A Guide to App Marketing Success: UA & Finance
Aside from the development team, app companies tend to have two clear groups that are critical to their success: the finance and marketing teams.
While these two functions have historically been divided into all types of company and sector, in the field of apps there is a strong imperative to bring them together to work more closely together on a daily basis.
In this article you will discover:
- Why bridging the disconnect between finance and marketing is a boon for growth
- The challenge of implementing such change and how to go about it
- The potential financial benefits of working closer together
The effect of bringing finance and marketing closer together
Typically, the finance department sets different budgets for marketing, as it does company-wide. Budgets are set quarterly or annually in advance and approved by the board of the company. The general rule of thumb is that the larger the company the more rigorously this approach is upheld.
For instance, the marketing department may receive $100,000 per month for new user acquisition from finance, which it then puts into action to attract the highest paying users possible, resulting in $150,000 in revenue. Marketing can then go back to finance retrospectively to demonstrate its results and request a higher budgeted amount for future accounting periods.
While this conventional method can be profitable, an entirely different approach, one that relies on intertwined, interdependent workflows and close-knit finance-marketing teamwork, can generate considerably better results.
Optimized budgeting to cater best to an app company’s investment horizon requires a more dynamic approach than the traditional method of setting aside a specific amount in advance for a specific business purpose.
Bringing user acquisition and finance together as one
Rather than finance setting the budget, it should be marketing that leads the initiative by indicating how much capital and in what time frame they need to spend in order to max out user acquisition until it stops producing suitable returns, essentially turning the process on its head.
With well-understood economics of customer acquisition cost (CAC) and Lifetime Value (LTV), the question changes from “how much money do I have to spend this month?” to “how can we find the financing to capitalize on the investment opportunity indicated our current CAC/LTV metrics?”
For user acquisition teams, involving finance colleagues in creating, validating the models, and monitoring cohort performance over time gives everyone more ownership of the decision-making process. If users can be acquired profitably, and both teams feel like they have ownership of the models and outcomes, there is greater confidence in spending on user acquisition.
Both teams must understand the wider company benefit of working more closely with each other. Any company or workflow change naturally takes some time, so it’s important to articulate it as one of a mindset that benefits the overall business. Framing it in terms of the potentially large increase in ROI should help accelerate its successful implementation.
Once marketing’s financing requirements are established, it’s then up to the finance team to figure out how to fund them, whether this is from existing cash reserves, borrowing against receivables, or setting out to raise more equity financing to capitalize on the opportunity established.
Driving more efficient investment for higher user acquisition numbers
What it really boils down to is simply an investment equation. If your marketing team can produce a repeatable formula for ROI-positive user acquisition and solid attribution metrics to support it, your finance department must then deliver the best way to fund its campaigns and monitor their performance.
As the game or app scales, user acquisition costs will increase over time and LTVs will crest. It should be a joint decision on setting the investment parameters between the teams.
For example, you might want to invest every available dollar into user acquisition until the expected ROI drops below 20%. Focusing on ROI rather than headline costs of acquisition will ensure maximization of profits, which is best done by harnessing the quantitative and analytical skills both of marketing and finance colleagues together.
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