The cost of acquiring a new player in mobile gaming has risen significantly. In 2024, the average Cost Per Install (CPI) for iOS games was $5.11, compared to $4.61 for Android games. This increase is mainly due to Apple's App Tracking Transparency (ATT) framework, which limits advertisers' ability to track user behavior across apps, making it more challenging and expensive to target potential players.
Relying on paid ads alone is now unsustainable, especially for smaller studios. To stay viable, developers must combine optimized paid campaigns with scalable organic tactics, such as ASO, community building, performance-based influencer deals, and strategic partnerships.
Key Takeaways:
Why tracking both New CAC and Blended CAC matters and how it helps balance acquisition and retention strategies.
How to improve creative and campaign performance using A/B testing, behavioral data, and AI-powered tools.
What steps to take to achieve a strong LTV-to-CAC ratio, including user retention through LiveOps, better onboarding, and loyalty programs.
How predictive analytics and regression models can reduce CAC by targeting high-LTV user cohorts.
Understanding Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) measures the total resources required to acquire a new player for your mobile game. CACs are of two types, Blended CAC and New CAC, which capture different aspects of acquisition efficiency.
Blended CAC
Blended CAC includes all sales and marketing expenses related to both new user acquisition and revenue expansion from existing players. It encompasses all paid ads, organic marketing efforts, UA team salaries, technology licenses, and reengagement campaigns. Expansion events may include level-upgrade purchases, season-pass renewals, or in-app purchases (IAP) spending from existing players, converted into “new-player equivalents.”
Formula:
[Blended CAC = Total S&M Costs ÷ (Number of New Players + Expansion Events)]
Example:
A mid‑core action RPG invests $50,000 across paid UA and reengagement, acquiring 8,000 new installs plus expansion events equal to 2,000 new players.
Blended CAC = $50,000 / (8,000 + 2,000) = $5.00
Tracking Blended CAC guides you in balancing budgets between fresh acquisition and retention initiatives.
New CAC
New CAC (also referred to as Paid CAC) measures the cost of acquiring first-time users through paid channels alone. It covers media spend, creative production, bidding fees, and UA‑team costs directly attributed to new installs.
Formula:
[New CAC = S&M Costs Allocated to New User Acquisition ÷ Number of New Players Acquired]
Example:
A hyper‑casual puzzle game runs a $20,000 media campaign targeting look‑alike audiences and achieves 10,000 installs. New CAC = $20,000 / 10,000 = $2.00
Focusing on New CAC lets marketers benchmark pure install efficiency and optimize creative and bid strategies.
Impact of High CAC
A CAC that exceeds the revenue from each player will erode profitability over time.
For the New CAC, compare it directly to your average revenue per user (ARPU) to confirm that you cover acquisition costs from the first engagement.
For Blended CAC, benchmark against customer lifetime value (LTV) to ensure you’re generating sufficient long‑term returns.
A standard benchmark is an LTV-to-CAC ratio of 3:1, meaning that each player’s lifetime value (LTV) should be at least three times the new customer acquisition cost (CAC). Tracking both New CAC and Blended CAC enables you to balance budgets between acquiring new users and expanding existing ones, driving sustainable growth.
Also Read: Top Mobile Gaming App Marketing Strategies You Must Know
Effective Strategies to Reduce CAC
With CAC rising, it’s more important than ever to reduce acquisition costs without sacrificing growth potential. Here are proven strategies to make that happen.
1. Optimize Paid UA Campaigns
Paid acquisition can still be effective if done right. Focus on performance-based models and smart channel diversification.
Performance-Based Marketing
Consider performance-based marketing strategies to manage your customer acquisition cost (CAC). Affiliate programs allow you to pay partners only when they deliver conversions, reducing upfront costs and shifting the financial risk to performance-based compensation.
Affiliate Programs
Pay affiliates only for conversions, ensuring cost-efficiency.
This model aligns incentives, motivating affiliates to bring valuable users.
Influencer Collaborations
Structure influencer partnerships with revenue sharing or cost-per-acquisition (CPA) models, so they earn based on the users they bring to your platform, directly contributing to your growth.
For example, Supercell’s launch of mo.co utilized a performance-based model, shifting from the traditional pay-to-win approach. With limited availability and invite-only access, the game relied on its inherent appeal to attract users. Despite minimal traditional marketing, this strategy generated over $680K in its first month.
