Mobile App Marketing Predictions for 2017

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App MarketingPredictions for 2017

By Jim Nichols VP-Marketing, Apsalar


• Advertising spend continued to rocket upward as the great app“land grab” continued.

• App sectors like retail, travel and on-demand services gainedreal share in both downloads and media spending versus thelong-dominant gaming category.

• “Brick and click” retail giants in North America and the EUresponded to the growth of pure play retail apps by investingbig in their own applications, and in acquisitions.

• In the developing world, install spending growth slowed as VCsand other investors demanded that their app businesses startmaking more money.

Many marketers saw their KPIs shift from a focus on raw install counts to app revenue. Plus, install fraud and other forms of app fraud became front burner issues across the industry.

While no one can predict everything that will happen next year, the following list of predictions stand a good chance of coming true during the next 12 months.

Post-Install Advertising Will Capture More than 20% of App Industry Marketing Budgets

While the app space has grown at a remarkable pace, our industry still suffers from a massive user retention problem. The average app loses the vast majority of its users in just a few weeks. In fact, a typical app that acquires 100 installs on day one can expect to have only 5 DAUs by day 90, according to our analysis. (See chart on the next page.)

95% customer loss is a tragedy. What business can survive and thrive on 5% retention?

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INTRODUCTIONIt’s that time of year. Time to look back at how app marketing changed in 2016, and look ahead to what the future will hold.

App marketing has changed in so many ways over the past 12 months. Some highlights:


Fortunately, brands are learning that post-install engagement advertising strongly increases user engagement. Across our footprint, which is composed primarily of enterprise-sized app businesses, the percentage of paid marketing events focused on re-engagement has skyrocketed in just the past two years. See chart in the next column.

$1.76 $35.20

CPI RETAINED USER

By Day 90, 95% of Installers Have Been Lost Remarketing as a Share of Paid Events (across in the Apsalar footprint)

Source: Apsalar Source: Apsalar

Q1 2015 Q4 2015Q2 2015 Q2 2016Q1 2016Q3 2015 Q3 2016

16%

14%

12%

10%

8%

6%

4%

2%

0%1%

2%3%

6%

8%

12%

14%

Post-install marketing's share of total paid events across ALL apps is likely lower, as the largest category players tend innovate more quickly than do smaller app publishers. But in a recent survey we conducted among mobile app marketers around the world, 58% said that they had tested or implemented re-engagement marketing, and another 28% said they would in the next year. (See chart on next page.)


Nevertheless, indications are that remarketing and re-engagement will account for about 20% of total category media investments by the end of 2017.

Investments across the industry were fairly modest in 2016, as you can see in the following chart:

Brands with Large, Established Install Bases Will Radically Increase Their Post-Install Marketing Spending

Related to the prediction above, we expect that large app brands – ones with large install bases already in place - will funnel a far larger percentage of their ad spend into post-install marketing by the end of 2017. Most such businesses have already made huge investments in driving installs, but now their plan objectives will emphasize revenue rather than vanity metrics. Those brands will focus on retaining and monetizing users in a more robust set of ways. Specifically, enterprise app marketers will implement post-install re-engagement programs for:

• New user activation:Advertising to get new installers to relaunch the app

• Converting cart abandons:Delivering ads to bring users back to buy

• Driving reinstalls:Getting people who have uninstalled an app to download itagain

• Reactivating lapsed users:Driving people who have not launched an app in n days to return

• Cross-sell/upsell:Stimulating incremental purchases from existing customers

Re-engagement ads work so well in part because they can reach everyone, not just those that opt-in to CRM programs. Expect big brands to rely on them as a primary tool to drive rich consumer engagement, transactions and revenue.

Source: Apsalar

2“Do you field re-engagement or retargeting campaigns for apps? “

70%

60%

50%

40%

30%

20%

10%

0%

58%

Yes

28%

No But Plan to inNext 12 Months

5%

No and No Plans to

9%

Don’t Know

3%

1%

1%

13%

23%

31%

28%

51-100%

31-50%

21-30%

11-20%

6-10%

0-5%

Don’t Know

0% 5% 10% 15% 20% 25% 30% 35%

“About what percentage of your total app marketing budget is allocated to re-engagement/retargeting?”

Source: Apsalar


Lots More Companies Will Deploy Mobile Marketing Automation Platforms3

The automation sector has increased penetration in 2016, and we expect that trend to continue in 2017. That's because messaging to your existing installs and app users can help drive big boosts in engagement.

Mobile automation can really help with the app user retention crisis we discussed in (1) above – at least among those users that opt-in to receive emails and push messages. Data from Localytics show that use of push messages results in 171% more app launches than when users don’t receive push messages. And over time, delivering push messages results in about 240% higher app retention rates over time.

Any big brand that expects to drive revenue and cultivate long-term relationships will be getting on the automation bandwagon in 2017 - if they haven’t already.

Our recent survey of app marketers revealed that 23% of marketers expected to add an automation platform in the next 12 months. That represents 62% growth over 2016 penetration in our sample.

Opt-In Rates for Push Notifications Will Drop as Marketers Relentlessly Over-Message to Drive Re-Engagement

So here’s the flip side of our last prediction. More brands are going to be delivering more marketing messages to users. Some will do so prudently, with appropriate content and cadence. But many others will press the push notification “on button” too often, or deliver content that feels spammy.

