Last week, we released our December Indexes, which reflected the anticipated spike in downloads over the holiday season but also surprised us, with only a slight dip in app marketing costs. What has traditionally been one of the most expensive periods for user acquisition, it appears, has actually become less costly for savvier marketers. Longer campaigns and strategic media spending using technologies like programmatic media buying meant that the peaks and troughs we’ve been used to seeing during the holidays have evened out.
They say that hindsight is 20:20. With that in mind, we decided to review our past Indexes, quarter-by-quarter and compare 2012 to 2013. And we have some interesting takeaways to share:
The volume of aggregate daily downloads increased by 17 percent year-over-year, but remains steady in recent quarters.
It wasn’t surprising to see that mobile app downloads had jumped in the last year; more devices meant more users yielding more app downloads by the day. However, the quarter over quarter comparison is quite interesting, as 2013 outpaced 2012 every quarter except Q1. That’s a bit decieving, though: download volume in Q1 2012 was greater than Q1 2013 only because many of those downloads were automated downloads by “bots.” Apple banned bots during that quarter, which cut a significant percentage of the total downloads. Overall, 2013 was the year downloads really took off, breaking industry records, though the download growth has started to plateau. This is an indication that some more mature markets are nearing their saturation point. While the percentage growth may be slower this year, it’s based on an ever-increasing raw number of total downloads.
Average mobile app marketing costs in 2013 were 22 percent higher than 2012.
As the market becomes increasingly saturated with new apps flooding into the App Store, smartphones are also becoming an everyday necessity for today’s consumers, making it increasingly costly for developers and app marketers to acquire new, loyal users. In 2012, the cost to acquire loyal users was 18 percent lower than in 2013.
There was a stark contrast between the loyal user acquisition costs when comparing Q3 2012 to Q3 2013.
Each year, Q3 is the season of device launches with Apple introducing the latest innovations to its line of much envied gadgets. But what’s interesting is the year-over-year comparison of the Q2 to Q3 transition. In 2013, user acquisition costs saw a 24 percent spike from Q2 to Q3, where 2012’s costs slightly decreased. This was due at least in part to October 2012 being the lowest month on record for UA costs, which was in turn driven by a glut in ad inventory thanks to the launch of the iPhone 5.
If we had to make a prediction for where we see the market for 2014, we expect two trends to continue:
- Download volumes will to continue to rise. With recent sales figures and the dominance of apps as the mobile user interface, there’s no sign of users putting down their devices any time soon.
- Costs will continue to fluctuate as marketers latch on to different technologies and tactics. As one route becomes popular because of its effectiveness, increased demand will drag it back down to earth. Then another channel surfaces as the most effective route and so on, swinging prices back and forth. Marketers should keep spends flexible to stay on top of what’s most effective month to month and quarter to quarter.