In July, the cost of acquiring a loyal mobile user fell about nine percent since the previous month. However, according to VentureBeat, the sudden drop is only providing a small amount of breathing room for mobile app developers and publishers.
The cost per loyal user (a person who opens an app three times) was $1.97 in July compared to $2.23 in June. Still, there’s no time for celebration considering the costs were still the second-highest monthly level in Fiksu‘s four-year history.
Why is this, though? Well, put simply, app makers, and game creators specifically, have to spend a lot of money upfront before they see revenue come in.
Since the competition amongst brands wanting to use mobile apps is becoming much fiercer, app makers are spending more and more money on advertising to make sure their apps attract attention. However, many of these apps are free-to-play, where users start playing for free and pay real money for virtual goods. So while companies have to invest in making an app, and then invest heavily in advertising that app, they only start making money back if a percentage of users (lets say five percent) start buying things in the app.
Additionally, Fiksu’s cost per install index rose as well. The cost per install rose forty four percent on Android from a year ago and sixteen percent on iOS, respectively.
Still, the Boston-based company had its July App Store Competitive Index, which measures aggregate daily download volume among the top 200 ranked iOS apps, increase from 6.1 million in June to 6.2 million in July, up two percent from June and up seven percent from last year.
Another notable increase was with the Cost Per Launch Index, which tracks the costs of driving engagement from mobile users — up sixteen percent on iOS and thirteen percent on Android.
July marked the first month of the full availability of Twitter’s Mobile App Promotion products. Results suggest that Twitter will be a major player for app install ads, Fiksu said.
“The July Fiksu Indexes reflected the typical slowdown of summer behavior but confirmed that underlying app marketing costs are still rising consistently year-over-year,” said Fiksu CEO Micah Adler. “However, marketers need to be sharpening their strategies in readiness for the next few months. In addition to powerful new channels like Twitter, a new iPhone and iOS always shake up the app marketing landscape.”