Tips and Strategies to Combat Rising User Acquisition Costs

The cost of acquiring new users for mobile apps and digital services has surged dramatically, driven by fiercer competition, evolving privacy policies, and shifting consumer behaviors. In the mobile “gaming” industry alone, the average “cost per install” (CPI) reached $4.83 for iOS and $2.17 for Android in 2024, reflecting a steep climb from previous years. As I’ve observed in the digital marketing landscape, businesses can no longer rely solely on pouring money into paid ads to drive growth. Instead, they need strategic, cost-effective approaches to lower “user acquisition costs” while maintaining profitability. Below, I’ll share proven tactics to optimize your “user acquisition” efforts, enhance retention, and navigate the challenges of 2025’s competitive market.

Understanding the Rise in “User Acquisition Costs”

Why Costs Are Skyrocketing

I’ve seen the numbers, and they’re not pretty—customer acquisition costs have jumped by as much as 222% over the past eight years. Several factors are fueling this spike:

• Increased Ad Competition: More brands are flooding digital platforms, driving up “cost per click” (CPC) and “cost per thousand impressions” (CPM). For example, Google Ads CPC rose 13% year-over-year by Q1 2024.
• Privacy Regulations: Apple’s “App Tracking Transparency” (ATT) and Google’s phase-out of third-party cookies have limited targeting precision, making ads less effective and more expensive. Only 5–15% of iOS users opt into tracking, gutting ad attribution.
• Algorithm Shifts: Platforms like Meta and Google tweak algorithms, reducing organic reach and forcing reliance on paid ads, which jacks up costs.
• User Fatigue: Consumers are bombarded with ads, making it harder for any single campaign to stand out, per posts on X.

Calculating Your UAC

To tackle rising costs, you need to know your “user acquisition cost.” It’s simple: divide your total marketing and sales expenses by the number of new users acquired in a given period. For example, if you spend $10,000 on ads and gain 500 users, your UAC is $20 per user. Tracking this monthly or per campaign helps you spot inefficiencies and benchmark against industry standards. Apps Make More Money on iPhone than Android, which can impact your user acquisition strategy.

Strategies to Lower “User Acquisition Costs”

Optimize Paid Ad Campaigns

Paid ads are a major driver of UAC, but I’ve found ways to make them work smarter, not harder.

Refine Targeting with First-Party Data

With privacy rules like ATT limiting third-party data, lean on your own “first-party data” to target high-intent users. Use website analytics, CRM data, or app engagement metrics to build custom audiences. For example, retarget users who’ve visited your app’s landing page or create lookalike audiences based on your best customers. This cuts waste and boosts conversions, per WordStream’s guide to lowering CAC.

Test Creative and Formats

A/B testing ad creatives is a game-changer. I’ve seen short, 15–30-second video ads outperform longer ones, especially for “gaming” apps. Try playable ads, like Duolingo’s gamified previews, to hook users before they install. Segment creatives by audience—hardcore gamers want intense action, while casual players prefer social, easy-to-play vibes like Candy Crush. Pause underperforming ads and shift budgets to winners to keep “cost per install” low.

Leverage Bid Strategies

On Google Ads, I’ve found “Target CPA” bidding effective for campaigns with enough conversion data. It keeps costs predictable by optimizing for your desired “cost per acquisition.” For newer campaigns, test manual bidding to find the sweet spot, then automate. Negotiate fixed CPM/CPC deals with platforms like TikTok if you’re a high spender—they often offer better rates for early adopters.

Diversify Acquisition Channels

Relying only on paid ads is a recipe for high UAC. I’ve seen businesses slash costs by spreading their efforts across multiple channels.

Embrace Organic Channels

“Search engine optimization” (SEO) and content marketing are long-term plays that drive free traffic. Optimize your app store listing with relevant keywords and compelling visuals—ranking in the top three search results is key, as users rarely scroll further. Create blogs, videos, or social posts that showcase your app’s value, like tutorials for a “gaming” app or playlists for a “music” app. These build trust and attract users without ad spend.

