User Retention Still the Key Challenge for App Marketers

September 12, 2017

App marketers are twice as likely to count user acquisition as a goal than engaging and retaining their existing user base (70% and 35%, respectively), according to a survey from InMobi [download page]. But focusing their marketing on acquisition may be ignoring their greatest challenge: user retention.

Indeed, user retention and engagement emerges as the most widely cited challenge for app marketers, by 55%. That’s to be expected, given that almost two-thirds (63%) of app users will become inactive within 30 days after downloading an app.

Another significant – and related – challenge is that app installs don’t translate into high lifetime value users.

Acquisition remains difficult also, of course, in a crowded market. Half of the InMobi survey respondents reported that app discovery is harder than ever before, and 41% pointed to the rising cost of user acquisition. (Learn how and why users download apps here.) Recent comScore data indicates that half of smartphone users don’t download any apps in a typical month, and that half of smartphone app time is spent with users’ single favorite app.

As it stands, then, both discovery and retention are very difficult propositions for app marketers.

In-App Ads the Primary Monetization Model

App marketers continue to use in-app advertising (61%) to a greater extent than in-app purchases (45%), per the report. That tracks with recent research from AdColony, which found that the top-grossing mobile app publishers tend to derive more revenues from advertising than from in-app purchases (IAPs) and other sources.

For user acquisition, marketers tend to rely most on banner ads and native ads, though video ads are gaining traction due to a perception of greater effectiveness.

There are some issues to contend with surrounding in-app ads, too: attribution heads that list (48%), followed by ad fraud (41%) and ad blocking (36%).

As regards fraud, 70% see it as a serious problem that ad networks must do more to address, and 61% feel that the industry hasn’t done enough to combat the problem.

The most common ad fraud issue encountered, by far, is invalid traffic by bots and scripts. To minimize fraud’s impact, marketers are partnering with trusted ad network, per the report’s findings.

Remarketing Becoming More Popular?

Remarketing currently is something of an afterthought in app marketing budgets, with almost half of marketers surveyed allocating 5% or less of their budgets to this practice. The cost is the chief inhibition – with half saying that it’s too expensive.

However, there are signs that remarketing might be on the upswing: although only one-third (32%) currently run mobile in-app remarketing campaigns, another 39% plan to use them in the future.

In other highlights regarding remarketing:

  • Almost three-quarters consider remarketing tactics to be at least somewhat successful;
  • Average revenue per user (ARPU) and return on ad spend (ROAS) are the most popular KPIs used for measuring success; and
  • Click-through (33%) as well as click and view-through (31%) methods are the most commonly-used attribution methods for remarketing, though almost one-third (31%) don’t know.

The full study is available for download here.

About the Data: The data is based on a global survey of 825 marketers, the vast majority of whom have been working in the mobile app industry from at least 3 years.


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