In 2018, we can confidently say that mobile is no longer just winning; it has won. This year will mark the first time mobile ad spend will surpass budgets allocated for TV. For marketers, mobile, particularly mobile apps, offers tremendous opportunities to communicate with consumers at [almost] all times and build loyalty. Apps are just one tap away, they offer a much better user experience than mobile web, and they enable meaningful re-engagement through push notifications.
But as mobile sweeps across the globe, the competition among apps has turned fierce with millions of apps in the app stores. This makes generating engagement and ongoing usage for monetization purposes extremely difficult. And since organic app discovery is largely broken, the share of high quality, revenue-generating organic installs is also dropping. Add to that the rise in the cost of media, and it becomes clear why lower profitability is a major concern these days for app developers.
Winning in the 2018 App Economy
The good news is that success is within reach. In fact, many marketers are overcoming the challenges of scaling mobile app businesses. The proof: Marketing-driven revenue has increased by 80% since 2016.
What’s common among these successful apps? They are laser-focused on measuring and acting on lifetime value (LTV). In a nutshell, LTV is the overall revenue a business generates from an average user throughout their time using an app. It informs marketers on how much they can spend to acquire a user and still remain profitable. With an increase in importance of paid traffic amid a decrease in organic traffic, looking to LTV to make smart acquisition decisions is vital.
The only way to properly optimize LTV is to rely on data, measurement and actionable analytics, particularly as it relates to revenue generated by in-app purchases (IAP) and in-app advertising (IAA). Revenue events should be measured granularly and connected to attribution data to pinpoint which channels, networks, campaigns, ad groups, and even creatives delivered revenue-producing users and which did not.
To help marketers make the most of revenue data to drive growth via LTV-driven optimization, AppsFlyer and Facebook teamed up to create Lifetime Value: The Cornerstone of App Marketing. This report analyzed $2.4 Billion in revenue generated by 3,800 apps worldwide throughout the first quarter of 2018. It provides multiple benchmarks for key verticals across key markets. These benchmarks will help marketers understand:
- Which countries have the most active consumers demonstrating purchasing power
- How much revenue is generated over different periods of time
- Which platforms — Android or iOS — drive higher LTV
- When consumers make their first purchase and how many of them do so repeatedly
- When to re-engage existing users to boost LTV
For example, the study shows that loyal users of shopping apps propel revenue growth over a 90-day period, as the following chart shows. Clearly, the US and UK are in a league of their own as far generating revenue is concerned, while Russia shows great potential.
Conclusion: Quality is Top Priority
An increasingly competitive space has led more and more app marketers across all verticals to put their faith in data, measurement and revenue-driven optimization to drive success.
According to Bryan Wang, Marketing Science at Facebook, “The most sophisticated app marketers are integrating LTV as a key indicator of sustainable and profitable growth. By measuring LTV – and taking actions based on those insights – they are giving themselves a clear competitive advantage over those who are only looking at CPI.”
The message is clear: measuring and optimizing lifetime value to identify, engage and re-engage quality audiences is the cornerstone of activity for successful app marketers.
All data used in the report is anonymous and aggregated data measured by AppsFlyer, the global leader in mobile attribution and marketing analytics and an official Facebook Mobile Measurement Partner (MMP) that measures the effectiveness of its clients’ app marketing campaigns. Data presented did not come from Facebook nor was it procured by Facebook.
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