The Challenges of User Acquisition in Today’s Mobile Market
Challenges With User Acquisition
There’s no denying that user acquisition is a significant challenge for app owners. In 2017 alone, there were 197 billion mobile app downloads from the app stores. This intense app store competition, coupled with rapid technology expansion into emerging markets, makes user acquisition extremely difficult for app advertisers.
App Store Competition
Every app in the app stores now competes with over 3 million other apps. Advertisers are faced with an ever-increasing challenge of promoting discovery of their apps to new users, and with millions of other apps all fighting for visibility, overcoming this challenge is critical to an app’s success.
Users discover apps in the app store in one of two ways: casual browsing through the app store or searching for an app that fills a specific need. In fact, the majority of app downloads comes from browsing the app store or searching for apps on the web, according to a TechCrunch report regarding Apple’s redesign for improved app discovery.
App store installs by source (worldwide)
While web referrals and app referrals do contribute to a small portion of total app downloads, about 80% of app downloads were a result of a searching and/or browsing process. If your app isn’t visible during this searching or browsing process, the chances of acquiring new users are low.
Rapid Technology Expansion into Emerging Markets
Rapid technology changes in emerging markets have influenced the exponential growth of mobile device ownership and subsequently, of mobile app usage. While a larger audience is generally seen as an opportunity rather than a challenge, app developers and publishers that make apps specifically for users in emerging markets face a number of unique challenges.
In many emerging countries, like in India, Russia, China, and Brazil, economic challenges mean users are found on a wide range of older or second-hand devices. These older, outdated operating systems and device capabilities make developing apps that perform the way they are meant to extremely difficult. Poor connections and network speeds are extremely common in emerging app markets, which can severely affect the user experience of an app.
Furthermore, data is extremely costly in many emerging markets, which can make reaching new audiences and provide a great user experience a challenge. Even apps that are free to download in the app store can “cost” a user significantly due to the amount of expensive data the apps use, and if an app uses up too much data to function, a user may decide not to download the app at all.
Catering mobile apps to the unique needs of the millions of users in these emerging markets is a costly challenge for app owners, and acquiring these users as long-term customers is even more difficult.
User Acquisition Costs
User acquisition costs continue to rise into 2018 and acquiring users that complete in-app purchases are even more costly. While it costs around $4 to get someone to download an app and $8 to acquire a registered user, a recent study found that it costs more than $65 to acquire a user that will complete an in-app purchase. If app advertisers want to acquire a user as a paid subscription user, the cost of acquisition rises even higher. Acquiring a single paid subscription user costs a whopping $162 per year.
Mobile app benchmark worldwide
There’s no denying that the mobile app ecosystem is extremely competitive, and acquiring users as customers is no easy feat. App owners and marketers are consistently trying to keep their apps as visible and attractive to users as possible, and landing a spot on Apple’s coveted “Featured” apps list is similar to winning the lottery. Even with Apple’s recent App Store redesign aimed at improving the user’s browsing experience and making it easier for users to discover new apps, it is more difficult than ever for apps to stand out from the masses and reach new users effectively.
Rising costs in the mobile ecosystem have made acquiring new users extremely challenging, but there are solutions that can be implemented to increase long-term user acquisition.
While User Acquisition is extremely challenging (and costly) in today’s app ecosystem, there are both organic (free) and paid strategies that can help apps to become more visible in the app stores, improve User Acquisition rates, and lower acquisition costs.
User Retention is Still Critical
A recent study from InMobi found that app marketers are twice as likely to list new user acquisition as a marketing goal before they will list retaining their current users as a marketing goal. App installs do not always translate into long-term users, and by focusing only on acquisition, app advertisers may be missing out on a large opportunity to re-engage, and thus retain their current user base.
Focusing on retaining and re-engaging your current users is just as critical as obtaining new users, especially given that two-thirds of all app users will stop using an app within 30 days of downloading it. Implementing personalized email campaigns and strategic push notification strategies that encourage the user to reopen your app can both have a strong positive impact on Engagement Rates. While engagement rates vary depending on your industry, a well-timed, targeted push notification can have up to a 40% engagement rate, compared to a still-notable 15-20% engagement rate for email campaigns.
Re-engaging with your current app audience is just as important as acquiring new users, and it is often more cost effective to re-engage with existing users than it is to acquire new users.
Organic channels refer to those that do not require an advertising investment, and an organic user is one that was not prompted by any paid campaign to engage with your app. Organic channels are beneficial to app owners in gaining users for a variety of reasons. Due to the “free” nature of the organic acquisition, this type of user is likely to have the highest Lifetime Customer Value (LCV), and the value of this type of user is obvious. Additionally, benefits of organic visibility are more long-term, with organic visibility gains lasting longer than paid advertising models that can end with the toggle of a button.
