For app marketers and owners, making sure every dollar spent yields tangible results is a constant effort. In such a situation, measuring and analyzing the app marketing ROI (Return On Investment) is critical in guiding resource allocation and driving growth smartly. While it seems easy to measure the app marketing ROI and take action accordingly, in reality, it is no less than a challenge to choose between an overwhelming number of channels and data points. 

App marketers often face a challenge in pinpointing the metrics that show how well their marketing campaign is doing. However, with the right tools and a strategic approach, they can easily navigate through this data jungle and ensure valuable insights. Even a recent study conducted by HubSpot revealed that over 79% of app marketers take ROI measurement as their top priority.

But what makes app marketers prioritize the ROI measurement in marketing campaigns? And what are the challenges to overcome in the process? Let’s find out in this comprehensive guide to understanding the key metrics and tools for measuring and analyzing app marketing ROI. Understanding each metric’s significance is essential for making your app marketing campaign successful. 

Surprising App Marketing ROI Statistics to Know in 2024

• There has been an increase in ad platforms used by the top 100 apps by 20% for Android and 25% for iOS devices. (Source: data.ai)
• The user spending on mobile apps was $120 billion in 2023, which is more than two times what it was in 2022. (Source: data.ai)
• Apps with multi-channel engagement strategies tend to have 62% higher retention rates than apps with single-channel strategies. (Source: Lean Plum)
• Video ads have 34% better CTR than native ads in mobile apps. The figure is about 56% better than typical banner ads. (Source: inMobi)
• The CTR of In-app video ads has grown by 300% in 2023. (Source: inMobi)

What is App Marketing ROI?

App Marketing ROI, or Return on Investment, is a metric that measures the revenue generated from app marketing spending. This expenditure can vary across organizations and may include costs such as overheads, salaries, media purchases, creative services, and more.

The primary objective of any marketing campaign is to accurately track each dollar spent and the revenue it brings in. While this used to be largely speculative, digital marketing has now enabled marketers to measure their marketing expenses and the resulting revenue with greater precision.

The ROI in marketing can be calculated using the following formula:

ROI = (Net Profit from Marketing Campaign / Cost of Marketing Campaign) x 100

Why does ROI matter so much? Successful marketing teams are typically data-driven. A solid understanding of attribution, fraud, and misattribution is crucial to achieving a profitable marketing performance. 

In other words, the ability to accurately track the source of each conversion, identify fraudulent activities, and correct misattributions is critical to maximizing the return on marketing investments.

The Significance of ROI for App Marketing

Before we discuss the key metrics, let’s first understand why measuring them is crucial for the success of your mobile app marketing strategy. As the market becomes increasingly competitive, ensuring your mobile app stands out from its competition is everything. 

To make it happen, it is far more crucial than ever to monitor the marketing performance of your mobile app and make data-driven decisions for improvement. Measuring the app ROI helps improve the future prospects of your business with the following principles.

1. Focusing on the User

The key to a successful app marketing strategy lies in understanding your app users' behavior and preferences. By analyzing data, you can gain valuable insights into what users appreciate and dislike about your app. This information can guide you in refining your advertising and marketing strategies.

2. Maximizing Return on Investment (ROI)

For any business, the ultimate measure of app marketing success is the optimization of ROI. Monitoring the appropriate metrics can help you determine the most effective allocation of resources for promoting and marketing your app.

3. Embracing Evolution

Apps and their associated marketing campaigns are not static; they are dynamic and constantly evolving. Metrics offer valuable data that can be used to iterate, refine, and continuously improve your app. 

This ongoing feedback can enhance not only the app's functionality and marketing campaigns' performance but also contribute to app store optimization (ASO) efforts across various app stores like Apple's App Store (iOS) or the Google Play Store (Android).

4. Gaining a Competitive Edge

By monitoring marketing data closely, you can compare the performance of your app campaign against that of your competitors. This comparison can highlight areas where you can gain an advantage over your competitors using tactics such as in-app messaging or SMS marketing.

Key Metrics for Measuring the App Marketing ROI

Now that you have understood the significance of measuring and analyzing app marketing ROI, let’s take a look at the critical metrics you should solely focus on 

1. User Acquisition Metrics

User acquisition is one of the most crucial processes for drawing potential users to download your mobile app. Here are the metrics to measure user acquisition: 

App Downloads

The number of users who have downloaded your mobile app is one of the critical metrics to monitor. By keeping track of the app downloads across various mobile devices, you can assess the initial curiosity sparked by your app and the success of your marketing strategies in relation to your intended audience.

Install Conversion Rate

This metric represents the proportion of users who have downloaded your app after landing on the app store. A high install conversion rate suggests that your app's description, visuals, and other elements are engaging and persuasive, thereby fostering user interaction.

