Study: App subscriptions gained momentum in 2018
- Mobile users are more likely this year to pay for app subscriptions than they were in 2017, with the cost to gain new subscribers dropping, according to a study by mobile user acquisition firm Liftoff and Leanplum. In an announcement shared with Mobile Marketer, the study found that acquisition costs for app subscribers fell by nearly half to $87 a person this year from $162 in 2017.
- Meanwhile, the cost to gain mobile customers who are willing to make in-app purchases rose 56% to $101.58 a person this year from last, while in-app purchase rates fell by nearly half to 2.8%.
- Female mobile users are more likely than men to engage with the apps they download. The cost, however, to acquire a woman who makes in-app purchases is about $94.16 a person, but their conversion rates reach 3.8%, more than twice as high as for men at 1.8%, per Liftoff and Leanplum's Mobile App Engagement Index.
The study's findings of 58.4 million app installs underscore important trends companies should consider when devising their mobile strategy, especially as more companies — Starbucks, 7-Eleven, McDonald's, Domino's Pizza, Subway and Dunkin', to name a few — focus on making their mobile platforms a key part of customer engagement to drive downloads and repeat purchases.
One of the largest takeaways from Liftoff's and Leanplum's research is that subscription models work for many companies. While the costs of finding paying subscribers who will actually make in-app purchases are more expensive, the investment may be worth it if the business provides a longer-term value for consumers. E-commerce giant Amazon has 100 million subscribers to its Prime service that offers two-day delivery on most products, while ride-hailing service Uber yesterday introduced a subscription plan that costs $15 a month for discounted rides, The Verge reported. Apple also reportedly pushed app makers to raise prices and build subscription revenue as the iPhone maker seeks to build its services business and foster a vibrant app economy. The combined app revenues for the Apple App Store and Google Play rose 28% to $34.4 billion during the first half of 2018 from a year earlier, per an estimate by researcher Sensor Tower.
For game developers, in particular, though, the rising cost to gain mobile users who make in-app purchases is worrisome as these companies rely on loyal gamers who pay to unlock premium features like additional game levels, lives and other consumables. About 1,500 games were submitted to the App Store last month, PocketGamer.biz reported, and more games are likely to appear as the holidays approach. In-app purchases have seasonal characteristics with the months of September and October showing the lowest costs to drive engagement (ranging from $61.16 to $68.63), compared to April through August (ranging from $100.56 to $127.73), per Liftoff and Leanplum.
- Mobile Marketer Survey: Most businesses say their apps are a 'financial success'