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Cost to acquire loyal app users jumps 30pc: report

App Store

As a result of increased holiday spending, the cost to acquire a loyal mobile application user increased in November, according to a new report from Fiksu.

Fiksu’s November indexes looks at the average cost in acquiring a loyal user based on actions from the company’s platform. Additionally, Fiksu’s indexes examine the daily download volume of the top 200 iPhone apps in the United States.

“In any given year, there are peak periods of discovery where consumers are actively seeking new apps,” said Craig Palli, vice president of business development at Fiksu Inc., Boston.

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“One is the release of new device or operating system, and as a result, we saw an annual high in app discovery in October, in excess of five million, following the launch of the iPhone 5,” he said.

“All this organic activity creates an excellent time to find value in user acquisition, and therefore the takeaway for marketers is that they need to go into peak periods with a plan to capitalize the opportunity.”

Fiksu helps brands and publishers manage their app marketing campaigns to accumulate groups of loyal users.

Costly users
Fiksu’s Cost per Loyal User index measures the cost of acquiring a loyal app user, which the company defines as being a user who interacts with an app three or more times.

For the month of November, the index found that it costs $1.38 to acquire a loyal user. To compare, the cost was $1.06 in October.

Up until November, there had been a four-month decline in marketing costs.

Additionally, the increase in marketing costs is likely due to more brands pouring money into their holiday marketing spend, per Fiksu.

For example, marketers use the holiday season to either upgrade or roll out new apps, meaning that brands need to spend more to get their apps in front of the right users.

October marked the lowest cost in the last eight months, per Fiksu. The company claims that the low cost in October is due to launch of Apple’s iPhone 5, which fueled organic searches and other cost-efficient marketing spend.

The highest cost to acquire a loyal app user in the same time period occurred in July with $1.54.

“It's basic supply and demand principles that dictate the cost,” Mr. Palli said.

“During peak periods of discovery, supply goes up as more users are seeking new apps, and this drives the cost per loyal user down; when organic searches drop off, the cost rises again,” he said.

“Likewise, when there's more brand demand for inventory, the cost of advertising units goes up.”

App downloads
The other part of Fiksu’s report is the App Store Competitive Index, which aggregates the daily number of app downloads for the top-ranked 200 free iPhone apps in the U.S.

Per the report, 4.57 million daily app downloads were made in November. This is a 15.4 percent decrease from October when there were 5.4 million daily app downloads.

Again, Fiksu points to the iPhone 5 as the reason for high download numbers in October when consumers were eager to download apps.

“We continue to foresee tremendous value in mobile user acquisition, and that it will continue being far more effective and efficient than other forms of marketing,” Mr. Palli said.

“That said, we believe that overall, the cost of user acquisition on mobile will increase over the course of the year but that it will still remain a superior value compared to other channels,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Marketer, New York

Lauren Johnson is associate reporter on Mobile Marketer. Reach her at lauren@mobilemarketer.com.

 
Related content: Research, Craig Palli, Fiksu, mobile marketing, mobile

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Comments on "Cost to acquire loyal app users jumps 30pc: report"

  1. Gerry Archiprete says:

    January 1, 2013 at 9:37pm

    Most businessmen and businesswomen have come to understand that the manner in which marketing is conducted has been altered by advancements in technology – and one of the biggest ways in which this is evident is through the use of mobile marketing. But while most people hoping to market their products to consumers understand that mobile marketing is valuable, many of these same people fail to grasp the nuances that go into a successful mobile marketing launch!
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