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Performance marketing via mobile display/video advertising networks, paid search ads, app install ads on Facebook, Instagram, Twitter, and other channels provides an opportunity to scale user acquisition far more aggressively than most other channels, albeit for a price.
Typically, performance marketing becomes a viable strategy for products that monetize at least some portion of their userbase -though in-app advertising, in-app purchases, subscriptions, or some combination – and when the customer acquisition cost (CAC) of new users from a given marketing campaign yields a positive return on investment (ROI), calculated by predicting the Lifetime Value (LTV) of a user within a certain confidence interval.
Performance marketing campaigns usually involve bidding against other advertisers for ad placements on a CPM (cost per thousand impressions), CPC (cost per click), CPI (cost per install) or CPA (cost per action: e.g. a purchase of an item or subscription) basis.