Brands keep dumping billions of dollars into app-install ads, but it’s not yet clear that the strategy has been successful. According to BI Intelligence, 25% of the mobile ad market goes toward app-install ads, a number that is expected to top $7 billion by 2020.
That’s a lot of money chasing app users, but perhaps not surprising. Given that roughly 90% of our smartphone time is spent in apps, every brand is trying to figure out how to get users into their apps.
Now, if only they could keep them.
After all, on average, smartphone users access 26.7 apps each month, according to Forrester, but spend 80% of their time in just five apps (which almost certainly won’t be your app). Worse, about 20% of apps are abandoned after the first use, while users delete another 50% within five to six months.
None of which is to say that apps are a bad strategy. In our mobile world, they’re essential. But we need to think of them differently. They’re critical for driving “bottom of the funnel” engagement with a brand’s most committed users, the “whales” that drive a company’s business.
You’re not Facebook
Yes, consumers spend upwards of 90% of their smartphone time with apps, but that doesn’t mean they’re spending it with your app. In fact, I guarantee they’re not.
Instead they’re frittering away time on Facebook, SnapChat, email, or games.
Even so, brands continue to plunk down billions to try to buy their way onto consumers’ devices, with $5.5 billion estimated to be spent in 2016 on app-install ads, according to BI Intelligence. This despite ads coming in third as a motivator for app downloads, according to Tune data:
Regardless of why consumers download apps, Matthew Ingram points to a troubling truth: We’re downloading fewer and fewer of them. As of 2014, he noted, 65% of US smartphone users download roughly zero apps per month. None. Nada. As he writes: “[I]f you’re Snapchat or Uber or Facebook or YouTube, your chances of having lots of people downloading and using your app are pretty good. If you are almost anyone else—and especially if you are a small media outlet—you are climbing a vast mountain of indifference.”
So…should you build an app for that?
Why you still need apps
In most cases, the answer is “probably.” After all, native apps are still the best way to deliver a compelling mobile experience. That experience isn’t simply the content that lurks behind the icon on a user’s home screen, but also the push messages, location data, and other services enabled by the existence of the app. The richest data about a user, not to mention the ideal ways to interact with her, comes after installing the app, and is difficult (read: impossible) to achieve without it.
Regardless, apps aren’t for everyone. Apps are for a brand’s most loyal users, as venture capitalist Fred Wilson highlights: “The mobile web is the window of your store. Users window shop on your mobile website. Getting them to download and install and use your mobile app is like getting them to come into the store. And that’s where the action is long term.”
Nor is this necessary to attain with every “window shopper.” Apps are for a brand’s “whales,” those customers who account for a disproportionate amount of revenue.
Here’s an example. I was meeting with a large US retailer not long ago and their head of analytics told me that just 30% of their customers have their app. Not so good, though better than most, where 10% is often the ceiling. But he also told me that same 30% accounts for 60% of online revenue, making that minority of app users a majorly big deal.
His goal, then, is to turn that 30% into 35% or more, because the more their customers use the app, the more they spend with the retailer.
The most mobile-savvy of brands understand this, and build holistic experiences across mobile (web and app) and desktop web. They reach out through email, push messages, and in-app messages, as well as re-engagement ad campaigns. They think about engaging with their customers in multi-channel, multi-faceted ways.
Oh, and they reserve the best, richest experiences for their app users.
Which means that smart money does go to app-install campaigns, but not to get every random window-shopper into the app. Instead, the smart companies think of mobile marketing in terms of funnels, as Wilson points out, with web as top of the funnel and app as bottom of the funnel.
About the Author
Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.
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