The Cost per Loyal User Index measures the cost of acquiring a loyal user for brands who actively market their apps. For the purposes of the Index, loyal users are defined as people who open an app three times or more. The CPLU Index decreased slightly from January to $2.80 in February, a 3 percent decrease month-over-month but a 76 percent rise year-over-year.
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. For the first time in four months, the Index dropped slightly in February, at 9.7 million daily downloads. While down from January's high, this volume still represents a significant increase of 43 percent year-over-year.
The Cost per Install (CPI) Index measures the cost per app install directly attributed to advertising. In February, CPI for iOS stayed steady at $1.28 – a 17 percent increase year-over-year. Android’s CPI also stayed relatively stable, decreasing 1 percent from $1.53 to $1.51, a 16 percent increase since last February.
The Cost per App Launch Index, which tracks the cost of each repeat app launch over time, focuses on engagement and lifetime value of mobile users. In February, the Android CPL Index decreased slightly to $0.15, down 14 percent from January and up 18 percent year-over-year. The iOS CPL Index decreased 7 percent to $0.24, representing an increase of 21 percent year-over-year.
Fiksu's Analysis: February 2015
After four consecutive record-breaking months of volume, app download volume declined slightly in February, with the Competitiveness Index dropping 6 percent to an average aggregate daily rate of 9.7 million. Though not unexpected (we witnessed a similar pattern last year – see February 2014’s index analysis here), it’s abundantly clear that these continued highs for both download activity and user acquisition costs are here to stay, depicting a far more expensive mobile marketing landscape than we’ve seen in years past.
By comparison, last February measured 6.8 million daily downloads, 51 percent fewer downloads than this year, and the cost to acquire a loyal user was at $1.59, versus this month’s $2.80. It's important to note that even though costs are rising, app publishers and brands continue to invest in mobile advertising – eMarketer estimates that 2015 is the year when mobile ad spending will surpass desktop digital spending in the US, with almost $29B being spent and $3B of that on mobile app install advertising alone. That kind of spending growth wouldn't happen if advertisers weren't seeing value in their returns.
Based on the year-over-year trends we’ve seen, it appears February has become a “holiday hangover” month, a seasonal transition characterized by brands resetting their priorities and getting ready for Q2 campaigns. It is also worth noting that February was a short month and lacked any big industry events or announcements that could have impacted the Index data.
The index analysis this month also revealed minimal fluctuations in marketing costs across iOS and Android. The Cost per Loyal User Index (CPLU), which measures the cost to acquire a loyal user for brands who actively market their apps, decreased only 3 percent to $2.80. The Cost Per Install Index (CPI), which measures the cost per app installs directly attributed to advertising, did not change on iOS from January, staying steady at $1.28. On Android, CPI decreased only 1 percent from January to $1.51 in February. But CPIs on both platforms are up over last year, 16% on Android and 17% on iOS.
In the coming months, marketers should prepare to regroup on priorities and spend wisely as they enter a period of renewed app investment for many brands. As programmatic mobile advertising reaches an inflection point and becomes more sophisticated, according to a recent IAB study, marketers should consider appropriate data partners to improve their audience targeting and using RTB to achieve the massive scale they need for their campaigns despite growing competition.
We will also be watching closely as the Apple Watch becomes widely available, starting in late April, as it represents an additional avenue for advertisers to navigate and use to their advantage.
For the breakdown on what happened last month, check out the January Index.
How can the Fiksu Indexes help you?
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We’ve accumulated more than 9 trillion marketing events including impressions analyzed, clicks, downloads, registrations, purchases and other loyal user events tracked across 2.1 billion devices– and use this data to help you better understand the fluctuating dynamics of the complex app marketing landscape through our monthly Fiksu Indexes.
Your app is competing for users with millions of others. The best way to improve your mobile marketing is to more precisely understand the competitive landscape you’re pouring your budget into. The Fiksu Indexes reveal how industry dynamics – such as iOS upgrades, device launches, advertiser demand, ad network/publisher inventory, and seasonal activity – impact your business goals. Armed with this insight, you can adapt and plan with more agility.