Mobile App Growth, Monetization, User Acquisition

Target ROAS Campaigns for IAP to Reach Your Goals

Doug Borghese
Sep 27, 2022

Mobile in-app purchases (IAP) are a simple, proven way to quickly monetize an app and generate revenue. But you must consider a few things for your IAP strategy, up to and including when you want to target ROAS in your user acquisition strategy: 

  • Where should you focus your efforts?
  • What strategies will be most effective? 
  • How can you refine and improve IAP performance over time? 

Whether you’re selling extra lives, feature unlocks, or something else entirely, AppDiscovery can help you target ROAS (Return on Ad Spend) using automation and machine learning. This, in turn, will help you efficiently hit your IAP ROAS goals.

What is IAP?

IAP, or in-app purchases, are typically optional app add-ons that bring new content to users. In a game, they are often used to give players quality of life improvements, extra inventory space, items, and more.

Before you begin: Know your app and audience

Before diving into an IAP ROAS campaign, make sure you’re engaging and retaining users. 

The formula for retention is simple: Active users divided by the number of installs in your cohort. Gaining new users, however, can be easier than retaining them. But if you can’t convince your users to stick around, you can’t sell to them later. 

Quick tip
Play some of the successful games or apps that you’ll be competing with. Identify common design patterns, mechanics, and/or gameplay elements that you can use in your own app and IAP strategy. 

With that in mind, think about how you can engage a user every time they open your app. If you reward players too soon, it can be meaningless. Reward them too late and they may have already churned. The balance between the two is tricky at best, so A/B testing is the only way to discover what works.

Know your KPIs

The following key metrics are important to track to help you understand and refine your IAP strategy:  

  • DAU –– The number of daily active unique users.
  • ARPPU –– The average revenue per paying user, which can vary depending on the type of game
  • IAP Conversion Rate –– The in-app purchase conversion rate, i.e., the percentage of users who make an in-app purchase. 
  • LTV ––  The predicted lifetime value profit margin earned from an average user during the entire time they play the game.

OK, you’ve engaged your audience. Now what?

The difference between AppDiscovery IAP ROAS campaigns and Ad-ROAS campaigns is that IAP ROAS optimizes for in-app purchases instead of ad revenue to optimize campaigns for purchasers and not just installs. Ad-ROAS campaigns, on the other hand, use ad revenue data. It also bears mentioning that Ad ROAS campaigns can only be leveraged by publishers if they are using MAX.

But before you dive into an IAP ROAS campaign, you should have a strong understanding of your app, its audience, and how to engage them effectively. If you’ve reached this point, then you’re at a good point to consider an IAP ROAS campaign strategy. 

Some examples of partners that have used IAP ROAS as part of their success include: 

  • Fastic, an intermittent fasting app that relies on IAPs to generate revenue, used an AppDiscovery IAP ROAS campaign to increase scale by 125% and grow profitability MoM by 58%. (Read more about Fastic results here.) 
  • Project Makeover, a match-3 game by Magic Tavern, used an AppDiscovery IAP ROAS campaign (as part of a larger strategy including cost-per-engagement campaigns) to become a #1 grossing game in 24 countries and No.1 download in 140 countries. (Read more about Project Makeover results here.)

Types of IAP ROAS campaigns

Basic IAP ROAS campaigns are run as either Day 0 or Day 7 campaigns.

  • Day 0 campaigns — Day 0 campaigns begin the optimization process after collecting 24 hours of data after installation. Day 0 campaigns are relatively quick to optimize and work best for apps with large conversion numbers on Day 0. A few examples might be certain sports games, merge games, match 3 games, and word games.
  • Day 7 campaigns — Day 7 campaigns are generally best for games that take longer to monetize. They require more time to collect mature data and begin the optimization process. These campaigns are generally best suited to apps that have a longer payback window — 6-18 months, for example. That’s because they spend more time collecting data from customers using your app. Some examples might be RPGs, along with slot and gambling-based games. 

What’s a realistic target ROAS for IAP-based campaigns?

Again, there’s no magic formula for an IAP ROAS campaign, and a realistic target varies significantly depending on the type of app and the type of campaign (Day 0 or Day 7).  Some apps, for example, can achieve ~10% IAP ROAS in a Day 7 campaign, while others can achieve markedly more or less. Some types of games, for example, might earn higher IAP ROAS faster, but these frequently also have much lower retention. 

You should also consider what recoup looks like for your clients. For example: What’s the average drop-off rate? Do users play for a targeted number of days, maybe 180 days, or a full year? if so, what’s their expected lifetime value (LTV)? That will help you better understand profitable CPI’s and what your D7/D30/DXX ROAS targets should be.

The bottom line is to pick something realistic based on the app genre and the audience, which is why, again, it’s vital that you know your app and its audience well before attempting an IAP ROAS campaign. It’s for this reason that IAP ROAS campaigns are generally best suited for developers that understand where their product is in the market and understand the competitive landscape. including what is competitive on other ad platforms.

However, once you’re armed with a thorough understanding, an AppDiscovery IAP ROAS campaign can be an efficient and effective tool for managing, increasing, and hitting your IAP ROAS goals. 

Learn more about AppDiscovery

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