How to Launch Paid Ads for Your App: High ARPU vs. Low ARPU Users

How to Launch Paid Ads for Your App: High ARPU vs. Low ARPU Users

When launching an app, choosing the right paid advertising strategy can make all the difference. One key decision you’ll face is whether to target users in high ARPU (Average Revenue Per User) countries with high CPI (Cost Per Install) or focus on low ARPU regions where CPI is lower, allowing you to gain more installs. Each strategy has its pros and cons, and the best choice depends on your app’s goals and budget. Here’s a guide to help you decide.

Strategy 1: Targeting High ARPU Users in High CPI Countries

High ARPU countries, such as the U.S., U.K., Japan, and Germany, have users who tend to spend more on apps through in-app purchases (IAPs), subscriptions, or premium features. But reaching these users comes at a cost, as competition for ads in these regions is high, making the CPI expensive.

Pros:

- Higher Revenue Per User: Users in these markets are more likely to spend money on your app.

- Better Engagement: These users often stay engaged longer and use premium features.

Cons:

- Higher Ad Costs: You might pay $5–$10 per install, or more, depending on the competition.

- Fewer Installs: With a limited budget, you’ll get fewer downloads because of the higher costs.

Who Should Choose This?

If your app is built for premium users who are willing to pay (like a subscription service or a productivity app), this strategy is best. It’s also a good option if you’re focusing on monetization from day one, rather than just growing your user base.

Strategy 2: Targeting Low ARPU Users in Low CPI Countries

Low ARPU countries, like India, Brazil, Southeast Asia, and Eastern Europe, have lower purchasing power, but they offer a large audience with much lower ad costs. CPI in these regions can be as low as $0.10–$1, making it easier to generate a large number of installs for a smaller budget.

Pros:

- Lower Ad Costs: You can get a lot of installs for a fraction of the cost compared to high ARPU markets.

- Faster Growth: Quickly grow your user base, which helps with app store rankings and visibility.

Cons:

- Lower Revenue Per User: Users in these markets might not spend as much on in-app purchases or subscriptions.

- Potential for Lower Engagement: While you’ll get more installs, users may not be as engaged or stick around long-term.

Who Should Choose This?

If you want to rapidly grow your user base, this strategy is ideal. It works well for apps that rely on ad revenue or have a freemium model where having more users boosts visibility and attracts more organic growth.

Which Strategy Should You Follow?

It really depends on your app’s goals and budget. Here's a simple guide:

- Focus on High ARPU Countries if you:

- Have a premium app and rely on in-app purchases or subscriptions for revenue.

- Want fewer but higher-quality users who are more likely to convert.

- Have the budget to handle higher CPI rates for each download.

- Focus on Low ARPU Countries if you:

- Want to grow your user base quickly and boost app store rankings.

- Plan to generate revenue through ads or need a large audience for your freemium model.

- Have a limited budget and need to get the most installs for your money.

Best Approach: A Balanced Strategy

For many app developers, the best option is a combination of both strategies:

1. Start with Low CPI Countries: Use your budget to gain a lot of installs quickly in low CPI regions. This helps improve your app’s ranking, gives you data on user behavior, and builds social proof.

2. Shift to High ARPU Countries: Once your app has some momentum, focus on high ARPU markets to drive revenue from premium users. By this stage, you’ll have a better understanding of what features and offers appeal most to your users.

3. Test and Optimize: Regularly analyze the performance of your ads. Track metrics like CPI, ARPU, and retention to see which strategy works best, and adjust your campaigns accordingly.

Key Recommendations for Success:

- Retarget Users: Use retargeting ads to convert users who’ve installed but haven’t made a purchase.

- A/B Test Ads: Continuously test different ad creatives, targeting methods, and offers to find what works best.

- Leverage App Store Optimization (ASO): Make sure your app is optimized for the app store to help attract more organic downloads, saving ad spend.

Conclusion

Choosing between high ARPU and low ARPU countries depends on whether your goal is to generate revenue immediately or build a large user base. If you want immediate returns, go for high ARPU users. If growth is your priority, target low ARPU countries for cheaper installs. Ideally, a mix of both strategies will help you scale efficiently while maximizing your revenue potential.