Is the decline in loyal app user cost permanent?
February 5, 2014
According to Fiksu’s December indices, the average cost per loyal application user saw a slight decrease of 4 cents as opposed to the usual jump around the holidays, suggesting marketers are getting smarter about how they spend their acquisition dollars.
Fiksu determined that daily app downloads in December 2013 jumped 20 percent year-over-year and 12 percent month-over-month at the same time that the cost per loyal user dropped to $1.75 from November’s $1.79. Fiksu defines a loyal user as a consumer who opens an app three or more times.
“Holiday-enthused app users on new devices are more likely to become loyal users, as the first wave of apps they download are most often the apps they care about most,” said Micah Adler, CEO/founder of Fiksu, Boston.
“Second, app marketers are getting smarter and spending their marketing budgets more wisely,” he said. “Rather than trying to go ‘all in’ during what has previously been the most expensive time of the year, they spread their marketing budgets across the entire season, engaging with users from Cyber Monday all the way through Christmas Day and on into the New Year.
“This month’s indexes are an indication that the mobile market and today’s app marketing strategies are starting to evolve in a more linear fashion, evening out the peaks and troughs we’ve been used to seeing around the holidays. Marketers are getting smarter about how they spend their marketing dollars, and are not just focused on acquiring new users around the holidays, but looking to also reengage with existing users.”
After analyzing the app market over the holidays, Fiksu concluded that the app store competitive index jumped 12 percent from November to 6.4 million daily downloads in December from November’s 5.7 million. This represents a 20 percent increase YOY from Dec. 2012.
At the same time, the cost per loyal user decreased from $1.79 in November to $1.75 in December. In past years, mobile app marketing costs peaked in December, so this news is very promising for marketers.
This ideal situation makes it cheaper for marketers to acquire more app users and signals a higher interest from consumers in downloading apps.
However, it is possible that this perfect mix is dependent on the holidays and cannot be sustained. During the holidays, consumers tend to download more apps than during the rest of the year.
“There is a downward trend right now, but that is due to the fact that it was so high in December and the beginning of January,” said Scott Michaels, executive vice president and partner at Atimi, Vancouver, Canada. “The reason being of course the large number of gift certificates for purchases in the app store(s) that are given, and expected to be expended during the holiday period. That time is now tailing down, resulting in this lowering of the average cost to acquire.”
The key for marketers is to grab this scenario of low cost per users and build it into a more long-term trend. Marketers should be wary of assuming the trend will last post-holidays and continue the effort to engage mobile users.
“Smart marketers are increasingly focusing their ad spend on traffic sources that return the best long term value for their money,” Fiksu’s Mr. Adler said. “Furthermore, taking advantage of new technologies like programmatic real-time media buying further helped them drive down costs and benefit from the increase in App Store traffic.”
Beyond the download
When it comes to apps, marketers need strategies both to acquire new users and engage current users.
Getting the first download is only the first hurdle. After initial downloads, many consumers will either forget about the app or they may just delete it.
“App users, as long as you have the right strategies in place to retain them can generate run of app revenue for you, which is of course valuable,” Atimi’s Mr. Michaels said. “The more tangential value is that if you can stay engaged, there are many examples of how apps, and the presence of being on-deck mean a higher brand affinity which in the case of retail for example is a driver to purchases in both ecommerce and bricks and mortar storefronts.”
The notion of cost per user declining is clearly beneficial for marketers, but they should not rest on their laurels just yet.
“The download is the beginning of the journey for a consumer,” said Marc Parrish, an advisor at Appboy, New York. “An app marketer has to realize that spending all your money on the download is always a recipe for disaster.
“If less time and money goes towards the further development of the app or the customer interaction after the download, then the app is almost always doomed to failure,” he said.
Rebecca Borison is editorial assistant on Mobile Marketer, New York
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