The Cost per Loyal User Index measures the cost of acquiring a loyal user for brands who proactively market their apps. For the purposes of the Index, loyal users are defined as people who open an app three times or more. This month, the cost per loyal user rose 26 percent to $3.50, from $2.79 in January.
The App Store Competitive Index tracks the aggregate volume of downloads per day achieved by the Top 200 ranked free iPhone apps in the U.S. In February, the Index dropped to 8.5 million daily downloads, down 3 percent from January and 12 percent year-over-year.
The Cost per Install (CPI) Index measures the cost per app install directly attributed to advertising. On iOS, CPI dropped 5 percent to $1.78, a 39 percent increase year-over-year. On Android, CPI fell to $2.51, a 4 percent decrease since January and an increase of 66 percent since last year.
Fiksu’s Analysis: February 2016
In contrast to January’s bargain of $2.79 to acquire a loyal user, February demonstrated a reversal, as the price of loyalty shot back up 26 percent to $3.50. At the same time, app download volumes remained relatively static; decreasing 3 percent to 8.5 million daily downloads, while Android and iOS CPI’s declined 4 and 5 percent, respectively.
Taken together, February’s results indicate that either users weren’t as easy to connect with, or the spending that was happening in the landscape wasn’t capturing loyal users effectively. However, one thing is for sure: January’s ‘bargain period’ for advertisers didn’t last long. As marketers dove in to take advantage of what appeared to be a great opportunity to reach users, the influx of ad dollars ultimately caused a market correction in February, driving ineffective installs and prices for loyal users back up.
Ad unit prices dropped on both iOS and on Android: February’s CPI on iOS decreased 5 percent to $1.78, while still 40 percent more expensive than last year. Similarly, Android CPI dropped 4 percent since January to $2.51, representing a 66 percent increase on Android since February of 2015. This month-over-month drop in ad unit prices somewhat contradicts the fact that overall spending for users increased during the month.
Ultimately, no matter the change in market behavior and trends, marketers should always be focusing their attention on understanding who their target audience is and how best to reach and engage with them. In the crowded and ever-growing app landscape, making it a priority to find the right users is a better bet than trying to “chase” the market trends.