Fintech Latam: Customer Acquisition Costs

Gonza Pastorino25 July

In the field of marketing, leading acquisition processes in the Fintech market requires a deep understanding of industry benchmark costs, especially considering the diverse realities present in Latin American markets.

In this regard, as a marketer, it is crucial to analyze and understand the position of your costs relative to the market. This Performance Trend, prepared by the Boomit team, is based on information collected from 68 applications in Latin America that provided their consent to benefit from the data obtained in this study.

This information was gathered through surveys and interviews, which allowed us to give deeper context to the numerical study and thus enrich the observations even further. In this way, we were able to classify companies into three very different categories and analyze the data considering this context.

Throughout this document, we will classify fintech applications according to their stages: launch (year 1), maturation (year 2), and expansion (more than 2 years).

The main objective of this report is to help you find benchmarks that allow you to better plan and optimize your acquisition strategies in Paid Media.

Methodology Used for the Analysis

This report is generated based on information from Latin American apps that decided to participate in this study.

• 68 Latin American apps.

• $107 million in advertising investment.

• Data taken from 2021 to 2023

• Countries: Mexico, Colombia, Peru, Ecuador, Chile, Uruguay, Paraguay, Bolivia, Panama, Puerto Rico, El Salvador, Nicaragua, Costa Rica.

• 100% of the data considered corresponds to conversions attributed by the following measurement and attribution tools: Singular, Appsflyer, Adjust, Google Analytics

Summary and Highlights

The following table shows a summary of acquisition costs for companies that are already in their expansion phase.

We can observe significant variations in the ranges of these Benchmarks for the first funding event. In this sense, we recommend that the reader consider the Median that we will present in the following slides for each stage in which the products are. It is also important to highlight the types of factors that increase these costs, such as limitations on minimum deposit amounts, lack of payment methods to do so, or commissions when the funding occurs, among others.

Three Stages of a Fintech

To correctly interpret the benchmarks in this report, we must understand how the life stages of an app impact these acquisition KPIs.

Stage 1: Launch

0-12 months

At this stage of product development, basic functionalities have been implemented, although certain instabilities still require attention. The marketing team is in the process of developing its measurement systems, beginning to measure the first acquisition costs. At this moment, the pressure on advertising inventory is low, as there is still no clear understanding of customer lifetime value (LTV) and return on ad spend (RoAS).

Stage 2: Maturation

At this stage, the product has gained sufficient strength and stability to increase advertising investment more decisively. The marketing team has started to obtain the first metrics and projections of return on ad spend (RoAS) and customer lifetime value (LTV). The measurement architecture has been correctly established, and efforts are aligned with stable objectives. Although conversion rates (CVR) are still not optimal, a trend towards improvement is observed. At the same time, the cost per installation (CPI) tends to increase due to the rise in advertising investment.

Stage 3: Expansion

In this phase, the goal is to achieve exponential growth and plan the launch of new product features. Large investments are made in user acquisition, and efforts are coordinated to retain existing customers. Conversion rates across the acquisition funnel are optimal, leading to efficiency in digital marketing investment. However, it is important to highlight that the cost per installation tends to increase due to the higher pressure on advertising inventory.

Stage 1: Launch

During the launch stage, it is common to observe low costs per installation but also low conversion rates, which increases costs related to in-app events. An increase in costs can be noted when comparing iOS with Android; however, in general, this is accompanied by a higher user value in terms of LTV. In this initial stage, it is normal to encounter lower conversion rates and significant variations in them. The lack of system stability makes it difficult to perform accurate profitability calculations and projections.

It is important to keep these challenges in mind and work on improving system stability to achieve greater predictability and projection capacity in terms of profitability. This stability in acquisition systems will allow Marketing teams to align their operations and objectives with those of the finance team and shareholders.

Stage 2: Maturation

The study reveals that, in the Maturation stage, there is a slight increase in installation costs compared to the Launch stage. However, this increase is accompanied by improvements in conversion rates, which helps to keep in-app event costs relatively stable in both stages. Regarding the iOS platform, it continues to present higher costs per installation and in other events compared to Android.

In this Maturation stage, there is still some variability in key performance indicators (KPIs). It is important to continue monitoring and optimizing the KPIs to drive sustainable growth. Additionally, there is greater media diversification among the studied applications. On average, these applications work with 3.5 advertising platforms during this stage, indicating a broader and more varied strategy to reach their target audience. In geographic terms, an increase in costs was identified particularly in the countries of Mexico, Colombia, Chile, and Uruguay. This may be related to specific factors in each market and should be considered when planning acquisition strategies in these countries.

Stage 3: Expansion

The data sample supports the trend of increased installation costs during this stage of the product lifecycle. However, there is an average improvement in the cost of the first funding, indicating greater efficiency in acquiring users who are willing to make transactions. Additionally, there is a significant improvement in conversion rates. The product’s maturity, communication efforts, and efficiency in advertising media are reflected in greater efficiency in generating in-app events, represented by an increase in the conversion rate (CVR). This indicates better results in user acquisition.

As the product matures, there is a reduction in cost variance and a decrease in the average cost (in post-installation events), showing a favorable evolution in systems and greater stability in acquisition strategies.

In this stage, there is a significant increase in investments, with a 5-fold rise compared to the maturation stage. This indicates confidence in the product and recognition of its potential to generate positive results.

Summary and Conclusions

After studying the acquisition costs for the 68 participating apps, we observed very valuable patterns that can complement the information available to marketing teams in the region. A differential analysis was performed considering two main variables:

• Operating System
• Maturation stage of the company and project.

We were able to obtain benchmark values for four very relevant events in the acquisition stages, which we see depend heavily on the maturity of the digital strategy and product stabilization. Despite observing an average increase of 10% in costs in the markets of Mexico, Uruguay, Colombia, and Chile, we identified very marked trends regarding CVR and cost ranges for different types of in-app events that represent the fintech industry.

Additionally, as expected, we see some cost differences between Android and iOS. The latter presents higher costs but with a favorable CVR behavior for iOS. As marketing teams diversify their paid media strategy with a greater number of advertising technologies, results improve and allow for exponential scaling of the product, generally accompanied by improvements in the development and stability of the same.

We see that teams are encouraged to innovate in this regard from the second year on average and are more conservative in the first year, mainly using platforms like Google Ads and Facebook Ads.