Why measuring ROI on Mobile App budgets is a must for all modern marketers

If you have a mobile app - which you likely have if you’re in a customer facing business - then you need a mobile app strategy. That might sound obvious, but we talk to a lot of people in the mobile business and let’s just say you’d be surprised!

In a world where 19% of apps are used only once, and with the average smartphone user having somewhere north of 100 apps installed on their phone - just building an app and spending money on acquisition isn’t going to cut it. You need to invest in the techniques and campaigns that turn new installs into successful long-term mobile relationships, and revenue as a result.

But that involves time and money. And in that situation, any CMO has to consider how to measure success, whether by revenue, profitability, app downloads, engagement or whatever else.

Businesses pour a ton of money into acquisition spend. Possibly for that reason, there has been plenty of research done on determining ROI on that spend over the years. It’s time to do the same thing for the money spent after the fact - on push campaigns, in-app messages, A/B testing of user experience - all the elements of an engagement strategy. In a world where an almost infinite number of opportunities exist for spending money, it is essential to demonstrate that money spent on mobile marketing automation is money well spent (and not spent better elsewhere).

So how would our theoretical CMO go about making that happen?  

Measuring ROI

A good marketing automation platform (say, a marketing automation platform like Swrve!) can dramatically change key mobile metrics like engagement, retention and ultimately revenue.

That provides the first, and easiest way to consider ROI. If these numbers ultimately roll up to a metric such as ‘average revenue per user’ or ARPU, then careful monitoring of this number alongside the control of as many variables as possible, can give us a perfectly decent estimate of ROI.

To put it simply, if we double ARPU from $5 to $10 on a back of a concerted marketing automation program, and we have 1m MAU, we can put $5m a month in the credit column. If our fully-loaded monthly spend on the program comes in at $100,000, that’s a super healthy 900% ROI. Most CMOs would be happy to take that to the board!

Of course we won’t always measure ARPU. But in most cases there are metrics through which we measure mobile success, and if we put some quantifiable value on these (and if we can’t, we might want to reconsider whether they really matter to us) we can arrive at decent ROI figures in the same way. As a side note, it will certainly help if our analytics engine is tightly integrated into our campaign platform (or indeed part of the same product).

 

The Campaign Level

Perhaps a more reliable way to determine your ROI - or at least a share of it - is to focus on individual campaigns. This will better determine the relevance of any changes that you make or campaigns you deliver. In an ideal world, your platform will provide clear feedback on the uplift versus a control group (or alternative treatment) for any activity, and the total benefit for the business. From that point it is simple enough to get a clear understanding of total benefit, although it might be worth remembering that  some improvements- such as an enhanced app experiences leading to growth through word-of-mouth, may fall through the cracks.

Ultimately there’s a simple enough golden rule: identify the metrics that you wish to influence, and the effect that you wish to see before you build out your campaigns. Then measure the results and compare with costs. Don’t make the mistake of running campaigns and only then looking for evidence of success - that can compromise honesty and accuracy when deciding whether the investment was worthwhile.