In 2017, we predict that the rise in unwelcome push and email activity will frustrate consumers. As a result, opt-in rates will show significant declines. Over the past several years, average opt-in rates have been in a slow but steady fall, and we expect this trend to accelerate.

With lower opt-in rates, savvy marketers will definitely need to pursue a COMBINATION of CRM and re-engagement advertising to engage all app users and customers.

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Marketers Will Start to Spend Big on App Retention/Rewards Programs

We’ve already discussed using ads and CRM to improve retention. But in 2017, we predict that many more marketers will incorporate tangible reward programs into their apps, so they can retain and monetize more users.

A number of startups are focused on empowering app marketers to reward app usage, and we expect more and more major apps to incorporate these tactics into their core app experiences.

Rewards for engagement and retention come in a number of forms. Here are a few examples:

• App-only discounts and offers that are only visible/available at launch.

• Escalating rewards and discounts for more frequent app launches and usage.

• Hyper-location-based rewards revealed as users shop store aisles.

Media Consolidation Will Continue at a Fast Clip. Top 20 Media Partners Will Capture 80+% of Total Category Dollars

The app media market is very fragmented. Apsalar, for example, has more than 1,000 integrations with a broad range of app markering vendors, from the top social and search communities to niche mobile ad networks.

5

67

Nevertheless, over the past year we have seen significant media consolidation, with the leading players grabbing a larger and larger share of total install and remarketing spend. Earlier this year we conducted an analysis across our own media footprint, and discovered that the share of spend for the top ten vendors grew by almost 40% over the past 18 months. Share of the second ten largest grew by about 20%. All that growth came out of the hides of smaller players – especially those with an exclusive focus on incentivized inventory.

On our platform, we’re seeing the top 20 brands take about 70% of total paid installs in 2016. That figure will likely climb to over 80% in 2017.

Optimizing to Conversions Versus Installs Will Become the Category’s New Normal

Historically, app marketers and their media partners optimized media to maximize install counts. But over the past 18 months, we’ve witnessed many marketers demand optimization to some form of deeper conversion.

This is all part of an uber-industry-trend toward “user quality” – recognizing that all users are not of the same value to a brand. Given this, smart marketing maximizes attracting and retaining more of an app’s most profitable customers.

In the mobile app marketer survey we conducted last summer, 78% said they were now more focused on user quality than they were a year before. (See chart next page.)


While it can be difficult to scale CPA media buys, many marketers are keeping their CPI and CPC contracts but asking their partners to optimize media spend to maximize the number of deeper conversions. We expect more brands to pursue this "dual objective" strategy in the future.

“Our team is more focused on the quality of installs than we were a year ago.”

Somewhat Agree,

28%

Strongly Disagree, 1%Don’t Know, 6%

Strongly Agree,

50%Neither Agree Nor Disagree, 11%

Somewhat Disagree, 4%

Around the World, Consolidation in the Retail App Space will Accelerate

Credit a tightening of VC funding, or a recognition that there may be too many pure play commerce startups in some categories. But these days, the biggest players are snapping up the midpack to grow scale and reduce competitive threats. The trend is most pronounced in India, where VCs who once cheered INSTALLS INSTALL INSTALLS! are now asking for revenue in addition to install growth. Some examples:

• India’s travel giant ibibo acquired bus booking service redBus.

• India’s hotel booking app Oyo Rooms bought its competitor,Zo Rooms

• India’s m-commerce leader Flipkart first acquired Letsbuy, thenfashion retail apps Myntra and Jabong

But it’s not just an India phenomenon. Consider:

• French retailer Vente Privee’s acquisition of a series of retailconcerns, including Złote Wyprzedaże, Designers and Friends,Privalia and Vente Exclusive.

• China’s Alibaba purchase of a controlling interest in SoutheastAsia mcommerce leader Lazada

• Rocket Internet’s acquisition of multiple food delivery companiesincluding HelloFresh,Delivery Hero and Food Panda.

Expect this type of consolidation to continue throughout 2017.

Source: Apsalar

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Apsalar is the leading mobile app marketing measurement and audiences company that empowers marketers to maximize their ROI. Through a combination of mobile measurement, analytics and segmentation services, we help bring data-driven marketing to the burgeoning mobile app marketing sector. With enterprise grade security and easy-to-build business rules, we enable marketers to get better results while retaining complete control of their first-party data.

The new Apsalar Mobile Marketing Cloud helps you improve the effectiveness of user acquisition and re-engagement programs by providing BOTH essential marketing measurement/user insights AND audience tools for customized, data-driven marketing.

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ABOUT THE AUTHORJim Nichols is VP of Marketing for Apsalar. Jim has 20+ years experience in over 80 different categories, including developing successful positioning and go-to-market plans for more than 40 adtech and martech companies. He joined Apsalar after several years as VP of Marketing for Conversant, where he led various efforts in the successful rebrand of the company from ValueClick, Inc. The rebrand and associated industry attention for the company contributed to the $2.3B sale of Conversant to Alliance Data in December, 2014. He is a prolific writer for digital trades on brand marketing, mobile, video, data, and customer profiling. Publications include iMedia Connection, Inside Radio, VentureBeat, ad:tech, ShellyPalmer.com, Jack Myers, and many consumer publications. He holds a B.A. in U.S. History from the Uni-versity of Pennsylvania and an MBA in Marketing from the University of Chicago.

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