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Mobile App Marketing: Acquiring and

Retaining Quality Users at Scale

Cathy Boyle

Principal Analyst, Mobile

October 20, 2016


The vast majority of US mobile devices users

will install apps on their devices this year

93.7%

US Smartphone Users

93.5%

US Tablet Users

Source: eMarketer, March 2016


Why talk about app marketing now?

175% The percentage increase in

iOS nonorganic installs

across shopping apps

(Oct vs. Sept 2016)

144%The percentage increase in

Android nonorganic installs

across shopping apps

(Oct vs. Sept 2016)

Source: AppsFlyer, September 2016

App marketers swing into

high gear in Q4

Shopping apps:

High install rates in October and November

pay off in in-apps sales on Thanksgiving,

Black Friday and Cyber Monday.

Gaming apps:

In-app purchase revenues spike around

Halloween, Thanksgiving and Christmas.


The Challenge


A relatively

small number

of apps are

used regularly

10 per day;

32 per month

4 per day;

13 per month

Source: Verto Analytics, February 2016

(as of December 2015)


An app might

attract a

crowd of new

users, but

most fail at

keeping new

users

interested

and engaged

for long

Source: Localytics, April 2016

23%

of mobile app users

worldwide gave up after

using an app just once


Most new users disappear 24 hours after an app

is first used

iOS users: Only 24% to

29% of those who installed

an app used it again within

24 hours of their first app

session

Android users: 27% to 40%

returned to the app within

1 day

Source: adjust, Q1 2016


A small sliver of new app users returned 30 days

after their first app session

3.6%

4.7%

5.1%

5.3%

5.5%

5.6%

5.9%

6.1%

6.5%

6.9%

7.0%

Books & Magaze

Lifestyle

Hobbies

eCommerce

Entertainment

Travel & Transport

Finance & Business

Games

Social & Comm.

Utilities

Education

30-Day Retention Rate for Android Apps

Worldwide, By Category, Q1 2016

4.4%

4.5%

5.1%

5.1%

5.2%

5.2%

5.5%

5.8%

5.9%

6.0%

6.9%

Books & Magazine

Games

Food & Drink

Entertainment

Lifestyle

Utilities

Hobbies

Social & Comm.

Travel & Transport

Education

Finance & Business

30-Day Retention Rate for iOS Apps

Worldwide, By Category, Q1 2016

Source: adjust, Q1 2016

Android iOS


The trouble is the supply of apps is outpacing

demand for them among consumers

33%

Source: Apple, June 2016

The percentage increase in

apps available in Apple’s

app store in 2016

16%

Source: eMarketer, March 2016

The percentage increase in

smartphone and table users

worldwide in 2015

8%The percentage increase in

the number of downloads in

Q1 2016 vs Q1 2015

Source: Sensor Tower, Q1 2015 vs. Q1 2016


User Acquisition Trends


App store

search and

word-of-mouth

are the

leading ways

smartphone

users discover

new apps

Ads play a minor role in

app discovery.


However, one

in five

smartphone

users polled

said they

installed an

app because

an ad was

interesting


App marketing budgets are getting bigger

89%

Source: AdColony, Q3 2016

of marketers worldwide said they

were spending more on app

marketing this year compared to

last year


According to eMarketer’s research, three

factors are fueling increased spending:

1. Increased competition in the leading app

stores.

2. More app-specific ad formats.

3. Better targeting capabilities, which allow

advertisers to find and serve ads to those

who look like the app’s most valuable users.


eMarketer

projects

$5.70 billion

will be spent

by US

advertisers

this year to

drive mobile

app installs


More than half

of app install

ad budgets

are spent on

video and

social ads



eMarketer

asked app

advertising

experts to

grade the

effectiveness

of a variety of

ad types and

channels


Mobile social app install ads received top scores

for effectiveness

A-

The qualities that attract most advertisers

to social platforms—highly engaged users,

enhanced audience targeting capabilities

and substantial reach—also draw app

advertisers to these platforms.

Facebook was the star performer among

those assigning grades, while Twitter’s

Audience Network proved particularly

effective for some.

Source: eMarketer, August 2016

Effectiveness Score for Mobile

Social App Install Ads:


Video’s appeal varied among the app advertisers

consulted

B

Effectiveness Score for Mobile

Video App Install Ads:

Game app advertisers sang the praises of

video ads, while those in the shopping and

food categories weren’t yet sold on the ad

format.

The latter group saw the potential of video,

but most were still at the experimental stage.



Rewarded

video is

particularly

effective at

attracting

quality users

at scale

“You get almost a 100% completion

rate and engaged viewers. People

are happy to watch the ad because

they get a reward in the end.”

—Jarkko Rajamäki, Director, Unity Technologies

“There is strong demand for

rewarded video that is scalable. A lot

of ad networks and publishers are

shifting their rewarded-video solutions

to programmatic.”

—Beth Gilmore, Head of Global Demand,

Twitter’s MoPub


The appeal of

search

advertising

is growing

among app

marketers

A majority of app marketers

said they planned to increase

spending on paid search

(including app store search).


There are pros and cons with browser-based

mobile search advertising

B

The upsides: The intent-based nature of the

channel attracts higher quality users, and

the opportunity to deploy targeted campaigns

at scale is powerful.

The downsides: The divide between the web

and app channels makes installs harder to

track; and for some, the users acquired were

less likely to make in-app purchases.


