How to do paid user acquisitions without unit-economy

When I started doing Paid UA, I read a lot of stories how different teams acquire users, what creatives they use, what targetings create. There is always a question how to measure the quality of traffic.

The basic rule of unit-economy is CPI≤LTV (Gold rule). Everybody knows it, it’s not rocket science. Live Time Value depends mostly on product team — app quality, retention rate, monetization. A traffic manager should acquire users at the price lower than lifetime value. In the most cases, it can be difficult to do in case the plan is to do high traffic volume, let’s say you need to acquire 1,000,000 users during a month (depends on each product individually).

This story works if unit-economy is positive. Not every product has a positive unit-economy. There can be a few situations:

1. A product doesn’t have monetization yet. The strategy can be to conquer the market, to get an audience and only then generate revenue etc.
2. A product has low LTV but it’s going to work on it in future. At the same time product can invest in acquiring an audience.
3. A product may generate revenue not from end users but from businesses.

At this situation, you need somehow evaluate the users you get. For me in Maps.me it was quite challenging when we invested in an audience and didn’t have any monetization. I could acquire users from all traffic sources — Facebook, Google, Twitter, Affiliate Networks etc. They all can have the same CPI but all of them have different quality. I understood we need to pay for active users and the task was to define this “active user” in maps.

First I tried to do it using general events like search, map download, routing creation. The thing was how to evaluate it, what is the price for search or map download? For this reason, I had to deny this method as I didn’t find a meaning for an “active user”.

At the same time I always compared paid traffic with organic which is considered to be ethalon — you don’t acquire it, users find your app without any tricks and I found that quality can be compared to Organic for each paid source. By quality I mean retention rate R1Day — the first day after install. I especially use the first day as it let me make an estimation of each campaign very quickly and I don’t need to wait too long and waste budget. The plan was to compare R1Day for each source with organic, it should be ≥80% of organic R1Day.

Here, we have 3 partners with different traffic quality. Using this method we can understand Partners 1 and 3 can be used further, they have quality≥80% from Organic retention rate. Partner 2 has quite a low retention of 60%.

That’s a pretty simple way how to evaluate quality if a product doesn’t have unit-economy and the CPI is equal for each source. Here I’ve tried to describe in what direction Marketing managers can think when they have a task which doesn’t suit “standard” methods like unit-economy.

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