This is now a "MO.CO" Channel! | New GLOBAL Supercell Game
For a deeper understanding of mo.co's launch and its innovative marketing tactics, you can watch the insightful analysis by KairosTime Gaming in the video above.
Experiment with New Channels & Ad Formats
As platforms like Facebook, Google, and Twitter become more competitive and costly, exploring alternative channels can help reach new audiences at lower acquisition costs. Smaller social and regional networks often have lower cost per mille (CPM) rates and less ad competition. For mobile apps and games, platforms like the Samsung Galaxy Store and Huawei AppGallery offer large, engaged user bases. Huawei AppGallery alone has 580 million monthly active users.
New Ad formats can improve engagement and reduce costs:
Playable ads provide interactive previews, attracting users who are more likely to convert.
Video HTML5 ads on ad networks (e.g., Google Ads, Meta Audience Network, and other demand-side platforms) leverage rich-media elements, such as animations, embedded video, and interactive overlays, to capture attention across devices and screen sizes.
These HTML5 video ads track metrics such as cost-per-engagement (CPE), completion rates, and user interactions, while supporting dynamic creative updates based on behavior and context, thereby boosting efficiency and reducing waste.
Your creative strategy plays a crucial role in controlling customer acquisition costs. According to industry data, a well-optimized creative can reduce your Cost Per Install (CPI) by up to 30%.
When developing new creatives, consider:
Highlighting core features that differentiate your product.
Using attention-grabbing visuals in the first 3 seconds.
Creating variants optimized for different platforms and placements.
Incorporating clear calls-to-action that drive immediate response.
Focus on developing creatives that clearly communicate your unique value proposition within seconds. For gaming apps, showcase actual gameplay rather than cinematic sequences that do not accurately represent the real user experience.
Constantly Test and Refine Creatives
Implement continuous A/B testing across all creative elements, including images, copy variations, video length, and call-to-action buttons. The most effective testing strategy involves segmenting and testing variables individually to identify which elements drive performance improvements.
For instance, test different hook text variations while keeping visuals consistent, then separately test visual elements with your winning headline. This methodical approach allows you to isolate the impact of each element on your conversion rates.
Remember that your optimization efforts shouldn't stop at the click. The entire conversion funnel from app store page to onboarding requires testing and refinement. Companies that use A/B testing effectively can identify exactly which aspects of the customer journey create friction or drive conversions.
When refining your creatives, pay special attention to:
Ad fatigue indicators (declining click-through rates over time).
Audience segmentation (different demographics may respond to different messaging).
Seasonal variations (adjust creatives to align with current events or seasons).
Platform-specific optimizations (what works on TikTok may fail on Google Display Network).
The key lies in creating accountability through performance-based partnerships, exploring new channels before they become saturated, and relentlessly testing every aspect of your creative strategy.
2. Maximize Organic & Viral User Growth
Here’s how you can strategically reduce your customer acquisition cost by focusing on high-impact, sustainable user acquisition tactics.
App Store Optimization (ASO)
App Store Optimization (ASO) is your first line of defense. By enhancing your app listing with targeted keywords, polished descriptions, and engaging visuals, you increase your app’s visibility in crowded marketplaces like the App Store and Google Play.
Use keyword research to identify high-intent search terms relevant to your app’s core features.
Craft compelling app descriptions that clearly communicate your value proposition and include those keywords naturally.
Invest in high-quality screenshots and videos that showcase your app’s unique selling points and user experience.
Don’t overlook SEO for your app’s landing page or website. Optimizing for search engines can drive organic traffic directly to your app store page, further reducing your reliance on paid acquisition and lowering your overall customer acquisition cost.
Encourage Word-of-Mouth & Referrals
Set up referral programs that reward users with in-game items, credits, or exclusive content for bringing in friends. This not only incentivizes sharing but also leverages your existing user base as a powerful marketing channel.
Design referral incentives that align with your app’s core loop and user motivations.
Make sharing seamless by integrating referral links and social sharing options directly within your app.
For example, Supercell’s launch of mo.co didn’t rely on up‑front ad budgets but on a performance-based referral engine: players only earn the right to invite new users after hitting an in‑game milestone (level 5), at which point each qualifying player unlocks up to three invite codes to share. This “pay‑for‑results” approach means Supercell incurs acquisition costs only when existing players perform and successfully refer others, aligning spend directly with measurable user growth metrics and creating a self‑sustaining viral loop.
