C

What is Contextual bandit?

Definition, examples, and more

Definition

A machine learning method that chooses one option from a set for each user, based on what it knows about that user, then learns from the result. In subscription apps it is used to pick which offer or paywall each user sees, balancing showing what has worked (exploitation) against trying options it is less sure about (exploration).

Example

A meditation app has four offers: monthly, annual with a 7-day trial, annual with a 50% first-year discount, and weekly. A contextual bandit looks at each user's onboarding answers and early sessions, picks one of the four, and records whether the user subscribed. Over time it shows the trial to users who behave like past trial converters and the discount to users who behave like past discount converters, while still sending a small share of traffic to less-tested choices.

Why Contextual bandit Matters

A standard A/B test finds one winner for the average user and keeps sending half of traffic to the loser until the test ends. A contextual bandit moves traffic toward what works as it learns and can pick a different winner for different kinds of users. Botsi uses this approach to choose among the offers and paywalls an app team approves, with a randomized holdout to measure the lift.

Frequently Asked Questions

How is a contextual bandit different from an A/B test?

An A/B test splits traffic evenly and reports one winner after it ends. A contextual bandit uses each user's context to choose an option for that user and shifts traffic toward better options while it learns. A/B tests answer "which is best on average?"; bandits answer "which is best for this user?"

Do I need a lot of traffic for a contextual bandit?

More traffic means faster learning, but bandits waste less traffic than A/B tests because they stop sending users to clearly worse options early. Subscription apps also face delayed rewards, since renewals happen weeks after the first purchase, so the setup has to account for that.

Should I build a contextual bandit in-house?

You can. A production version needs the bandit itself, a randomized holdout to measure lift, reward handling for delayed subscription revenue, and monitoring for drift. Teams without a dedicated ML group often use a service such as Botsi instead.

Category
Subscription App Terminology
Related Area
Mobile App Growth & Monetization

More terms starting with “C”

Cancellation

The act of ending a subscription, either by the user or automatically due to billing failure. Understanding cancellation timing and reasons is key for designing retention strategies, deflection flows, and win-back campaigns.

Cancellation survey

A short feedback form presented during the cancellation process to understand why a user is choosing to leave. These insights inform product improvements, pricing strategy, and targeted win-back efforts.

Churn rate

The percentage of subscribers who cancel or do not renew their subscription over a given time period. Churn can be voluntary or involuntary and is a core metric for measuring retention health and forecasting revenue growth.

Click-through rate (CTR)

The ratio of users who click on a specific call-to-action (e.g., email link, push notification, paywall button) versus those who viewed it. CTR is a key engagement metric for evaluating creative performance and funnel effectiveness. Click-through-rate originated in the email and banner ad world, where everything was on a desktop. With mobile, some companies now call this same metric tap-through-rate since people are tapping on their phone vs clicking on desktop, but at the end of the day it's really the same type of measurement.

Cohort analysis

A method of analyzing user behavior by grouping users based on shared characteristics — most often the date they first installed or subscribed. This allows teams to compare retention, LTV, and monetization trends across cohorts over time.

Show every user the right offer

Botsi picks the offer and paywall each user sees, from options you approve, and measures the lift against a holdout.