Cost Per Install (CPI)

CPI refers to the advertising expenditure incurred to gain a new user who installs your app. It's a vital metric for evaluating the effectiveness of your marketing campaign and advertising budget. A lower CPI is generally preferred as it signifies a cost-efficient user acquisition strategy.

Organic vs. Paid Installs

It's crucial to differentiate between organic and paid installs. Organic installs are those where users discover your app via search or recommendations, whereas paid installs are driven by advertisements. 

Understanding the ratio between these two types of installs can help in fine-tuning your marketing approach and exploring various channels such as influencer marketing, email marketing, content marketing, and more.

2. User Engagement Metrics

After acquiring new users for your mobile app, businesses need to focus on how they are engaging with their app. To measure the user engagement, here are the metrics to consider: 

User Retention Rate

This metric represents the proportion of users who remain active on your app within a given time frame, which could be daily, weekly, or monthly. A high user retention percentage signifies that your app is delivering significant value to its users. 

Conversely, a low percentage indicates potential areas for enhancement. By offering value, you increase the chances of users promoting your app through word-of-mouth.

Daily Active Users (DAU) and Monthly Active Users (MAU)

These metrics, known as Daily Active Users (DAU) and Monthly Active Users (MAU), monitor the number of users who engage with your app on a daily and monthly basis. They offer insights into your app's appeal and the regularity of user interaction. Identifying usage patterns can help in crafting timely or seasonal marketing initiatives.

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Session Length and Frequency

The duration of a user session quantifies the time a user spends on your app in a single visit. In contrast, the regularity of sessions monitors the frequency of their return visits. Extended session durations and frequent returns are indicators of robust user engagement and value delivery.

User Churn Rate

This metric calculates the proportion of users who discontinue using your app within a specific period. It's essentially the opposite of the user retention rate. Monitoring churn allows you to pinpoint user frustrations and areas requiring enhancement. 

It can also reveal if users perceive your app as beneficial only at certain times or if your marketing doesn't accurately portray the app's functionality.

Lifetime Value (LTV)

LTV is a prediction of the total revenue a business can generate from a single customer over the course of their relationship. It takes into account the customer's purchasing history and the probability of future transactions or referrals. 

A customer with a high LTV is more beneficial to your business. To calculate LTV, subtract any marketing/sales expenses and the cost of goods sold from the total revenue derived from a customer. Then, multiply the result by the expected number of repeat transactions over the customer's lifetime.

3. User Feedback Metrics

Continuous feedback can help app owners and marketers identify and work on the areas that need immediate improvements. Here’s how you can ensure so with the key metrics:

App Ratings and Reviews

You can collect your user’s feedback through direct contacts or surveys. This data can provide detailed insights into user sentiments and suggest areas of improvement. The user’s ratings and reviews on app stores can help a lot in providing valuable feedback on what users are experiencing with your app.

Responding to the user’s issues immediately can help improve user satisfaction and further add to its reliability, which converts them into loyal users. 

Net Promoter Score (NPS)

NPS is a metric that measures user satisfaction and whether or not they will recommend your app to others. A higher NPS means the users will likely recommend your app to their friends and family circle. 

4. Acquisition Source 

Finding the source of user acquisition will help you a lot in identifying the potential marketing channels that can yield better results for your app marketing campaign. 

Attribution

Attribution is the process of determining the origins of your user base. It aids in pinpointing the marketing channels and campaigns that yield the best results. Typical sources of attribution include organic search, digital marketing, social media, referral links, word of mouth, and mobile ads.

Click-Through Rate - CTR

CTR is a metric that quantifies the proportion of users who interact with your app's advertisements or promotional content. It serves as a vital indicator of your ad's creative and messaging effectiveness.

5. Funnel Analysis

This metric helps businesses find the right marketing funnel for their mobile app. Here are some app funnel metrics to consider: 

Conversion Funnel

A conversion funnel shows the user's path from initial awareness to final conversion. Examining funnel metrics can reveal areas where users tend to exit the process, enabling you to make targeted enhancements.

Abandonment Rate

The abandonment rate quantifies the fraction of prospective users who initiate a process (like sign-up or checkout) but fail to complete it. Lowering this rate can substantially boost your app's conversion rates and revenue and assist in eliminating obstacles to registration.

6. Demographics

If your app is released for global users, you should measure the demographic metrics. It will help you get insight into how your mobile is performing in your targeted region. 

Geographic Usage

Knowing the geographical distribution of your app's popularity can guide localization strategies and enable you to focus marketing efforts on specific regions.

User Demographics

Understanding your users' demographic details, such as age, gender, and interests, facilitates more accurate marketing targeting. This data can also shape the design and content of your app to better align with your target audience's preferences.

7. A/B Testing Metrics 

Continuous testing of your ROI measuring metrics can help businesses identify the potholes in their app and what makes users abandon it. 

Conversion Rate A/B Testing

A/B testing involves comparing the performance of two or more feature or marketing campaign versions. By determining which variant is more successful, you can refine your marketing and messaging to boost conversions.

