Is Your App Ready to Scale?

These 5 Metrics Will Tell You

if You’re on the Right Track

www.growmobile.com

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In an extremely crowded app store environment, how do you know

that it is time to really double down and push an app at full scale?

This paper provides five benchmark metrics that you can use

to tell if you are ready to push your app into the top tier

(and sustain it there).

By A.J. Yeakel, GrowMobile COO and co-founder

Launching a mobile app can be a risky and expensive proposition. Your team has spent

months or more developing and perfecting the user experience. You’ve allocated a launch

marketing budget. You’ve kicked off a Beta advertising campaign to collect data. And

you’re on the path to unleashing your labor of love to the world.

But how do know when your app is ready for a full-scale launch?

While every app has different goals and category benchmarks to consider and no two

successful apps perform exactly alike, here’s a list of five metrics to make sure you’ve

nailed before you pull the trigger.

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Virality

Virality is the lifeblood of successful applications. While there are exceptions to every rule,

even the most niche-focused top grossing applications rely on organic referrals to win.

In the desktop world, where accurate referral analytics exist, you can isolate an acquisition

channel and compute a K-factor to establish virality. In the mobile app space, where

referral analytics are incomplete, you need to get a bit scrappier with your math. One

simple marketing metric developers commonly rely on is their free-to-paid install ratio. If

you are relying on another form of tracked non-organic marketing to kick-start your user

base, like cross promotion, the same concept applies. You can substitute paid for other

non-organic channels.

For broad appeal applications, like casual games, it’s important that the free-to-paid ratio

exceeds 1. For apps that launch into and stick in the top of the free charts, this ratio

commonly exceeds 3.

Let’s say, for example, you are marketing an application in the US App Store, targeting a

top 10 ranking in the Free chart with a goal of 150k first day downloads. If your free-to-paid

ratio is 3, you would need to pay for 37,500 installs to achieve your goal. For most applica-

tions, this is a reasonable paid install goal. And with this level of free organic installs, there

is a high probability that the app would continue to stay in charts for some time without a

large sustained marketing investment.

The higher your free-to-paid ratio, the higher the probability that your free traffic will

snowball and reduce the need for paid acquisition.

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For more niche-focused applications with higher revenues per user, it is possible to launch

a successful application if the free-to-paid ratio is less than 1. At Grow Mobile, we advise

these developers to target a minimum free-to-paid ratio of .5.

Monetization

Monetization benchmarks should be evaluated relative to the size of your user base and

the associated costs to service those users. One of the most common metrics that

developers focus on is their Daily Average Revenue Per User (DARPU).

The graph below illustrates where your DARPU would need to be relative to your DAU to

generate $50,000 per day with your application:

DAU & DARPU Needed to Hit $50k Daily Rev

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As the above graph shows, the more narrow your niche, the more important it is to

maximize your DARPU. Conversely, the broader your market appeal, the less pressure you

have to produce a high DARPU. With that said, building a large audience is far from easy

and generally comes with higher operational costs, so making sure your DARPU is competi-

tive for your category should be a focus prior to your launch.

Retention

Strong retention is the key to building a large user base. While an app is new, it’s important

to look at one, three, and seven day retention metrics to gauge as early proxies. Yet,

long-term retention needs to be the ultimate goal.

Developers who rely on daily usage for their success should strive to hit a day one

retention number of at least 30%. Apps that dominate the top grossing charts in most

cases exceed 50% day one retention, with retention dropping less than 10% per week and

beginning to level off at day 30. The better your long-term retention, the more you avoid

the “leaky bucket” issue, which requires pouring an increasing number of new installs into

the funnel to grow. Over the long-haul, an app with poor long-term retention will fizzle out

as saturation makes it sustain install levels.

While your app is still in Beta, the great news is that you still have time to improve your

retention through tweaks like: bug fixes, tutorial additions, push notifications,

and reward systems.

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Percentage of Users Retained (Healthy)

Percentage of Users Retained (Leaky Bucket)

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User Acquisition

Before you get ready to launch your app, you will want to have a gauge on how you expect

your app to scale from a user acquisition standpoint.

The goal here is to give you the opportunity to address any critical marketability issues in

advance of your full-scale launch.

To get a basic understanding of how your user acquisition will scale, we recommend

setting up one or more small advertising tests while you are in Beta. The goal is to observe

your click through rate (CTR), Conversion Rate, and cost per install (CPI) relative to your

scale. Each placement has very different benchmarks for each of these metrics, so we’d

recommend picking a high-traffic placement that’s proven to perform well and consulting

with your user acquisition partner to get an understanding of what success looks like on

the placement you are targeting. You should shoot to outperform the average eCPM for the

placement while hitting your CPI target, to make sure there is room to increase your

volume and/or reduce your CPI in the future.

If your Beta advertising campaigns are performing below your target benchmarks, now is

the time to identify where you need to improve the marketability of your app. Look closely

at the CTR of your ads, the conversion rate from ad click to install, and your cost per install

rate itself. If your initial ads face a low CTR, test additional angles, colors, and targeting. If

your conversion rate is low, make sure that your ad is aligned with your app store page. If

your CPI is too low, re-evaluate your monetization to decide whether there is room to

increase your rate.

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Return on Ad Spend / Payback Period

Once your user acquisition is on track to scale, now is the time to monitor how you are

progressing relative to the return on ad spend targets you’ve set for your app.

Many developers establish a pay back threshold for their user acquisition campaigns that

ranges between 30 and 180 days, depending on when the product monetizes and how

aggressively they are trying to gain market share. While it takes time to collect this data,

and most developers do not have the luxury of time, so its important to analyze trends over

the first 14 days and establish a lifetime value predictions that you can use as a baseline to

make educated rate and budget allocations before you launch.

About Grow Mobile

GrowMobile provides the first cross-network, self-serve and fully-managed

mobile advertising platform featuring the easiest, most effective, and complete

solution for mobile app promotion across the widest range of traffic sources (ad

networks, ad exchanges, and social media). GrowMobile is part of the Mobile

Marketing Division of Perion. To learn more about our platform and advertising

solutions, visit www.growmobile.com or contact us.