How to Play It Well With Customer Acquisition Cost for Apps in 2024 (Success Story Included)

If you have a mobile app, acquiring users mirrors a high-stakes soccer showdown, like Argentina vs. Chile in Copa America. Just as Argentina clinched victory with a late goal, app developers must strategically win over new users in a competitive mobile app market.

Picture the match as a metaphor for mobile app user acquisition: Argentina’s tactics reflect your app marketing efforts on new users acquired.

Like struggles converting chances to goals, you face hurdles turning app installs into loyal users. Meanwhile, the late winning goal symbolizes the breakthrough of a well-executed strategy in successful mobile app user acquisition.

Source: YouTube CNBC TV18

As Argentina’s win required skill and strategy, the app user acquisition strategy demands data-driven precision and ongoing app optimization. For every win, you need a growth strategy. You also want to monitor customer acquisition costs to maximize your resources.

Moving from the soccer field to the app business, I’ll unpack the customer acquisition cost for apps in 2024. We’ll explore current trends and user acquisition strategies to lower CAC for apps. By grasping these areas, you can control your budget, boost ROI, and ensure app success.

What is customer acquisition cost for apps?

Customer acquisition cost (CAC) for apps refers to the total amount of money spent to acquire a new user or customer for the app. In the context of mobile apps, the app user acquisition cost includes all marketing and sales expenses to get a new user to install and engage with the app.

CAC is the amount you get by dividing total sales and marketing expenses by the number of new customers acquired within a set timeframe. For mobile apps, this includes app marketing costs like advertising, team salaries, user acquisition tools, and creative production costs.

To calculate the calculate customer acquisition cost, you can use the following traditional methods:

• 💡 Standard formula. Total sales and marketing expenses / number of new customers acquired
• 💡 Paid formula. Marketing and sales expenses (excluding salaries and overhead) / number of new customers acquired through paid channels
• 💡 Fully loaded formula. All customer acquisition costs / number of new customers gained.

Monitoring CAC is important because it:

• Refines app marketing strategies for cost-effective attraction of new users
• Identifies profitable user segments to enhance your app monetization strategies
• Pinpoints top-performing marketing channels
• Guides budget planning and business model evaluation
• Boosts profitability and supports sustainable growth
• Offers insights to enhance the entire user acquisition process

With that said, understanding the current state of CAC will help you build a strategy that fits your goals. I’ll unpack more of them in the next section.

What’s the current state of CAC for apps in 2024?

The current state of Customer Acquisition Cost (CAC) for mobile apps in 2024 reflects a complex and evolving landscape influenced by factors such as app category, platform, and geographic location.

Here is a detailed analysis of the average CAC across different app categories:

Metric	Value
Cost per install (CPI)
Global Average	$2.24
iOS	$1.5 to $3.5
Android	$1.5 to $4.00
North America	$2.5 to $5.00
App category analysis
Gaming Apps	Average CPI: $2.00 to $6.00, varies by genre and platform
iOS Games	$2 to $5
Android Games	$1.5 to $4.00
Casual Games	Around $1.00
Finance Apps	Average CPI: $2.33, variations by platform and region
iOS	$4.35
Android	$2.09
LATAM Users	Most cost-effective at $1.60 CPI
Health Apps	Average CPI: Range of $1.5 to $4.00, similar to non-gaming apps
Shopping Apps	Average CPI: North America: $4.74, Latin America: $1.42

Sources: Business of Apps and ironSource

In my opinion, CAC presents both hurdles and opportunities to gain and keep mobile app users engaged. With a 60% rise in CAC over five years, factors like Apple’s iOS 14.5 update and cookie changes have reshaped user acquisition tactics for app developers and marketers.

For example, With the iOS 14.5 update, Apple’s App Tracking Transparency (ATT) shook things up by making user tracking opt-in. This shift means less data for advertisers to pinpoint customers accurately, potentially driving up acquisition costs.

Here’s a cool video on how ATT affects advertisers’ efforts to promote and acquire users.

