In today's increasingly competitive In-App Advertising (IAA) market, the traditional Cost Per Install (CPI) model—often described as a "brick-moving" approach to user acquisition—is becoming unsustainable. As competitors learn to acquire higher-value users at greater costs while achieving superior ad revenue and longer user lifecycles, developers must adapt or risk being left behind.
This article examines how IAA publishers can achieve profitable growth through Return on Ad Spend (ROAS) strategies amid shrinking traffic dividends and rising user acquisition costs. We'll systematically analyze the most effective ROAS methodologies and present actionable insights through real-world case studies.
I. The Limitations of CPI Models
Since the explosive growth of SLG games in 2017, IAA models have attracted numerous developers with their lightweight design and accessibility. However, as market competition intensifies and traffic costs rise, the drawbacks of traditional CPI models become increasingly apparent.
1. Vanishing Traffic Dividends and Rising CPI: Early IAA games in emerging markets like Southeast Asia enjoyed low CPI rates. However, as these markets matured, acquisition costs soared dramatically. While Southeast Asian IAA games averaged $0.3-$0.5 CPI in 2021, current rates typically reach $1.5-$3, with premium creatives sometimes commanding $5-$8. The era of cheap user acquisition has ended.
2. Extended Monetization Cycles: IAA revenue depends entirely on ad views, making user retention, session length, and ad frequency critical. Yet with more choices available, retention rates continue to decline, stretching monetization timelines. Under CPI models, developers struggle to assess long-term user value, often trapped in a "spend-to-lose" cycle.
3. Platform Algorithm Challenges: CPI optimization targets users most likely to install—not necessarily those who generate value. These "easy installers" frequently exhibit poor retention and low ad engagement, failing to deliver meaningful revenue. Consequently, CPI models underutilize platform algorithms' targeting capabilities.
II. ROAS: The Path Forward for IAA
ROAS optimization shifts focus from "cheapest installs" to "profitable users"—those likely to generate returns exceeding acquisition costs. Platforms like Facebook, Google, TikTok, IronSource, and Unity now leverage algorithms to identify these high-value users automatically.
ROAS = Ad Revenue ÷ Ad Spend
For example: If $10,000 in daily ad spend yields $25,000 from those users' ad views (rewarded videos, interstitials, banners) by Day 7, the D7 ROAS equals 2.5 (250%).
III. The Competitive Advantages of ROAS
1. Sustainable Profitability: By targeting users with proven monetization potential, ROAS models ensure positive returns. One hybrid puzzle-IAA project improved from D30 ROAS 0.65 under CPI to D7 ROAS 1.15 and D30 ROAS 1.8 after switching to ROAS optimization, achieving consistent 47% monthly margins.
2. Higher Scaling Potential: Once ROAS models identify profitable segments, platforms aggressively scale these campaigns—often growing from $1,000 to $50,000-$80,000 daily spend, far beyond CPI limitations.
3. Resilience Against Platform Changes: During Meta's 2024 algorithm updates, CPI campaigns suffered catastrophic drops while ROAS campaigns maintained stability within 15% fluctuations. Platforms inherently prioritize advertisers demonstrating sustainable economics.
4. Creative Efficiency: Rather than optimizing for CTR or IPM, ROAS evaluates creatives based on direct D3 ROAS performance, accelerating testing cycles by 5x or more.
5. Budget Confidence: With clear ROI visibility, publishers can confidently scale to $100,000-$200,000 daily budgets—provided their monetization fundamentals remain sound.
IV. Implementing Successful ROAS Strategies
1. Platform Selection: Different networks offer distinct advantages. Facebook excels at granular targeting, TikTok dominates short-form video, while Unity provides deep gaming integrations.
2. Target Setting: D7 ROAS targets should balance ambition with realism—1.0+ typically indicates healthy performance.
3. Creative Optimization: High-performing ad creatives remain essential. Continuous A/B testing of concepts, copy, and landing pages drives incremental improvements.
4. Data Accuracy: Precise ad revenue tracking—including view timing, ad formats, and earnings—enables algorithms to refine targeting dynamically.
5. Continuous Monitoring: Regular analysis of ROAS, CPI, retention, and ad frequency metrics allows for timely strategy adjustments.
V. Case Study: Puzzle Game Transformation
A casual game developer struggling with CPI inefficiencies transitioned to ROAS optimization with dramatic results. Their match-3 title, monetized through rewarded and interstitial ads, achieved D7 ROAS 1.2 and D30 ROAS 1.5 after implementing precise revenue tracking and creative refinements—boosting monthly profitability by 30%.
VI. Conclusion
As acquisition costs continue rising, IAA publishers must evolve from CPI-focused strategies to value-centric ROAS models. Through platform selection, target setting, creative optimization, and rigorous analytics, developers can build sustainable, scalable businesses.
By 2026, only two paths remain viable:
1. ROAS Adoption: Accept higher initial CPIs and slower scaling for predictable, long-term profitability.
2. CPI Reliance: Depend on diminishing market inefficiencies—an increasingly precarious approach.
The industry consensus is clear: In an era of permanent cost inflation, only those willing to pay sustainable rates for high-quality users will thrive.