Effectiveness Score for

Browser-Based Search App

Install Ads:


App store search ads have yet to prove

themselves in terms of effectiveness

C

This low score is a reflection of the nascent

stage of app store search.

Criticisms centered mostly around the limited

scale of the ad type and advantages

established brands have over lesser-known

apps due to keyword targeting.

Conversely, the relevancy of the ad to the intent

of the users and the context of the search

results were hailed as the biggest benefits.


Effectiveness Score for App

Store Search App Install Ads:


10 media sources

outperformed all

others for

efficiently

generating a high

volume of quality

users

But the mix of companies in

the top 10 varied by operating

system and by gaming vs.

nongaming app advertisers.


App

marketers

invest in more

than just

mobile ads

Traditional

media is one

area of focus25%

of app marketers

worldwide used

television

9%

of app marketers

worldwide used

radio and print



Television advertising is the domain of

deep-pocketed app developers

C-

Most are looking to extend their reach beyond

mobile app advertising.

Primarily goal is to raise brand awareness

among a broader audience.

The high price tag and difficulties in directly

attributing installs to TV ads were the primary

reasons the channel received poor marks.


Effectiveness Score for

Television App Install Ads:


Radio ads were ineffective except when used

with a time-sensitive message or offer

D

Radio performed poorly

for most of those that had

used it.

“We use digital radio in the

peak shopping season.

It’s a broad-reach vehicle and

is something we can execute,

target and put out locally or

nationally pretty quickly.”

—Marissa Tarleton, CMO, RetailMeNot


Effectiveness Score for Radio

App Install Ads:


Print promotions only make sense if there is

little to no cost involved

D

Newspapers, magazines,

direct mail, etc., were not

viable channels for

generating app installs.

“If a newspaper ad is for the

newspaper’s own app, then

the cost to run that ad would

be the ‘opportunity cost’ of

other content on that page.”

—Daniel Kahtan, Director, Market

Development, AppsFlyer


Effectiveness Score for Print

App Install Ads:


Email, content marketing and influencer

marketing are growing in importance

20%of app marketers worldwide

expect to spend more on

email promotions*

Source: Apsalar, Aug 2016

42%of app marketers worldwide


influencer marketing*

29%.

of app marketers worldwide


content marketing*

* in the next 12 months


Game developers tapped influencers first, but

more app marketers are employing ‘celebs’

“In the gaming space,

they’re leveraging

YouTube and social

media influencers.

And they apply

traditional performance

metrics in those

influencer channels.”

—Jarkko Rajamäki, Director,

Unity Technologies

“Most of our advertisers

work with social

influencers. They go

through a third party

because it’s just a bit of a

hassle to work directly

with a big YouTuber or an

Instagrammer.”

—Maor Sadra, Managing Director

and CRO, Applift


The magic in acquiring and retaining quality app

users comes from the mix of media used

“Combined together, the

channels elevate each other’s

performance.”

—Marissa Tarleton, CMO, RetailMeNot


Performance Measurement

Has Matured


The most

successful

app marketers

look beyond

top-of-funnel

measures

such as

click-to-install

rates


The importance of install rates and clickthrough

rates is declining

Successful app advertisers

“have become increasingly

more sophisticated, and they

don’t really care as much

about the install anymore.”

—Jehan Damji, Product Manager,

Facebook

One reason:

Measuring clicks and

downloads alone can steer

marketers’ attention away

from sources that are

attracting a healthy volume

of quality users.


A second reason: The future of the install itself

is being called into question

In May 2016, Google

introduced Android Instant

Apps, a means for apps to

run on a device without

requiring installation.

“Android Instant Apps will

allow a user to test drive an

app without actually installing

it, which means the ‘install’

will become even more

irrelevant as a metric.”

—Jenny Crosby, Group Marketing

Manager, Intuit’s TurboTax brand


Retention, lifetime value (LTV) and return on ad

spend (ROAS) have taken center stage

“ROAS is emerging as the key

metric to measure campaign

performance.”

—Arun Pattabhiraman, Vice President

and Global Head of Marketing, inMobi

Marketers assign a value

to in-app actions, and by

tracking the actions taken

by new users, projections

are made about the

potential LTV of that user

Such LTV calculations enable

advertisers to project ROAS


Quality costs

more than

quantity: The

cost to acquire

a loyal user has

ticked steadily

higher over the

past four years


There are a handful of reasons why valuable

users force acquisition costs higher

Precision targeting tools are used more frequently

Greater competition for high-value audience segments

Increased use of more immersive—and costly—ad units


The number

of marketers

making decisions

about future

media buys

based on cost

measures alone

is declining

“It doesn’t matter how much

you’re spending to acquire

new users if you’re making a

positive return on those

users.”

—John Koetsier, Mobile Economist,

Tune

Increasingly, the value of a media source is

measured by weighing the volume of

quality users acquired against the cost of

acquiring those users.


To sum up…

Mobile app install advertisers face significant challenges—intense

competition and declining user retention rates are chief among them.

Now is the time to ramp up app install marketing efforts because payoffs

typically come over the holiday period.

Paid advertising is effective for attracting quality users at scale, especially

mobile video, social and search ads.

Email, content marketing and influencer marketing are three other

channels app advertisers plan to invest in more heavily.

To succeed, app advertisers are building multichannel user acquisition

campaigns with retention in mind (LTV and ROAS).

Josh ToddCMO


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Cathy Boyle

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Acquiring and Retaining Quality

Users at Scale

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