Each channel converts its daily budget into installs at that channel's cost-per-install (CPI) — but CPI is not fixed. Like a real ad auction, the effective CPI inflates as you spend more on a channel (you're bidding against more competitors for the same limited inventory). Every install carries a lifetime value (LTV): the revenue that user is expected to generate over their life in the app. Profitability isn't about installs, it's about whether blended LTV clears blended CAC by a healthy margin.
effective CPI(channel) = base CPI × (1 + spend / saturation)
installs(channel) = spend / effective CPI(channel)
blended CAC = total spend / total installs
blended LTV = Σ(installs × channel LTV) / total installs
LTV:CAC = blended LTV / blended CAC (industry rule of thumb: healthy ≥ 3)
daily profit = Σ(installs × channel LTV) − total spend
- Social — cheapest CPI, lowest LTV (browsing intent, low commitment). Saturates fast.
- Search — mid CPI, highest LTV (users already searching for what your app does). Best ratio if not over-spent.
- Influencer — most expensive CPI, mid LTV. Slowest to saturate — a release valve when the others are maxed out.
- This is the paid-acquisition side of app growth: allocating a fixed budget across channels for the best return. It's a different mechanic from organic App Store Optimization, where nothing is spent and the lever is search-ranking and listing conversion, not budget.