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While the impact of retention on UA is critical, there are 2 points to consider: 1. Some apps, especially games, only aim to monetize users in the first 1-30 days. This type of model significantly reduces the impact that higher retention may have on LTV. 2. The best UA will not succeed if the product isn't built for long-term usability, no matter what. High retention is a result of a good product, not good UA. Marked as spam
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Retention has a massive impact on user acquisition performance -- retention is the fundamental measure of a cohort's engagement, meaning you can't really have stable / sustainable monetization without it. Some people believe that LTV and retention are independent product measures, but LTV is actually a function of retention: the "bowed" shape that many LTV curves take is the result of cohort users churning out of the product (as users churn out, there are fewer to contribute revenue, and since an LTV curve measures cumulative revenue of the cohort, the LTV curve's slope decreases over time and it takes the logarithmic shape). In an article I wrote called Visualizing the dynamic between LTV and Retention, I walk through the relationship between revenue and LTV with some code samples. I have written pretty extensively on this subject at Mobile Dev Memo; some relevant articles: Marked as spam
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Retention is one of the crucial factors which affect User Acquisition (UA) performance directly. While some app publishers are focussed on scaling UA, most of the acquired users are gone soon due to low retention rates. Retention and UA are not replacements of each other. They are complementary. Life Time Value (LTV) is dependent upon the retention to a great extent. Opportunity to monetise better will be high when you have good retention rates. With low retention, the LTV also takes a hit.
LTV > CPI
While it’s a well-known fact that LTV has to be greater than UA Cost, many often ignore the fact that it’s the other way around too. You can’t scale UA if the LTV is too low. This is because CPIs go up with the scale and with time. If the LTV doesn’t support UA, it becomes tough to even sustain the existing UA levels in the long run.
What happens when an app has low retention rates?
Let’s take a look at the below example: Here are the Inorganic LTV values of App A & B over a period of time. Assumptions:
Implications:
Some points:
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