs from the campaign
CPA = Total cost of conversion (actions) ÷ Number of conversions (Actions)
CAC = Total spend to acquire a new customer ÷ Number of users acquired
A gaming app wants to acquire new paying users so has a campaign KPI of cost per action, where action is an acquired user making an in-app purchase. They spend $1000 on the Facebook ads campaign and gain a total of 20 new paying users, the CPA for paying users acquired from the campaign is $50.
More Essential Mobile App Marketing KPIs:
Learn about the essential Key Performance Indicators to measure and improve your mobile app marketing acquisition, engagement, retention, conversion and campaign performance. Check out more KPI metrics to measure your app success: