The mobile app industry has come a long way in the past decade. Back in 2007, Apple released the first generation of iPhone with preloaded apps. Shortly after, the first Android smartphone hit the market in 2008. Back then, mobile apps were simply functional, nice-to-have tools that people could live without.
Fast-forward to today and mobile apps have become an integral part of people’s daily lives. They have become a fundamental platform for communication, entertainment, retail, utilities, and much more. Today there are millions of apps available to install from the app stores. Statista reveals that in the third quarter of 2020, there were more than 36 billion app installs worldwide, 28.3 billion in the Google Play Store and 8.2 billion in the Apple’s App Store. “The Google Play platform has always made up the bulk of app downloads but the Apple App Store is stronger in terms of revenue generation.”
Furthermore, the install ad spend projection by Statista expects continued robust growth, from $57.8 billion in 2019 to $118 billion in 2022. As the number of apps continues to grow, competition between apps to acquire new users intensifies, and growing revenue becomes an uphill battle. As a result, the way app developers market their apps to users has evolved to keep pace with this maturing market.
From Clicks to Installs
Going back to the early days of app marketing, the most important metric to app developers was ad clicks. A higher click-through rate (CTR) is an indication of user interest, and for a while that was enough for app developers. However, clicks don’t often result in a direct install, and it is app installs that drive revenue. Therefore, it is no surprise that years later, CTR is no longer the most common key performance indicator (KPI).
Instead, app developers have paid more attention to installs, or the number of users they are able to acquire. This is down to the fact that the more users an app can acquire, the higher it will rise in rank in the app stores’ charts. In turn, this visibility from being in the top chart can drive a significant organic lift in installs.
Aim for Quality
While acquiring a high volume of installs is a good initial objective, app developers have now begun focusing on a more mature strategy - acquiring high-quality users. For an app that operates under a freemium model, offering free install and monetizing through in-app purchases, the return on investment (ROI) is dependent on the quality of users who have installed the app. Thus, many app developers have moved away from focusing on only the number of installs as their campaign KPI.
Realistically, the number of installs will not contribute to the success of an app if the users do not make any in-app purchases or simply do not stick around. As a result, app developers are now targeting high lifetime value (LTV) users. In short, these high LTV users are active users who are spending, or will spend, real money in the app. For more info about user LTV and how it is calculated, click here.
Optimize for Post-Install Events
Apps generate revenue when high LTV users conduct post-install actions, such as purchasing an extra game life, utilizing paid-subscriptions, booking a hotel room, or listing an item for sale in the app. The more post-install actions a user conducts, the higher the user’s LTV. Thus, app developers are optimizing their app marketing campaigns for post-install events as a way to acquire high LTV users.
This can be accomplished by forecasting the probability of post-install events to determine what optimization should be implemented in real-time bidding (RTB) situations. The accuracy of the forecast determines both the media placement and consequently, whether advertisers will achieve their post-install goal. In a programmatic media-buying platform such as Aarki Encore, bidding algorithms can be utilized to forecast the probability of post-install events, enabling app developers to make data-driven campaign decisions and implement necessary optimizations to achieve post-install goals. User acquisition through programmatic media is easy if you know the basics.
As this industry continues to evolve, app developers are adjusting their strategies accordingly. Now, app marketing strategies go beyond running a simple user acquisition campaign. To learn more about more emerging solutions, read the second part of this blog series which will focus on cross-promotion and re-engagement strategies.