TLDR;
- San Jose is arguably one of the most expensive advertising markets globally for tech due to competitor density; expect CPTs (Cost Per Tap) to be 30-50% higher than US averages.
- Your budget shouldn't be based on market averages but on your LTV (Lifetime Value); if you know your LTV, you know your maximum bid.
- We've included a Budget & ROAS Calculator below to help you model scenarios specifically for high-cost regions.
- Don't rely solely on broad match keywords in high-stakes areas; exact match is your best friend for cost control.
- The most important piece of advice is to focus on your App Store Optimization (ASO) first—Apple's relevance score dictates your entry price into the auction.
Hi there,
Thanks for reaching out!
It’s great that you’re looking to plan this out properly before throwing money at the wall. Targeting San Jose specifically for a mobile app marketing campaign is a bit like trying to rent a billboard in Times Square; you are stepping into the backyard of the biggest tech giants in the world. It’s high risk, but potentially high reward if that’s exactly where your high-value users are.
I’m happy to give you some initial thoughts and guidance on how to tackle this. To be brutally honest, if you go into the San Jose market without a very strict bid strategy and a clear understanding of your unit economics, you will burn through your budget in days, if not hours. The competition there is fierce because you aren't just fighting for user attention; you're fighting against competitors who likely have massive testing budgets and are willing to pay a premium just to dominate that specific geo.
The short answer regarding costs? It varies wildly. I've seen Cost Per Taps (CPTs) range from $2 for niche utility apps to over $15 for competitive fintech or B2B SaaS keywords in that specific region. But focusing just on the "cost" is actually the wrong way to look at it. You need to focus on what you can afford to pay based on your conversion rates.
Below, I’m going to walk you through exactly how to structure your budget, how to estimate your costs when the data is opaque, and how to survive in a high-cost auction environment like Silicon Valley.
The "San Jose Premium" in Apple Search Ads
First off, let’s talk about why San Jose (and the broader Bay Area) is a nightmare for budget planning if you look at national averages. In our experience running campaigns for software and app clients, we often see a "tech hub premium."
Because Apple Search Ads (ASA) is a second-price auction system, you pay just enough to beat the next highest bidder. In San Jose, that "next highest bidder" is often a VC-backed startup or a tech giant with a massive user acquisition team. They aren't bidding based on immediate profitability; they are bidding for market share.
If you look at the United States as a whole, the average CPT might sit around $1.50 - $2.50 across all categories. In San Jose, for tech-related keywords, you should comfortably double or triple that estimate for your initial planning. I'd say you want to be prepared for CPTs in the $4 - $8 range if you are in a competitive vertical like productivity, finance, or business tools.
Estimated CPT Multiplier: US Avg vs. San Jose
Reverse Engineering Your Budget
Since you don't know the exact CPT yet (and Apple won't tell you until you start bidding), you can't build a budget forward. You have to build it backward. This is the only safe way to enter a market like CA without losing your shirt.
Step 1: Determine your Target CPA (Cost Per Acquisition)
Forget about the cost of the ad for a second. How much is a user worth to you? If you have a subscription app with an LTV of $50, maybe you can afford to pay $20 to acquire a customer. If you’re a free game monetising with ads, maybe your LTV is $2, and you can only afford $0.50.
Step 2: Estimate your Conversion Rate (CVR)
On the App Store, conversion rates from "Tap" to "Download" are generally quite high compared to web landing pages. We usually see between 30% and 60% depending on how well optimsed your App Store page is. In a savvy market like San Jose, users scrutinise apps more. If your ratings are low, your CVR will tank.
Step 3: Calculate your Max Bid
The formula is simple: Max CPT Bid = Target CPA * Conversion Rate.
If you can afford $20 per user and you convert 50% of taps, your max bid is $10. If the auction in San Jose requires $12 to be seen, you cannot afford to advertise there. It's that simple. No amount of "budget planning" fixes bad unit economics.
I've built a calculator below so you can plug in your own numbers and see where your break-even point sits.
San Jose Bid Planner
Strategies for High-Cost Markets
So, you've run the numbers. Maybe they look tight. How do you actually survive in San Jose without burning cash? You can't just set up a "Basic" campaign and hope for the best. You need a granular structure.
1. Don't Rely on Search Match (Initially)
Apple's "Search Match" feature is great for discovery, but it's dangerous in expensive markets. It automatically matches your ad to relevant terms. In San Jose, "relevant" might mean matching your budget-friendly productivity app to "Enterprise ERP Software" searches that cost $15 a tap. I'd suggest starting with Exact Match keywords only. This gives you total control. You know exactly what you are bidding on, and you can adjust the bid for that specific term.
2. The Relevance Score Factor
This is a myth-busting moment. People think the highest bidder wins. That's not entirely true. Apple prioritises relevance. If your app store metadata (title, subtitle, keywords) doesn't align perfectly with the keyword you are bidding on, Apple will penalise you. You will have to bid significantly more than your competitor to get the same spot. Before you spend a penny on ads, optimise your App Store listing. If you target "Project Management" but your app description talks about "To-Do Lists", your TTR (Tap Through Rate) will be low, your relevance score will drop, and your costs will skyrocket.
