App marketers get ready! New iPhones and iOS updates historically lead to short-term surges in downloads as enthusiastic users load up their new devices. The upcoming releases continue that trend.
The two devices being launched today provide marketers with new opportunities to target two distinct types of users with new creative and tactics: the more value-conscious (iPhone 5C) and high-end buyers (iPhone 5S). In addition, the changes to iOS 7 offer some intriguing new possibilities for app marketers: in time, iTunes Radio will present a whole new advertising channel and Popular Near Me could provide high value users to apps with a local profile.” – Craig Palli, chief strategy officer, Fiksu.
It's also wise from a budgeting standpoint. According to a study last year from Fiksu, there was a surge in volume of organic searches for iPhone 5-compatible apps when the device was first announced almost exactly a year ago.
That meant the cost of acquiring a loyal user based on various mobile advertising channels went down. Two months later, however, Fiksu's data showed the cost of acquiring iOS users jumped 30 percent. It's possible developers will see the same thing happen if Apple launches a new iPhone on Sept. 10.
A week ago, mobile ad network Fiksu reported that Apple was running tests to incorporate star ratings in its App Store ranking algorithm.
This sparked a healthy debate in mobile and tech circles about the potential implications of the decision, assuming it comes to fruition. How would it change the rankings of existing apps? Who would it benefit most? And could the solution be gamed?
Apple’s App Store algorithms used to take into account download volumes and velocity as the two largest factors that determined an app’s rank. Ratings, however, started to impact rankings sometime in July, according to Fiksu’s earlier findings.
Developers can release updates for bug fixes and performance problems for a chance to start fresh – the new version’s ratings are featured more prominently in the App Store, and are those consumers see first when deciding to buy.
The actual cost per loyal user rose by 20 per cent from $1.50 to $1.80, hitting the highest priced month since December 2011, reports Fiksu.
Micah Adler, CEO of Fiksu, said: “There’s major sea change everywhere, now that Apple’s ranking algorithm appears to favour highly-rated apps and penalize others. App marketers must now work even harder to generate positive ratings from engaged users, since user acquisition costs for apps without stellar ratings will now be more expensive.”
Application marketing costs increased 20 percent in July 2013, reaching their highest point since the end of 2011, mobile user acquisition platform Fiksu reports.
Fiksu's Cost per Loyal User Index, which measures the cost of acquiring a loyal user for brands that proactively market their apps, increased to $1.80 last month, up 30 cents from June and falling just one penny short of matching Dec. 2011's high of $1.81. Fiksu credited the surge to the growing number of brands leveraging Facebook's (NASDAQ:FB) mobile app install ads, which target consumers based on the apps and games they already access on their smartphones, as well as Apple's (NASDAQ:AAPL) recent efforts to factor iOS user ratings into its App Store Top Charts rankings.
It took Fiksu, a mobile app marketing software provider, to take a close enough look at what's going on to reveal last week that Apple has obviously been making major changes to its algorithm.
While some details may not be fully known to anyone outside of Cupertino, Calif., Fiksu published a blog post which showed the increased importance of a common measurement: user ratings:
"In late July, we first began to notice apps unexpectedly shifting position without a corresponding increase or decrease in downloads. Upon closer inspection, we discovered these position changes correlated with the apps' ratings... Apps with ratings of 4 or more stars received a rank boost in late July and have maintained that rank throughout August. Poorly rated apps with less than 3 stars received the opposite treatment about two weeks later, dropping off precipitously in rank and staying that way."
Fiksu also noted today that user acquisition costs in the U.S. reached their highest level since 2011, rising to $1.80 in July, up 20 percent from $1.50 in June, making the month the most expensive since December 2011.
Facebook’s mobile app advertising platform is partially responsible by driving up competition, while deep-pocketed buyers are increasing, forcing the littler guys to spend more to keep up. The big-name publishers are now dominating the tops of the app store charts, making it harder for newcomers to reach the top 250, potentially turning the app stores into winner-takes-all markets.
"The continuing surge in mobile app users is attracting bigger brands eager to use apps to create long-lasting, ongoing engagement, and their spending is pushing up costs," Micah Adler, chief executive of Fiksu, said.
As the number of mobile app downloads increases across the United States, the cost for app developers to gain loyal customers has risen to its highest rate in two years, according to a new study by Fiksu.
According to the recently released Fiksu Indexes, July saw a significant increase in the cost to acquire mobile users.
Fisku points to several reasons for the increase including Apple's recent use of app ratings in its App Store Top Charts ranking algorithm, the increasing number of companies utilizing Facebook's mobile app install ads, and an uptick in mobile app downloads during the summer.