Build Community and User-Generated Buzz
Create spaces where users can interact, such as Discord servers, Reddit threads, or in-game chat rooms. These platforms foster engagement, loyalty, and advocacy.
Encourage users to share gameplay clips, fan art, and tips. User-generated content (UGC) not only amplifies your reach but also builds authenticity and trust among potential users.
Host community events, contests, or Ask Me Anything (AMA) sessions to keep your audience engaged and invested in your app’s success.
A vibrant community can become a self-sustaining engine for user acquisition, as engaged users are more likely to recommend your app and create content that attracts new users organically.
Cross-Promotions and Partnerships
Cross-promotions such as featuring each other’s apps, running joint campaigns, or bundling offers can introduce your app to highly relevant user segments.
Identify partners whose audiences overlap with your target demographic but don’t directly compete with your offering.
Structure mutually beneficial campaigns that provide value to both user bases.
Strategic partnerships can help you scale user acquisition efficiently, keeping your customer acquisition cost in check while expanding your reach.
3. Focus on Retention to Boost LTV
Below, we explore three key retention strategies: optimizing onboarding, leveraging LiveOps, and implementing loyalty hooks:
Onboarding Experience
A seamless onboarding experience is your first opportunity to engage users and set the tone for long-term retention. Poor onboarding can lead to high churn rates, with studies showing that 77% of mobile app users churn within the first day if their initial experience falls short.
Develop Engaging Tutorials: Your tutorial should be concise yet informative, guiding users through core mechanics while showcasing the value of your product. Elements like progress bars or rewards for completing tutorials can enhance engagement.
Personalize Early Experiences: Segment users by behavior or demographics and tailor onboarding flows to their needs. For example, casual gamers benefit from simpler tutorials compared to mid-core players.
Measure Key Metrics: Track Day 1 and Day 7 retention rates to identify friction points. Utilize analytics tools to optimize these early interactions continually.
Keep Players Engaged with LiveOps
LiveOps (Live Operations) is a dynamic approach to keeping users engaged through regular updates, events, and personalized experiences. It transforms games into evolving platforms rather than static products, extending their lifecycle and increasing user engagement.
Schedule Regular Content Updates: Introduce new features, such as characters, levels, or storylines, at consistent intervals. This keeps your game fresh and gives players reasons to return.
Host Limited-Time Events: Events like holiday-themed challenges or crossover collaborations create a sense of urgency and excitement. These time-sensitive activities can drive higher engagement rates and in-game spending.
Leverage Personalization: Utilize AI-driven insights to provide tailored rewards or dynamic difficulty adjustments tailored to player behavior. Personalized experiences foster deeper connections with your product.
Implement Loyalty Hooks
Loyalty hooks are mechanisms designed to encourage repeated engagement and long-term retention. By rewarding consistent activity, you can develop habits that reduce churn and increase customer lifetime value (LTV).
Design Habit-Forming Reward Loops: Emphasizes building daily and weekly engagement cycles to boost retention. Daily login rewards that increase in value over time can encourage habitual use, while milestone rewards (like on Day 7 or Day 30) create anticipation and reward loyalty, making churn less likely.
Tiered VIP and Progression Systems: Segmented tiers (Bronze, Silver, Gold, Platinum) provide escalating perks, tapping into users' desire for status. Each tier should offer distinct and meaningful rewards to motivate users to progress through the ranks.
Cumulative and Event-Based Bonuses: Offering cumulative bonuses for specific actions (e.g., completing daily challenges) and event-based rewards. These bonuses should be trackable, creating clear goals and progress indicators. Limited-time events add urgency, driving engagement and in-game purchases.
Personalization and Data-Driven Optimization: Using A/B testing and data analysis to optimize reward structures continuously. Personalize offers based on user segments, such as spenders or social players, to increase relevance. This data-driven approach helps keep loyalty systems effective as your user base evolves.
By focusing on retention strategies such as optimizing onboarding experiences, leveraging LiveOps, and implementing loyalty hooks, you can significantly reduce customer acquisition costs while boosting lifetime value.
4. Leverage Data and Continuous Optimization
Keep an eye on Cost Per Install (CPI), click-through rates, retention, and Return on Ad Spend (ROAS). It’s not just about numbers—it’s what they imply:
If CPI rises but retention stays flat, your targeting or creatives might need adjustment.
A high CTR with a low ROAS could indicate weak post-click engagement or monetization gaps.
Reallocate your budget and creative efforts based on clear performance signals. If specific channels are underperforming, pull your spend from them and redirect it to areas that show strong return on investment.
