Benchmarking app store competitiveness & the cost of mobile app marketing
App Store Competitive Index
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 January, the Index peaked at 6.79 million downloads per day, beating December’s previous all-time high of 6.04 million daily downloads – a 12 percent increase and the fourth straight month of increasing app traffic.
Cost per Loyal User Index
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 fell by a whopping 37 percent – the lowest it has been since May 2011 – from a record high of $1.81 in December to $1.14 in January.
In December, smartphones were ranked as the top Christmas gift to give and receive – and consumers rushed to download the hottest apps after unwrapping their new devices. During that time, competition amongst app marketers was cut-throat, as brands scrambled to secure their share of the Christmas app download frenzy. But the story doesn't end here.
Similar to post-Christmas retail sales, inventory became much more cost-effective in January, but the proliferation of new devices caused a surge in user activity and app discovery, presenting mobile marketers with an almost too-good-to-be true opportunity for both value and growth.
We've seen many app brands invest heavily in the fourth quarter, seeking extreme growth during the holiday season, then halt spending in January as they focus efforts on app upgrades and level-setting for the New Year. However, our January Indexes show that slowing down in January is not always the best approach. In fact, January provided one of the best opportunities for mobile marketers EVER, as volume reached an all-time high and costs approached an all-time low.
We've historically observed this spike in volume and costs around peak periods – such as major holidays or iPhone launches – then seen a return to more normalized costs levels once the initial rush dies down. This year was no exception. Cost-conscious marketers who chose to hold off on Christmas spending, preferring to target a period when costs were expected to drop, won big in January 2012.