Tips on How to Determine a Max Bid

3 Ways to determine an affordable CPI (Cost Per Install):

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
Determining an affordable CPC (Cost per click):

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






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