How Do We Arrive at the User Segment to Target?
Data analysis techniques, such as cohort analysis and regression analysis, can help pinpoint high-value customer segments. For instance:
1. Cohort Analysis:
Cohort analysis involves grouping users based on a shared characteristic, such as acquisition date or specific behavior, and then tracking their performance metrics, like retention or conversion, over time. By comparing retention curves across cohorts, you can identify drop‑off points and refine onboarding or engagement strategies for each user group. This method helps reduce churn and optimize acquisition channels by revealing which cohorts deliver the highest lifetime value.
2. Regression Analysis:
Regression analysis is a statistical techniques that estimate how independent variables (e.g., ad spend, creative features, channel, demographics) influence dependent outcomes (installs, revenue, retention). In mobile gaming, it’s applied through:
Marketing Mix Modeling (MMM): Uses multivariate linear regression on historical media spend and performance data to quantify each channel’s ROI and identify diminishing returns.
Creative A/B Regression: Fits models linking creative attributes (e.g., video length, playable ad format) to CPI and D7 retention.
Predictive LTV Models: Incorporate regression within machine learning frameworks to forecast player LTV based on early behaviors (session count, in‑app events) and user demographics.
These insights ensure that your campaigns are laser-focused on audiences most likely to convert, reducing wasteful spending.
Automate and Use AI for Optimization
Implementing AI-powered tools allows businesses to streamline processes and make data-driven decisions at scale:
Retargeting Campaigns: Ad networks like Google Ads and Meta, as well as platforms such as AdRoll, utilize AI to automate retargeting by tracking user behavior with pixels, segmenting audiences based on intent, and dynamically generating personalized ads. AI also adjusts bids in real-time and continuously learns from performance data to improve targeting and creative effectiveness, eliminating the need for manual setup or optimization.
Predictive Analytics: AI algorithms analyze historical data to forecast which strategies will perform best. For example, predictive analytics can help optimize ad spend by identifying high-performing channels before launching campaigns.
By automating repetitive tasks, such as audience segmentation and campaign optimization, you free up resources while ensuring consistent performance improvements.
Also Read: Top Proven Strategies to Promote Your Mobile App
Conclusion
The rise in Customer Acquisition Costs (CAC) underscores the need for a balanced approach, blending organic growth strategies with optimized paid campaigns. Emphasizing App Store Optimization (ASO), influencer collaborations, and community engagement can attract and retain players without overspending. Moreover, refining ad creatives through continuous testing and leveraging alternative channels can further enhance efficiency and reduce costs.
To support these efforts, leveraging the right tools is essential, especially when it comes to creative optimization and performance tracking. Tools like Segwise use AI-driven insights to streamline user acquisition. Its Creative Tagging and Analytics Agent automatically tags ad elements and delivers performance insights, making it easier to identify what resonates with users. Additionally, the Creative Monitoring Agent continuously evaluates ad performance, flags underperforming creatives, and provides actionable suggestions for improvement. These capabilities enable marketing teams to make data-driven decisions, save time, and ultimately increase return on ad spend (ROAS).
Sign up for a 14-day free trial to see how Segwise can optimize your user acquisition campaigns and drive better results. No credit card required.
FAQs
1. What’s the difference between New CAC and Blended CAC, and why do both matter?
New CAC measures paid user acquisition only; Blended CAC includes all costs, including reengagement and retention. Tracking both helps allocate budget efficiently between attracting new players and keeping existing ones.
2. How can smaller studios compete with rising CPIs and limited budgets?
Focus on cost-effective growth tactics: optimize App Store Optimization (ASO), encourage referrals, utilize influencer CPA models, develop community-driven marketing strategies, and explore alternative ad platforms with lower cost-per-thousand-impressions (CPMs).
3. What’s the benchmark LTV-to-CAC ratio I should aim for?
A 3:1 ratio is ideal, meaning each player should generate 3x the cost to acquire them. Falling below that risks negative ROI.
4. How do I reduce CAC through creative optimization?
Test and iterate relentlessly, hook users in the first 3 seconds, show real gameplay, A/B test elements individually, and monitor performance for signs of fatigue or inefficiency.
5. How can data and AI improve UA strategy?
Use cohort analysis, regression modeling, and AI tools (like Segwise) to identify high-value user segments, optimize spend, automate targeting, and continuously refine ad creatives and campaigns.
