App Marketing Costs Rise in June As Downloads Dip

Growing demand for Facebook’s mobile app install ads helped push up average app marketing costs for developers in June by 13% per user, according to the latest monthly data from mobile app marketing firm Fiksu.
The company, which tracks the daily U.S. traffic of the top 200 free iPhone apps, said marketing costs per loyal user -- measuring how much developers spend to acquire customers who open their apps at least three times a month -- had increased to $1.50 from $1.33 in May.
Fiksu attributed the rise in costs to the popularity of app install ads as a vehicle for promoting apps to the social network’s 800 million app users. Facebook executives last week indicated that revenue from the ad format was still a small part of overall ad sales but growing rapidly. In May, the company has said the ad unit had driven 25 million app downloads and that 40% of the top-grossing Android and iPhone apps had advertised on Facebook.
“It’s no wonder that brands are starting to ramp up their spending on Facebook mobile app install ads as they are driving large volumes of qualified users at extremely cost-effective rates,” said Fiksu CEO Micah Adler. He suggested the cost of Facebook app campaigns would continue to rise as more and more developers flocked to app install ads.
Recent data from Spruce Media, a Facebook strategic Preferred Marketing Developer (PMD), showed that the app cost-per-install through advertising on Facebook increased to $1.67 in the second quarter from $1.57 in the prior quarter. That’s partly a result of advertiser demand being seasonally weaker in the first quarter, according to Spruce.
Facebook separately on Tuesday announced a new pilot program to help promote game apps on its platform for small- and medium-sized developers in exchange for a share of share of game revenue. Craig Palli, chief strategy officer at Fiksu, said the effort could help small developers break through to app store success, especially if they don't have the budgets yet to run app install campaigns.
While marketing costs for developers were going up in June, download volume was falling. The number of downloads among the 200 most popular iPhone apps dropped 5% from 5.9 million in May to 5.6 million. Despite the monthly decline resulting from the “summer doldrums setting in,” Fiksu noted the total was still 22% higher than the year earlier period. It was also roughly on par with April and higher than February and March.
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