58% of all connected consumer time takes place in mobile apps, according to digital research firm comScore. That’s just one reason why so many businesses are investing in their own apps. But while the app industry as a whole shows great growth, most individual apps struggle to drive app ROI growth and fail to retain more than a small fraction of their users.
How small? Singular recently analyzed the iOS and Android apps of hundreds of enterprise-sized clients, and found that apps can lose 95% of their daily users (DAUs) in the first three months after an install. That’s right. 19 out of 20 users may well drift away in just the first 90 days.
No one understands these disturbing statistics more than app marketers. According to a 2016 global survey of mobile app marketers conducted by Singular and our partner, Thomvest Ventures, app business leaders are working hard to address this issue in 2017. The data show that 78% of mobile marketers care more now about “user quality” than a year ago. User quality refers to how much and how long users engage and make purchases within an app. User quality, then, is central to revenue growth.
Whether focused on in-app purchases (IAPs), real-world purchases, or a content subscription revenue model, mobile app marketers are increasingly taking a data-driven approach to growing mobile app revenue, carefully analyzing their businesses and users based on app ROI, and then putting insights into action. Our survey showed that app marketing leaders will rely on four key data-driven strategies to help improve app revenue and user quality in 2017:
1. Improving App Installer Quality
Not every mobile app download from an app store is worth the same amount to your app business. You need the right set of installers to drive strong app ROI, revenue and engagement and maximize the success of your monetization strategy.
App install campaigns traditionally focused on driving the maximum possible number of app downloads. Mobile monetization played a secondary role to the KPIs of most marketers.
But in 2017, smart app marketers want to attract more of the right app downloads and installs with their ad strategy. More than 80% of Android and iOS marketers surveyed said they will factor retention rates into their campaign optimization strategies, and 54% will use uninstall rates to enrich their models.
They’re also focusing their resources on fewer, higher quality app media vendors than they have in the past. While mobile app marketers can choose from more than 1,000 ad networks, publishers and programmatic media partners, our data show that the top ten media companies have increased their share of category spend by 40% over the past year. The losers? Hundreds of small, niche media networks that historically drove inexpensive but low-quality users for smartphone apps to the app stores. Their conversion rates may have been high, but their value to the business wasn’t.
2. Fighting Mobile App Install Fraud
As spending on mobile app marketing has grown, so too has the amount of app install fraud in the ecosystem. Many sources say that fraud is costing app marketers more than $1Billion a year worldwide. Install fraud comprises the lion’s share of app fraud. Fake installs are relatively easy to perpetrate using simulated apps and hijacked mobile devices.
78% of marketers say that they are concerned about fraud, but only 39% believe that their companies have done enough to mitigate the risks. Marketers are now demanding that vendors take an active role in preventing fraud, and are using measurement to identify suspicious or fraudulent installs on an ongoing basis. Such demands are now a key part of a smart app monetization strategy.
3. Engaging in Post-Install App Advertising
Historically, app promotion stopped at the moment of an install. App developers were rewarded for high install counts, not long-term usage. But things have changed. 84% of marketers – whether of free apps or premium apps — now say that their performance is primarily measured based on revenue, not install counts.
That’s driving many efforts to help get users to become regular, revenue-generating users. In our survey, almost 90% of app marketers said they have started or are about to start fielding, post-install advertising campaigns to existing users in 2017. Such campaigns will focus on things like engaging new users, getting cart abandoners to return and buy, and getting existing customers to make incremental purchases. Across our footprint, we’ve seen the percentage of marketing efforts focused on post-install initiatives rise more than 1,000% in the past year.
4. Implementing Mobile Marketing Automation
Many app developers are looking to in-app communications like CRM and push notification messages to bring people back their apps. Marketing automation companies, the companies that make developing and delivering push notification and other messages easier and more personal, are growing rapidly, and VC investment in the sector is spiking. More than a third of marketers we surveyed have already implemented marketing automation platforms that they can use in 2017. Another 23% say they will in the next 12 months.
By understanding users – and leveraging that understanding in proactive, data-driven marketing programs, app developers hope to change the dynamics of an industry that has long struggled to hold onto its smartphone app users. For 2017, it’s all about marrying insight with action. Are you onboard?