There's such an emphasis on user growth these days- for your app, SEO, Twitter followers, blog traffic- you can even have a career in user growth, tracking cohorts and leveraging user behaviors. But, growth really goes beyond just an quantitative measurement. True growth lies in measuring the long-term value of users over a lifetime.
It's apparent that the mobile app industry is growing at a phenomenal rate: with Apple's App Store hitting 40 Billion downloads and an estimated $25 billion in revenue alone in 2013. Gaming apps have the greatest number of downloads, and continue to be the most popular app category with the most time spent. There are now more than 500 million mobile gamers globally, spending nearly $9 billion a year. As the mobile app industry continues to grow- it's critical that developers focus on the quality of users they are attracting in-order to stay in the game for the long haul.
Today's methods focus on a value exchange model- user receives virtual currency for a given action (downloading a game, watching a video, filling out a form, etc). Also referred to as rewarded ads, the ad is built into the game mechanics, which limits the level of engagement with the content being delivered. Publishers like the fact that its not disruptive to the user experience, and users like the fact that they get what they 'pay' for. On the flip side, these users aren't as qualified since they are using the app for a means of currency rather than pure enjoyment. Although a successful means of bursting onto the app scene and climbing up the charts, these methods are often short-lived and do not generate the high LTV users that developers need.
To attract new users, and keep them, alternative methods of user acquisition need to be deployed. Acquiring quality, high LTV users lies in video and rich media ads that are non-rewarded. Video trailers and rich media yield more qualified users, increase brand awareness and recognition and allows for a CPE (cost, per engagement) or CPI model (where you only pay for the installs that are delivered). The ad-unit educates the user, highlights compelling features and is an immersive experience. It feels less ad-like, and more like a movie trailer for this summers action-packed blockbuster hit. It's estimated that rich media drives up to 4.5x engagement of traditional ads. With rich media does come a higher premium, but this takes us back to the question: Quantity vs. Quality? If you are paying a premium for qualified, long-term users then you can expect that user to pay for itself within a relatively short period of time. The tail of these users is significantly longer than users acquired from rewarded, burst-style campaigns. So, if you're looking to sustain long-term user growth and acquire quality, loyal users than look to video and rich media ads. But, if your just looking for a quick jump-start that could fizzle out in 30-days, then a rewarded style campaign could work for you.