Cost of acquiring app users drops in April as the spring lull hits mobile

The cost of acquiring loyal mobile app users fell in April as the frenzied competition among app publishers subsided in the spring.

Fiksu, a mobile marketing company, said in a report that its monthly indices showed a spring lull hit in April, as the cost to acquire a loyal user (who opens an app three times or more) fell to $2.51, down 22 percent since March and 8 percent year-over-year. As seen in past years, April results have typically fallen below those of preceding months. Characteristic spring decline, combined with the steady slowdown of the app frenzy that accompanied the early “wild west” days of app marketing, meant marketers who were focused on the right audiences were able to keep costs down, Fiksu said.

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In tandem, volume fell 7 percent since last year, to 7.5M daily downloads, according to the Fiksu App Store Competitive Index, which tracks the average aggregate daily downloads of the top 200 free iOS apps. Since this decline in downloads would have reduced ad inventories and put upwards pressure on costs, this month’s results show other dynamics were at play. A key contributor was advertisers getting smarter and shifting to audience-focused targeting, Fiksu said.

“An increasing number of ad technology providers are making it easier to get good targeting data, reach the right people and test different creatives — ultimately resulting in advertisers showing ads to the right people and obtaining better user loyalty,” said Micah Adler, CEO of Fiksu, in a statement. “While this may not be representative across the entire industry yet, it has certainly impacted our index results. We encourage all brands to treat mobile as more than just a sideshow, as they will see the investment pay back considerable dividends.”

Mobile ad spending is expected to more than double from 2016 to 2021, growing from 48 percent to 70 percent of all digital advertising spend, according to the Forrester Data Mobile Advertising Forecast.

This increase in spend raises a question of where the dollars will go. According to Morgan Stanley, 85 percent of every incremental online ad dollar is destined for Facebook or Google in the first quarter of 2016, according to AdExchanger. However, Jim Payne, CEO and founder of MoPub, noted in the same article that a portion of spend is staying away from Facebook, particularly among marketers who understand what long-term user acquisition is all about.

“This point is spot on,” according to Tom Cummings, client accounts director at Fiksu, in a statement. “Marketers have a love/hate relationship with Facebook: they net excellent results, but are increasingly dependent on the platform as a single source for their ad spend and are seeing margins shrink. In response, advertisers are working to expand the process of acquiring and successfully engaging users across multiple channels, and this is a strategy that will ultimately pay off for them.”

Looking ahead, Fiksu said that, as brands and advertisers get smarter and more analytical about audience targeting, it’s important that they continue diversifying spend and tracking media costs carefully. Separating the cost per loyal user metric from media costs means some marketers will pay more for installs at the outset, but earn loyalty downstream and see better ROI long-term. In addition, if they’re able to apply the same audience targeting across multiple networks, marketers should consider diversifying spending to make sure they’re getting the most efficient results.