Acquisition Example
Let's take as an example the case of two projects: A and B, each of which has just been released to the market and acquires new users.
Project A has attracted 100 users, while the project B has attracted 60 users. Which of the projects is better? Far it seems that A (and so far this is true), but let's also take a look at more acquisition metrics, and not make final conclusions yet.
Let’s add another sentence to our example. Project A received from its users $300, and their acquisition cost was $200 (Installs cost). Project B received from its users $200, and the acquisition cost was $100.
Let’s calculate the CPI for both projects:
А: CPI = Installs cost / Installs = $200/100 = $2 - this is the average price project A acquired one person for.
B: CPI = $100/60 = $1,67. For Project B one user is less expensive than for the project A.
Now let’s calculate ARPU. For project А: ARPU = Gross / Installs = $300/100 = $3 - this is the average revenue from one user for project A. For project B: ARPU = $200/60 = $3,33.
Finally, let’s calculate the ROI for both projects. ROI = Gross / Installs cost.
For A: ROI = $300/$200 = 150%.
For B: ROI = $200/$100 = 200%.
It turns out that project B, although it attracted fewer users, they brought more money on the average, the buying costs paid off twice while project B acquired users at a lower price.
Let’s add one more sentence to our example.
Let's say, from the first entry in project A 30 days passed, and in Project B - 90 days. Recall, ROI (A) = ROI (A) = 30 to 150%, ROI (B) = ROI (B) = 90 to 200%. This explains the fact that project B looks more successful for now. To compare the quality of traffic, let's compare ROI for the same period of time.
Assume, ROI (B) = 30 to 100%, while the ROI (A) = 30 to 150%.
We conclude that traffic from project A has all chances to become more efficient than traffic from Project B, if the dynamics of ROI continue.
But in any case, it should be said that traffic in both projects is good enough and effective as in both cases, the ROI is more than 100%.
Last modified 2yr ago