Retention Rate A/B Testing

Similar to conversion rate A/B testing, this method aims to enhance user retention. Test different features, onboarding procedures, or content to identify what keeps users engaged longer. Understanding why users remain is crucial for developing value-driven marketing.

8. Social Sharing and Virality 

This metric allows businesses to track how frequently their users share their apps or their content on social media platforms. 

Social Sharing Rate

This metric tracks the frequency of users sharing your app or its content on social media. An elevated social sharing rate can spur organic user growth, expand your community, and amplify brand visibility and recognition.

Virality Coefficient - K-Factor

The virality coefficient measures the number of new users gained through referrals from existing users. A K-factor exceeding one indicates viral growth, where each user recruits more than one new user.

9. Financial Costs

Decoding the financial cost of your mobile app can help businesses determine whether the app is making a profit or a loss. It helps you get the detailed CAC and ROI of your app. 

Customer Acquisition Cost (CAC)

CAC estimates the average expense incurred to gain a new user, taking into account marketing costs and other acquisition expenses. Balancing a low CAC with high user value is key to maintaining profitability.

Return on Investment (ROI)

ROI evaluates the success of your app marketing initiatives. By contrasting the revenue or new users generated by a campaign with its cost, you can assess the campaign's effectiveness.

10. Benchmarking Metrics 

You can use benchmarking metrics to assess your app's marketing performance against industry standards to understand your competitive position. 

• Identify areas of strength or those needing enhancement. 
• Do you need to concentrate on improving SEO? 
• How does your pricing compare with other mobile game or app competitors? 

Benchmark analysis can propel your app marketing strategies forward.

Tools for Measuring and Analyzing Marketing ROI

App marketing ROI tools are crucial in determining the return on investment for marketing efforts. They provide organizations with insights based on data, simplifying the evaluation of their marketing campaigns' success.

Google Analytics

Google Analytics provides comprehensive insights into user behavior and website traffic. It allows you to monitor and measure a variety of marketing data, such as visitor count, conversion rates, bounce rates, and average session duration. 

Understanding how users interact with your website enables you to evaluate your marketing strategies' effectiveness and make improvements based on data.

CRM Software

Customer Relationship Management (CRM) software allows businesses to manage and analyze customer data. It enables tracking sales activities, following up with customers, and studying their behavior. By combining sales and marketing data, CRM software provides a holistic view of your customer's journey, helping you evaluate the effectiveness of your marketing strategies in attracting and retaining new customers.

Marketing Automation Platforms

Marketing automation platforms simplify the measurement of ROI by automating marketing processes and campaigns. 

These platforms enable you to track and analyze various marketing metrics, automate lead nurturing, and generate detailed reports. By monitoring campaign performance, you can evaluate the ROI of your marketing efforts and fine-tune your campaigns for better outcomes.

Social Media Analytics Tools

Social media analytics tools offer insights into the reach and effectiveness of your social media marketing efforts. These tools allow you to track engagement rates, follower growth, reach, and conversions. 

Analyzing these metrics helps you determine the ROI of your social media campaign and identify areas for improvement.

Advertising Platforms

Advertising platforms offer robust analytics and reporting features to track the effectiveness of your paid advertising campaigns. They allow tracking of metrics such as impressions, clicks, conversions, and cost-per-acquisition (CPA). 

By analyzing these metrics, you can evaluate the ROI of your advertising efforts, make data-driven adjustments, and optimize your ad spend.

Conclusion

Measuring and analyzing app marketing ROI is a continuous process that requires businesses to comprehensively understand the key metrics. By tracking and analyzing the data, businesses can make informed decisions at the right time, whether about enhancing the app’s performance, user experience, or revenue generation. 

Remember, don’t put all your efforts into a single data point; in fact, diversify your strategies to multiple fields. With time, your app’s goals and user’s needs will surely evolve, so be prepared to adapt to these changes strategically. While this blog guides you in using the different metrics and tools to measure app marketing ROI, you can still reach out to Mtoag Technologies for professional assistance on your app marketing plan. 

FAQs

How do you Measure App Marketing ROI?

App Marketing ROI is measured by comparing the cost of marketing efforts to the revenue generated from users acquired through these efforts. It's calculated by subtracting the marketing cost from the revenue and dividing the result by the marketing cost.

How do you Measure ROI and KPI in App Marketing?

ROI and KPI in App Marketing are measured by defining key performance indicators (KPIs) such as user acquisition cost, user lifetime value, and engagement rate. ROI is then calculated using these KPIs and the total marketing expenditure.

What Metrics Should the Organization Use to Measure the Return on Investment (ROI)?

To measure ROI, organizations should use metrics like customer acquisition cost (CAC), customer lifetime value (CLV), retention rate, and conversion rate. These metrics provide insights into the effectiveness of marketing strategies and the profitability of the app.