The cookie changes have disrupted the way traditional digital advertising acquires new users, further complicating the process instead of reducing friction. Thus, costs have increased. A video from the Chrome Developers channel gives developers a heads-up on how to prepare for the changes in third-party cookies.

Another critical aspect is the difference in acquisition costs between iOS apps and Android platforms. iOS users cost more to acquire than Android app users.

Why? iOS users typically spend more on in-app purchases and subscriptions, making them valuable targets for advertisers. This premium on iOS users boosts the acquisition cost and promises higher returns in the long run.

In my research, I found interesting data from Statista showing the average mobile user acquisition cost from 2019 to 2020. Historical data also suggests that if you want users to purchase and subscribe, there’s a trade-off in costs.

In August 2020, snagging an in-app buyer in North America was the priciest move, costing around $74.68 per acquisition. Subscriptions were a bit cheaper, at $64.27 each.

Source: Statista

The numbers tell you that a budget is also needed upfront for gaining new users. These growing pains in managing CAC for apps also push you to find ways to have a sustainable strategy apart from the app store optimization on Google Play Store and Apple App Store and other paid methods that will not lead you to bleed pockets once you launch an app and scale it.

But wait, hold on to that thought. What if there are ways to reduce acquisition costs? Find out more in the next section.

How do we lower customer acquisition costs for apps?

In this section, I’ll share Vello’s inspiring app success story and unique ways of acquiring new users. Of course, the goal is to make users stay in your ecosystem and, hopefully, become brand ambassadors and evangelists.

Developed by Appetiser, Vello effectively uses these strategies to reduce customer acquisition costs (CAC) and drive growth:

1. Celebrity partnerships

Vello has built a database of over 1,000 high-profile celebrities. This partnership with well-known personalities creates a strong draw for users, reducing the need for expensive traditional marketing efforts.

2. Fan base leverage

With a fan base of over 150 million, Vello is tapping into an existing community of engaged users. This large user base acts as a powerful organic marketing tool, spreading awareness through word-of-mouth and social sharing.

3. Freemium model

Vello allows users to join the app for free, enabling them to send and receive personal video messages from their favorite celebrities. This low-barrier entry point attracts a large user base, which can then be converted to paying customers through premium features.

4. Exclusive content

Vello offers a paid VIP feed option, granting access to exclusive premium video content. This creates a strong incentive for free users to upgrade, effectively monetizing the community.

5. Social network effect

As a social networking platform, Vello benefits from network effects. Each new user adds value to the platform, attracting more users and celebrities and creating a continuous cycle of growth.

6. Community engagement

The platform fosters a sense of community among fans of various celebrities. This app engagement technique keeps users active on the platform, reducing churn and increasing the likelihood of users recommending the app to others.

7. Targeted marketing

With a clear understanding of its user base (fans of specific celebrities), Vello can implement highly targeted marketing strategies. This approach improves the efficiency of its marketing spend.

Savvy community-driven tactics have helped surge Vello’s user base and celebrity collaborations while slashing CAC. This strategy has been so successful that Vello is eyeing a debut on the Canadian stock market and expansion into the US.

The app’s community-centric blueprint showcases how apps can slash CAC by fostering user interaction, sharing, and natural growth. This dual benefit trims marketing expenses and cultivates a devoted user community essential for enduring triumph in the cutthroat app industry.

Build customer-centric apps for a sustainable CAC strategy

Like any soccer team that wants to score points or goals, succeeding in the competitive world of mobile apps requires a strong game plan and an even stronger team. As discussed, user acquisition and app retention are crucial factors in app growth and development.

However, with the rising costs of CAC due to significant changes in cookies and privacy regulations, it’s essential to be street-smart in spending and executing your app growth strategy.

Thankfully, reliable partners like Appetiser understand these challenges and know how to navigate them with nearly a decade of expertise in building user-centric apps that users will be delighted to use.

Building a successful app requires more than just a great idea—it requires a high-performing team with hands-on experience to get things done.

We can’t wait to help you turn your dream into a reality and see your app soar high above the competition. Schedule a call with us to discuss how we can make your ultimate vision happen.