eMarketer webinar: Mobile App Marketing—Acquiring and Retaining Quality Users at Scale

© 2016 eMarketer Inc.
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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%
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
apps available in Apple’s
app store in 2016
16%
Source: eMarketer, March 2016
smartphone and table users
worldwide in 2015
8%
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 focus 25%
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).

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Cathy Boyle
Mobile App Marketing:
Acquiring and Retaining Quality
Users at Scale
 US App Install Ad Spending Will Near $6 Billion in 2016
 Snapchat Advertising: A Roadmap for US Brand Marketers and
Digital Agency Executives
 Digital Ad Pricing StatPack: CPMs and Pricing Trends for
Display, Video and Social Ads Served Worldwide
 US Mobile StatPack: An Atlas of eMarketer Forecasts to Keep
at Your Fingertips All Year Long

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