App Store Optimization
SensorTower found that browsing the Apple app store accounts for 15% of all app downloads in 2018. This increase is credited to Apple’s enhanced app store search update that was released with iOS 11. Apps with strong app store visibility during the user’s browsing process are at a significant advantage when compared with apps that are not visible within the app stores.
App store optimization involves optimizing app store download pages for the highest organic visibility by utilizing popular keywords and strong calls to action. To leverage ASO tactics to increase user acquisition from the app stores, you should include core keywords in the App Name and the App Description, as well as include support app content like screenshots and featured images to catch your ideal user’s eye.
By taking advantage of organic optimization tactics like ASO, app marketers can gain visibility for their apps online and increase user acquisition rates from the app stores.
Learn more about App Store Optimization and Organic Channels here.
Percentage of app store installs from browse (worldwide)
Organic Social Media
Promoting your app on social media channels can increase the brand awareness of your mobile app and increase acquisition rates. Though social media algorithms continue to change, social media still remains a powerful channel for creating brand awareness and driving higher user acquisition rates.
Engaging in helpful conversations and in related groups is an excellent way to improve social media presence. You can become a bit of a thought leader in your industry by answering questions and engaging with users on top social media channels like Facebook and Linkedin, or secondary social media channels such as Quora or Reddit.
While 2018 social media channel environments have developed into a “Pay to Play” model that often requires an advertising budget, maintaining a strong, branded organic social media presence is key to increasing awareness around your mobile app.
Cross-Promotion with Other Apps
Cross-promotion networks are generally free for app publishers and involve partnering with other apps to promote each other to their user audiences. Usually, there is no cost allocated by either app, and each partner can enjoy the benefits of reaching new audiences. Especially with the current cost of acquiring new app users, saving money on advertising costs through cross-promotion of apps can be a cost-effective and budget-friendly way to acquire new app users.
Paid channels are those that require a budget to engage with users. Organic strategies, though cost-effective, are not always successful in reaching the number of users it takes to significantly impact User Acquisition rates. Paid strategies can perfectly compliment both organic strategies and retention strategies, and, when implemented properly, paid strategies can bring in new users faster than organic strategies alone.
Social Media Advertising
Social media advertising can be a powerful paid strategy for gaining users on your app. The largest social channels, such as Facebook and Instagram, allow you to target new audiences in very specific ways, including location, gender, age, interests, behaviors, education levels, income levels, and even relationship status. This allows app marketers to carefully segment their audiences based on these factors and allows them to tailor their messaging so that it resounds and connects with specific audiences.
Additionally, large, imagery-based ad formats provide an opportunity for app brands to create eye-catching ad displays with targeting calls to action. This presents an opportunity for app brands to stand out from the crowd and create interest around their apps, which is extremely important given the large number of competitors in the app ecosystem. Furthermore, even modest advertising budgets tend to go a long way on social media ad campaigns, making them the ideal way to promote your mobile app and reach new audiences.
Retargeting strategies can be an effective way of acquiring new users that have already shown interest in your app. Retargeting strategies focus on staying visible to users that have previously landed on your site or have interacted with your app in the past but did not convert into a user. Additional segmentation of these remarketing audiences allows for even more targeted messaging.
Retargeting methods cross between an app and vertical boundaries, meaning that an ad for your mobile app might be shown to your user as they are doing something else on their device, such as shopping, browsing the web, or playing a game. This provides a large advantage for app advertisers to stay on top of mind for potential users that may have otherwise never returned back to an app they previously exited or stopping engaging with.
Another benefit of retargeting strategies for user acquisition is that since users have already expressed interest in your app in the past, retargeting methods generally yield higher conversion rates and lower acquisition costs. Retargeting methods generally cost around 70% of the cost of standard acquisition and can mean more budget for other paid acquisition strategies.
Cost per Install Campaigns
Cost per Install or Cost per Sale campaigns are generally a low-risk advertising strategy that focuses on driving app downloads. In a CPI campaign, the advertiser only pays for the amount of actual downloads their app receives after an ad is clicked. This presents a huge advantage to app advertisers, as each incoming lead is prequalified before they are paid for and budgets remain relatively low. An extra benefit with cost per install campaigns is that impression-based brand awareness is built with an audience at no additional cost to the advertiser until an actual install occurs.
Cost per Install campaigns do present some disadvantages, however. Advertisers have limited control over the users that will see their ads, and this lack of segmented targeting can cause low conversion rates. Luckily, since CPI campaigns are only paid for when users actually install the app to their devices, even low conversion rates do not result in wasted ad spend. Additionally, CPI advertisers have limited control over the tracking methods used to capture information about the users that are engaging with their app before installation. This presents challenges when learning about interested audiences and applying those learnings to future campaigns.
While user acquisition strategies become more and more difficult and acquisition costs continue to rise, there are steps app publishers and owners can take to overcome these challenges and ensure that their apps are visible to new audiences and maintain cost-effective user acquisition rates.