a) Growth strategy: I want 100K installs in 3 months and my marketing budget is $300,000 = $3.00 CPI
b) LTV strategy: I know each new user generates $9.00 in revenue before churn (LTV) divided by 3 (33% marketing budget)= $3.00 CPI
c) Tips on Calculating Simple LTV (Life Time Value) to arrive at a CPI Bid
- Last month's revenue (look up in iTunes + Ad Providers + In-app-commerce) divided by...
- Last month's users (look up in Google Analytics, Flurry etc) equals Revenue per user, multiplied by...
- Lifetime (length of time guesstimate) of customer before he churns equals LTV
- LTV divided by 3 (33% marketing budget) = CPI Bid
- Example: ($20,000 total revenue last month) divided by (10,000 users last month) = ($2 Revenue per user) multiplied by 4.5 months lifetime = $9.00 LTV divided by 3 = $3.00
a) Set a target CPI above (using any of the 3 methods) and divide by 5 = CPC.
Why 5? Assume 20% or 1 out of 5 clicks results in an install.
Example: $3.00 target CPI divided by 5 = $0.60 cost per click bid