App downloads are a nice vanity metric for a mobile publisher, but it’s having users stick around and invest in apps that’s really the key business driver. Savvy publishers track the lifetime value (LTV) of users, and try to keep the cost for acquiring new users below the expected LTV of that user. Unfortunately, according to Fiksu’s latest numbers, that acquisition cost for loyal users is rising.
As reported by VentureBeat, numbers provided by Fiksu show that acquiring users for games and apps is up ten percent from the previous month, a rise of a whopping 113 percent over the previous year. As a result, the cost per loyal user has risen to $3.09, nearly twice the amount that it was last year at around $1.50. Check out the chart below just to see the contrast in these numbers — and how quickly they’ve risen.
In addition, the Cost Per Install Index (looking only at what it costs to get an app installed by a user) climbed to $1.53 on iOS, up 46 percent from the previous year. Another index, Cost Per Launch, showed increases on both iOS and Android, up to $.31 and $.24, respectively — that’s a 62 percent increase for iOS and a huge 135 percent jump for Android in year-over-year measurements.
That can be quite expensive for some companies as they seek out new players to join their folds, although some, like the developers behind DomiNations, have managed to find success. That doesn’t mean everyone is guaranteed success, however.
“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,” said Stewart Rogers, an analyst for VentureBeat Insight. “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.”
That said, demand for new apps continues to be on the rise, as the App Store Competitive Index from Fiksu shows shifting numbers with the average daily download volume for the top 200 free iOS apps. Although the recent month report for March 2015 shows a 16 percent drop, the overall numbers are still up 15 percent from the previous year. A total of 8.1 million downloads were calculated overall for the month.
“As we enter another record breaking month, brands must face the inevitable rising tide: mobile marketing is maturing and becoming more expensive,” said Micah Adler, CEO of Fiksu. “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.”