User acquisition cost for apps and games increases to $3
As more marketers aim to reach mobile app users, the cost to acquire loyal mobile apps and games users surpassed $3 in March 2015. These are the findings of the latest Fiksu Index for March 2015. The Cost per Loyal User (CPLU) represents an increase of 10% compared to the month before and a steep 113% growth year-on.
CPLU increased 113% between 2014 and 2015
Findings are in line with projections that ever more ad spending focusses on in-app advertising, as opposed to just web. In fact, eMarketer reports that mobile ad spending will overtake web by 2016, offering improve targeting and more inventory. Getting users to download an app is no longer the goal. Marketers want loyal users to ensure the success of their products.
Despite a drop of 16% from February 2015, the App Store Competitive Index, which tracks downloads of the top 200 free iOS apps, shows that overall app downloads are growing and increased by 15% over the year.
The top 200 free iOS apps were downloaded 8.1 million times in March 2015
Cost per Install (CPI) is also becoming more expensive. CPI, which measures the cost per install directly linked to an advert, rose 46% for iOS apps and 63% for Android between 2014 and 2015.
CPI increased more steeply for Android apps the year over
Stewart Rogers, analyst at VB Insight, explains:
“One of the big issues here is that, according to John Koetsier’s recent Mobile User Acquisition study, mobile app and game developers prefer cost per install (CPI) user acquisition techniques more than any other. CPI may enable cost management against lifetime value (LTV) but it also attracts low-spending, and low quality, users. That in itself is driving the CPLU index up, since that group is the least likely to stick with the vendor’s app.”
Measuring the lifetime value of an app user, Fiksu also tracked the Cost per Launch (CPL) of apps, determining continued engagement of Android and iOS apps. The iOS CPL index rose by 62% the year-over, whilst Android climbed to a significant $0.24, a 135% increase to the year before.
Android CPL rose steeply over the year
Micah Adler, CEO of Fiksu, says:
“As we enter another record-breaking month, brands must face the inevitable rising tide: mobile marketing is maturing and becoming more expensive. To stay ahead of this evolving market, marketers must continually adjust and take advantage of programmatic media buying methods to spend marketing budgets as wisely as possible. Sustainable success will be found by brands that use more precise forms of targeting to reach the right mobile users: those who will engage with an app and become loyal over the long term.”
Facing growing competition for mobile app consumers, marketers will need to adjust their methods of programmatic media buying to budget wisely and refocus on keeping their users as opposed to adding new ones.