Cheap At The Price: Cost Of Acquiring New App Users Creeps Upward

by Steve Smith, Aug 31, 2012, 8:00 AM

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At last week’s Mobile Insider Summit, more than a few of our brand marketers on stage mentioned the “efficiency” of using the mobile channel. Actually, some of them just came right out and recommended it for being so “cheap.” In fact, by the time we got to Day 3 of the Summit, the publishers -- the ones who have to monetize those pages and apps, after all -- had heard about enough of “mobile efficiency.” Grant Whitmore in his presentation on the challenges for content online said the eCPMs on mobile are 20% of those on the desktop. To paraphrase one of the publisher panelists, “let’s stop calling this channel so cheap.” It shouldn’t be. Price may be a nice way to get marketers’ initial interest, but branding mobile as the cheap channel is not in the long-term interests of the mobile media economy.  

Well, it may take a while to get there, but some costs associated with mobile are on the rise. According to the latest monthly report on app download volume and acquisition costs from Fiksu, the average price of acquiring a loyal app user has gone up slowly but surely in the past three months. The “Fiksu Loyal User Index” went up 7% in July from the previous month to $1.54, the average price of getting an app loyalist. Fiksu defines someone who opens an app three or more times as a loyal user. This price has risen from $1.26 in May to $1.44 in June. Typically, the feverish app marketing that accompanies the holiday season drives the cost of acquisition to an annual high. While climbing, the July Fiksu index is still well below the December 2011 high of $1.81.

In June Fiksu speculated that the two-month rise was associated with marketers dumping end-of-quarter budgets. But the trend has continued into summer, even as overall app download volumes have declined. Fiksu also measures the rate of daily downloads among the top 200 free apps in the iPhone App Store. In July the rate declined 5.6% to 4.37 million a day. Fiksu CEO Micah Adler says the three-month trend indicates that “brands increasingly turned to mobile as a pivotal marketing channel for reaching high-quality, engaged users at a fraction of the cost of more traditional advertising methods.”

Again. This stuff is cheap. Maybe still too cheap for its own long-term good. 

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