3. Use Custom Product Pages (CPP)
This is a newer feature that many advertisers sleep on. You can create different versions of your App Store page. If you are bidding on a keyword like "Expense Tracker for Startups" in San Jose, do not send them to your generic homepage. Send them to a Custom Product Page that highlights "Expense Tracking" in the screenshots and first line of text. This increases your TTR, which lowers your CPT over time. It’s a huge lever for efficiency.
Is San Jose Even the Right Choice?
I have to ask—why San Jose specifically? Is your app geo-locked? Does it only function in that city?
If your app is available nationally or globally, restricting your ads to San Jose is an expensive way to learn. You are artificially narrowing your liquidity. I recall an app growth campaign we worked on where we utilized a mix of platforms including Apple Ads. By optimising our targeting and not restricting ourselves to just the most expensive placements, we were able to drive over 45,000 signups at under £2 cost per signup. If we had focused solely on the most competitive segments, our costs would have been significantly higher.
If you absolutely must target San Jose, consider "conquesting" carefully. Conquesting is bidding on your competitors' brand names. In San Jose, everyone does this. If you bid on a competitor's name, expect to pay a premium. Their users are loyal, so your conversion rate will be lower. It's often a vanity metric. "Look, we're showing up above [Big Competitor]!"—yeah, but you paid $12 for that tap and they didn't convert.
Alternative Channels
Since you are worried about the budget, I'd suggest looking at the broader ecosystem. Apple Search Ads is "demand capture"—you catch people when they are looking. But if the cost to capture is too high, you might need to generate demand elsewhere cheaper.
Meta (Facebook/Instagram) & TikTok:
Even in San Jose, social inventory is generally cheaper than high-intent search inventory. You can target "Tech early adopters" or specific interests on Meta, drive them to your App Store page, and retarget them. We've seen app campaigns where we acquired users for under £2 on Meta when Search Ads were costing us £5+. The intent is lower, but the volume is higher.
Google App Campaigns:
Google has massive inventory across Search, Play (not relevant for iOS obviously), YouTube, and Display. Their algorithm is very good at finding users at a target CPA. It’s less transparent than Apple Search Ads (you have less control over keywords), but it can be very efficient for scale.
How We Structure These Budgets
When we work with clients launching in high-competition zones, we don't just guess. We usually allocate a "testing budget" that we are prepared to lose. This is the cost of buying data.
We might set aside $2,000 for the first month specifically for San Jose. We would run:
- Brand Campaign (Exact Match): Protect your own name. Cheap, high conversion.
- Discovery Campaign (Search Match): Low bids, just to see what search terms Apple thinks are relevant.
- Generic Campaign (Exact Match): Your top 10-15 "must-win" keywords. High bids, strict monitoring.
- Competitor Campaign: ONLY if budget permits. We usually skip this in phase 1 for budget-conscious clients.
We monitor the Search Terms Report daily. Any search term that spends money without converting gets added to the Negative Keyword list immediately. In San Jose, a broad match term like "free app" could eat your budget in an hour if you aren't careful. Negative keywords are your shield.
The "Kill or Scale" Decision Flow
Action: Pause or Fix ASO.
This "Kill or Scale" mentality is vital. I've seen too many people "set and forget" Apple Search Ads, only to wake up a month later with a $5,000 bill and 30 users to show for it. In 2024, automation and vigilance are key.
One final thing to keep in mind regarding privacy and measurement: SKAdNetwork. Since iOS 14.5, tracking users is harder. If you are targeting San Jose, you are targeting a privacy-conscious demographic. Many will have "Allow Apps to Request to Track" turned off. This means your dashboard might underreport conversions. Don't panic if the dashboard looks a bit light; check your actual backend server data for new signups from the region to get the real truth.
Summary of Recommendations
I’ve detailed my main recommendations for you below:
| Action Item | Why It Matters |
|---|---|
| Calculate Max Bid First | Do not guess. Use the calculator above. If your max bid is under $3, reconsider San Jose. |
| Start with Exact Match | Broad match and Search Match will waste budget on irrelevant, expensive tech terms. |
| Audit your ASO | Improve your metadata relevance to lower your entry price in the auction. |
| Use Negative Keywords | Aggressively block terms that drive spend but no conversions. |
| Consider Broader Geo | San Jose is saturated. Testing "California" or "US" might yield cheaper users. |
There is a lot of nuance here, and without seeing your specific app and current metrics, it’s hard to give a precise "budget" number. But hopefully, this gives you the framework to calculate it yourself. Don't let the fear of competition paralyse you, but respect the market forces at play in Silicon Valley.
If you find yourself getting stuck with the setup or just want a second pair of eyes on your strategy before you hit "launch," we'd be happy to help. We offer a free initial consultation where we can look at your specific category and give you a more tailored estimate of what you're up against.
Hope this helps!
Regards,
Team @ Lukas Holschuh
