The mobile app landscape has been changing for developers and publishers, away from a simple pursuit of pure downloads to a search for engaged and loyal users. It’s increasingly about building up a following of users who come back to an app. But what is a loyal app user and how much do they cost to get?
That’s a question that Fiksu, a Boston-based mobile user acquisition service is trying to get at. The company is announcing the start of two new indexes that it hopes will become accepted metrics for publishers looking to understand the cost of engaged user acquisition.
Cost Per Loyal User Index
One of the indexes, a Cost Per Loyal User Index, will look at how much it costs to acquire a user who opens an app three times. Three times is the threshold at which a user is generally engaged with an app, said Fiksu CEO Micah Adler. He said the definition of a loyal user is usually determined by publishers, who have different ways of measuring engagement. But he said for the purpose of a broad index, three is a good dividing line, showing where real loyalty begins for an app.
And when you start to look at how much it costs through advertising, incentivized offers and real-time bidding and other tools, you can begin to see what it takes to achieve that level of engagement. In June, for example, it costs about $1.27 to acquire a loyal user, up from 94 cents in March.
App Store Competitiveness Index
Fiksu also has the App Store Competitiveness Index that looks at how many downloads are racked up by the top 200 free iPhone apps collectively per day. That can be useful in understanding how competitive it is to break into the top ranks. It can also help marketers understand how they compare to the rest of the industry, why an app is doing well or not and how the cost of acquiring a user changes. In June, the top 200 apps are generating about 4.5 million downloads per day.
This is all designed to highlight the importance of acquiring loyal users. That’s how Fiksu sells its business, by emphasizing that with its intelligent platform that finds the most efficient and cost effective way to acquire a user, it can drive more loyal consumers, who are more valuable than random downloaders. So the company has something to gain by touting a new pair of indexes. It’s also a little unclear how accurate the indexes will be. Fiksu pulls its data from apps that use its service. Fiksu has some big clients like Barnes & Noble, Gilt, Groupon, Hearst Magazines, VH1, WHERE but it’s only got a few dozen customers overall.
Why Fiksu Makes Sense
I think the company raises an interesting point and is right to try and get at this question. For developers, the real challenge is to acquire users that come back. These are the people that can be monetized through advertisements and will buy in-app purchases. These are the people that can keep an game like Tap Zoo at the head of the top grossing charts list for the better part of a year.
It used to be easy and cheap to buy downloads using incentivized install campaigns, but now that Apple has banned them from new and updated apps, developers have been scrambling for ways to get their apps noticed and downloaded. You can see that in the rising cost of acquiring a loyal user. It’s gone up 35 percent since March, likely due to the ban on incentivized installs.
That’s the reality for developers: it’s getting more expensive to get engaged users, but that’s the name of the game. Now we’re getting a better sense of just how expensive.