After a burst of pre-holiday efforts drove the cost of marketing apps to new highs, January was a bargain for anyone trying to collect loyal users. According to app marketing services firm Fiksu and its monthly index of of the cost of acquiring users, many developers pulled back from their year-end spend as the new year starts. The cost of acquiring a loyal user fell from a Dec. 2011 high of $1.81 to $1.14 in January, down by 59%. Fiksu bases its finding on 13.9 billion app actions off of 217.4 million downloads that have been marketed by its service.
In Q4 app makers are feverishly promoting the ranking of their apps in advance of the annual Apple iTunes App store holiday “freeze.” This is when iTunes staff take time off around Christmas Day, and so the App Store rankings are not updated for those critical days when new iPhone and iPad owners are hitting the app stores to fill their new gadgets with app goodness. As that frenzy eases, marketers tend to withdraw from their competitive spending and assess budgets for the coming year. According to Fiksu CEO Micah Adler, developers often use the post-holiday period to focus on app version upgrades.
But while developers are leaning back, their consumers are leaning in. January saw a surge in download activity.The top 200 iPhone apps, for instance, peaked for the month at 6.79 million daily downloads, up 12% from the previous record-setting December of 6.04 million downloads a day. The increase in overall download volume coupled with a reduction in marketing spend sent the cost of user acquisition to a new low. Through much of the last half of 2011 the Fiksu Cost Per Loyal User was between $1.43 and $1.64Index. The average number of daily downloads has been rising since a September lull that preceded the launch of the iPhone 4S.
Adler argues that the growth in download volume and reduction of competitive pricing pressure makes January a great opportunity for bargain-hunting among mobile app marketers.