Explore Emerging Platforms

Newer platforms like TikTok or Snapchat often have lower CPMs than Meta or Google. TikTok’s CPMs are nearly 60% cheaper than Meta’s, making it a goldmine for early adopters. I’ve seen brands test carousel or collection ads on these platforms to grab attention at a lower “cost per click.” Just monitor performance closely to avoid overspending.

Build Referral Programs

Referral programs turn existing users into brand ambassadors. Offer incentives like discounts or in-app rewards for inviting friends—think free shipping or bonus coins for a “gaming” app. A well-designed program, like Pasta Evangelists’ dual-reward system, can slash UAC by leveraging word-of-mouth, per Swanky Agency’s ecommerce tips.

Boost Retention to Reduce UAC

Acquiring users is just half the battle—keeping them lowers your effective UAC by spreading costs over a longer “customer lifetime value” (CLV).

Streamline Onboarding

A smooth onboarding experience keeps new users engaged. Make your app’s value clear from the start with simple tutorials or guided tours. For “gaming” apps, let users jump into a quick match to hook them. I’ve seen apps lose 50% of users in the first week due to clunky onboarding—don’t be that app.

Personalize Experiences

Personalization is king for retention. Use AI-driven tools to recommend content based on user behavior, like Spotify’s tailored playlists or Netflix’s show suggestions. For “gaming” apps, segment players by skill level and offer relevant challenges. Personalized emails or push notifications can boost engagement by 23.5%, per Insider’s personalization tactics.

Foster Community

Build a community around your app to keep users coming back. For “gaming” apps, add leaderboards, guilds, or social features like Among Us chat. For “music” apps, let users share playlists or follow tastemakers. I’ve noticed “tablet users” especially love social features, as they drive engagement without extra ad spend.

Measure and Optimize Continuously

You can’t fix what you don’t measure. I track UAC and related KPIs to spot trends and fine-tune strategies.

Key Metrics to Monitor

• Cost Per Install (CPI): Measures ad efficiency for app installs.
• Customer Lifetime Value (CLV): Ensures UAC doesn’t outstrip user value.
• Retention Rate: Tracks how many users stick around post-install.
• Conversion Rate: Gauges how many ad clicks lead to installs.

Compare these channel-by-channel to see what’s working. If TikTok’s CPI is $2 but Meta’s is $5, shift budget to TikTok.

Use Analytics Tools

Tools like Google Analytics or Flurry help you track user behavior and identify drop-off points. For example, if users abandon your app after onboarding, tweak that flow. I also check “behavior flow” to see where users exit landing pages and optimize those weak spots.

Challenges and Solutions

I’ve seen businesses struggle with high UAC, but here’s how to tackle common hurdles:

• Challenge: Privacy rules limit targeting. Solution: Use “first-party data” and AI-powered segmentation to predict user behavior, like discount affinity, per Insider’s guide.
• Challenge: Ad fatigue lowers click-through rates. Solution: Refresh creatives weekly and test bold formats like playable ads or carousels.
• Challenge: High churn after install. Solution: Personalize onboarding and offer early rewards to boost retention.

My Playbook for 2025

Here’s how I’d approach lowering “user acquisition costs” in 2025, and you can too:

• Start with Data: Calculate your UAC and CLV to set a target. If UAC exceeds CLV, prioritize retention.
• Mix Channels: Combine paid ads on TikTok, SEO for organic traffic, and referral programs for low-cost growth.
• Test Relentlessly: A/B test ad creatives, landing pages, and onboarding flows. Shift budgets to top performers.
• Personalize Everything: Use “first-party data” for targeted ads and AI-driven recommendations to keep users engaged.
• Track and Tweak: Monitor CPI, retention, and conversions monthly. Use analytics to spot leaks and plug them fast.