Cheap installs. Expensive customers. What exactly are you scaling?

An acquisition report shows that your cost per install has fallen, so the obvious recommendation is to put more money behind the campaign. Before agreeing, though, I’d want to follow those customers a little further. If fewer of them activate, buy or come back, you may have improved the cost of filling the funnel while making the business at the other end more expensive to grow.

That’s why an app acquisition review needs to connect the original spend to a commercial outcome. An install is a useful step in the journey, but its value depends on what happens afterwards, and the cheapest source of installs won’t necessarily be the cheapest source of customers worth acquiring.

Follow the same cohort through the journey

Start with people acquired during a defined period and follow them for the same length of time. Otherwise, a recent campaign can appear weaker simply because its customers haven’t had the opportunity to make a second purchase. AppsFlyer’s cohort documentation describes grouping users by acquisition date; that provides a useful organising principle, although an attribution dashboard still doesn’t establish what advertising caused.

For the commercial review, define activation in terms of a meaningful customer action. Completing registration may be operationally useful, while making a first booking or completing a first transfer could be closer to the value the business needs. The right definition depends on the product, and it needs to be tested against subsequent behaviour rather than selected because the event is easy to record.

A worked comparison

Consider two acquisition routes, each with £20,000 of media spend. Here, activation means completing the first meaningful product action, and paying customers are a subset of activated users. Both cohorts have reached day 90.

Route A wins the install comparison comfortably, yet Route B produces twice as many paying customers and a stronger contribution result. The reversal comes from the journey after the install: 5% of Route A’s installers become paying customers, compared with 20% for Route B.

Here, contribution means customer revenue less the variable costs of serving those customers, including relevant transaction costs, refunds and incentives. It excludes the acquisition media spend until the final row, and it isn’t company profit because fixed costs and other acquisition costs haven’t been deducted.

Work out which problem you’re buying

The comparison gives you a reason to investigate Route A, although it doesn’t tell you to switch it off immediately. Perhaps the campaign is attracting customers who don’t understand the proposition. Perhaps the ad promise and onboarding experience don’t match, or a particular device group is struggling with the journey. Those explanations imply different actions, so inspect the drop-off by audience, market, device and creative before treating targeting as the only possible cause.

You also need to check whether you’re looking at genuinely new customers. Existing web customers moving into the app may be valuable, particularly if their service costs fall or repeat behaviour improves, but the business case is different from acquiring people who would otherwise never have bought. A web-to-app handoff that loses identity can make that distinction difficult, which is a measurement issue worth resolving before scaling.

Choose the next investment with the uncertainty visible

If Route B’s stronger economics hold across comparable cohorts, a controlled increase in its budget may be sensible. However, its current average acquisition cost doesn’t establish the return on additional spend, so set a review point and watch whether the next tranche attracts a different customer mix.

Meanwhile, Route A might deserve an onboarding test rather than more acquisition budget. Specify the expected improvement, the contribution it would need to unlock and how long you’ll wait for a mature result. Where longer payback is acceptable, assess the cash requirement explicitly instead of assuming future lifetime value will rescue weak early economics.

Cheap installs can be useful when they lead to valuable behaviour. Before celebrating the saving, show how the cohort moves from install to activation, payment and contribution, then decide which part of that journey deserves the next pound.

If your acquisition report and customer economics are telling different stories, GV Marketing can help frame the investment decision and identify the evidence needed to resolve it.

Read next: marketing budget allocation and choosing measurement for your decision.