The subscription based app model is working and here's proof
Monday, November 5, 2018
The subscription based app model is soaring finds a new report, which analyzed over 257 billion impressions from iOS and Android markets. The report also indicates a saturated gaming app market though, as the costs to acquire users who purchase in-app game items jump a whopping 56 percent.
Liftoff released its annual Mobile App Engagement Index, describing trends in consumer app engagement and ways mobile marketers can adapt to thrive in the changing landscape. Specifically, the report reveals that mobile users are head over heels for the subscription model, with considerable momentum gained from last year. Additionally, the Index highlights a shift in gender engagement, as well as a key in-app action meeting resistance this year and what this might mean for monetization.
Drawing from an internal analysis of over 257 billion ad impressions across 58.4 million app installs and 47.4 million post-install events spanning six major app categories (Dating, Finance, Gaming, Shopping, Travel and Utility) from September 1, 2017 to August 31, 2018, the Index Report found the following:
Mobile Users are Subscribing to the Subscription Based App Economy
The rise of direct-to-consumer brands like Dollar Shave Club and Stitch Fix and the continued dominance of Amazon Prime, Netflix and Spotify have helped people acclimate to the idea of regular payments for a service. And seeing the value gained through this payment-model in other areas of their life has helped people increasingly engage with it in apps.
Year-over-year, acquisition costs for subscription-based apps have plummeted by nearly half, down to a comparatively low $86.99 from last year’s $162.22. While the cost to convert subscribing users is on the higher end, predictable cash flow is undoubtedly attractive. Plus, at 3.3 percent, engagement for subscription apps soars, up a whopping 32 percent in the last year alone -- further illustrating that these apps offer value that users are willing to pay for, again and again.
“Acquiring users for this app category isn’t inexpensive by any means, but the year-over-year data showcases major momentum for subscriptions. Now pair that with Apple’s recent report that revenue from subscription-monetized apps is up 95 percent since 2017,” explained Mark Ellis, Liftoff co-founder and CEO. “And there’s no question that the long-term benefits of the subscription model, in the form of loyal users and stable cash flow, are worth the investment in service quality and marketing spend.”
Women Reclaim The App-Engagement Throne
In a significant departure from last year’s Mobile App Engagement Index, this year’s data reveals women to be the new premium user segment in the app economy at large, twice as likely to convert than men and more engaged overall.
Booking a reservation in-app, for instance, offers a valuable deep-funnel opportunity for marketers to capitalize on female engagement. While acquisition costs for female users who reserve in-app show a 10 percent premium, they deliver on engagement: with an install-to-reservation conversion rate of 62 percent, women reserve in-app at a rate 40 percent higher than men. In-app purchases follow the same pattern, where women are still pricey at $94.16 but offer highly-compelling engagement, with more than double the conversion rate of their male counterparts (3.8 to 1.8 percent).
As the data shifts in favor of female app users, marketers should take heed and execute campaigns with women in mind, with an emphasis on those dividend-paying deep-funnel events of in-app purchases and reservation. But plan smart, as competition for the female demographic - across all app categories - is bound to get tough in the year ahead.
A Challenge for Gaming as In-App Purchases Meet Resistance
Across mobile app categories, acquisition costs dropped and engagement grew, with the data showing a sharp decline in costs and significant increases in conversion rates deep into the funnel compared to the 2017 Index Report. Still, there is one notable, unsettling exception: the cost to acquire a user that opens their wallet to make an in-app purchase, a key funnel event in mobile gaming. This cost rose to $101.58, up 56 percent in the last year, while in-app purchase rates dropped by nearly half to 2.9 percent.
With the massive influx of gaming apps this year, it’s likely that fevered competition for users attracted by the free-to-play (F2P) model is driving up acquisition costs at this engagement stage. But there’s hope, as some months do show promise for driving in-app purchases. A prime example is September, marked by the highest engagement rate (4.3 percent) at the lowest cost ($61.16), albeit less attractive than 2017’s best months.
"These days, to be successful on mobile, you need to understand that mobile user acquisition and retention go hand-in-hand,” advised Joyce Solano, SVP of Global Marketing at Leanplum. “The best way to protect your acquisition investment and retain customers throughout their lifecycle is by forming a relationship — and that starts with contextual mobile messaging. In fact, our data shows this approach can increase retention by 62%."
The takeaway? Opportunity abounds in today’s app economy as people are more comfortable spending on mobile, but massive growth also presents massive challenges for mobile app marketers -- especially in verticals where competition is rife, such as gaming. Marketers looking to rise above the noise can sharpen segmentation, optimize targeting and focus on prime calendar months to appeal to an audience bordering on ad fatigue.
The Liftoff and Leanplum 2018 Mobile App Engagement Index draws from Liftoff internal data from September 1, 2017 through August 31, 2018—which spans over 257 billion impressions (257,492,955,717 to be exact) across 58.4 million installs and 19.2 million first-time events.
Specifically, the Index tracks costs and conversions across 47.4 million post-install events throughout the funnel (App Installs, Registrations, Reservations, In-App Purchases, Purchases and Subscriptions) across leading app categories (Dating, Finance, Gaming, Shopping, Travel and Utilities). The Index also offers a breakdown of data by platform (iOS and Android), user demographics (gender) and region (North America, LATAM, EMEA and APAC) to help app marketers architect strategies to address their audience, increase engagement and make their apps indispensable.
Through a new partnership with mobile engagement platform Leanplum, the Index provides an analysis of retention data (average session length, amount of time since the last app activation and percentage of active users) and shows the impact of communication channels (push notifications and email) on retention metrics.
Read more: https://info.liftoff.io/2018-app-engagement-index/
Become a subscriber of App Developer Magazine for just $5.99 a month and take advantage of all these perks.
MEMBERS GET ACCESS TO
- - Exclusive content from leaders in the industry
- - Q&A articles from industry leaders
- - Tips and tricks from the most successful developers weekly
- - Monthly issues, including all 90+ back-issues since 2012
- - Event discounts and early-bird signups
- - Gain insight from top achievers in the app store
- - Learn what tools to use, what SDK's to use, and more