Get the most important digital marketing news each day.
Reports: It’s cheaper to drive app-installs but harder to retain ‘high-value’ consumers
iPhone users spent average of $40 on paid apps and in-app purchases in 2016.
A report from Adobe declared the “app boom” is over in developed markets like the US, with a marked decline in app installs. Two new reports from Fisku and Sensor Tower offer a slightly different and more nuanced picture of the app landscape in the US.
Fisku said that in December and January, the cost of media to drive app installs declined. These lower advertising costs drove an increase in app install rates across both iOS and Android.
By comparison, Sensor Tower found that year-over-year app downloads per device (iOS only) declined from a total of 35 in 2015 to 33 in 2016. In particular, social networking apps saw the largest declines across the top five categories.
But while app installs declined somewhat, Sensor Tower reports that iPhone users spent more money on paid apps and in-app purchases in 2016 than in 2015.
Owners of iPhones spent an average of $40 last year on apps. The bulk of that spending came in the games category ($27), which increased from $25 in 2015. Entertainment category apps, however, saw the most growth in 2016, driven by video apps such as HBO NOW, Hulu and Netflix.
Fisku observed that while users were downloading more apps, they were using and retaining a smaller number. In other words, increased downloads didn’t translate into loyalty.
The company speculated that higher-storage devices were allowing people to download and test-drive more apps, but that didn’t change retention challenges that developers and brands face. The company reported that 87 percent of their sample of users were active in “less than 10 apps on a daily basis.”
Fisku also reported that while it was cheaper to drive app installs overall, the cost of users who will make purchases or take other high-value actions in apps was actually up year over year.