App downloads are vanity, usage is sanity

By James Hilton

The mobile application landscape has been changing for marketers, developers and publishers. It is no longer about the simple pursuit of pure downloads or visits. Now it is all about the search for engaged and loyal users who can be acquired in the most cost-effective way possible.

There are obvious motivations behind this shift.

Game face
First, it is not cheap to create a quality mobile app, especially if you are targeting multiple platforms. Failure to achieve engagement ultimately results in zero return on investment.

Second, continued app usage leads to revenue generation.

Retailers need apps that add to the in-store experience or makes shopping on a small screen simple and intuitive.

News apps rely on subscription revenues more than most other kinds of app, so publishers need to have high volumes to drive advertising and subscription numbers.

Game developers need to drive in-app payments, revenue from advertising or upfront revenue from paid downloads – the list could go on.

Usage leads to revenue. Revenue leads to happy investors and, ultimately, the ability to improve and expand products capitalizing on the acquired audience.

To many, this will not sound like anything new. It is merely a reinvention of the business mantra, “Turnover is vanity, revenue is sanity.”

But with the maturing of the mobile app market, it is increasingly important to consider the reasons behind launching an app.

While huge download statistics are what some think are the best demonstration of success, the reality is that if apps are only opened once and then deleted within 30 days, they are a failure. There has been no engagement, no customer relation, no opportunity for advertising and no commerce opportunity.

These apps disappear into the void with other badly thought-out apps, the ones that had no tangible purpose.

Gone are the days where apps that looked like lighters or pints would have onlookers using excessive amounts of hyperbole.

Smartphones and apps are no longer new inventions. There is no longer a need to try to impress friends. What consumers are more interested in is which apps make their lives easier or give them the best experiences.

It is for this precise reason that less than 1 percent of branded apps released by big healthcare and consumer brands have been downloaded more than 1 million times.

When put into the context that all three leading app stores generate more than 1.7 billion downloads every month, these levels of engagement are incredibly low.

In fact, only 20 percent of branded apps have been downloaded more than 1,000 times.

Just think of how much budget has been spent on mobile apps – budget that could have been plugged into mobile advertising or branding partnerships with established and popular apps.

Billions surfed
What every developer ultimately wants is engaged and loyal users. These will be the people who use the app regularly and recommend the app to their friends, the users who will be likely to spend money through the app.

The most recent example of this is Apple announcing that iOS owners have now downloaded more than 40 billion apps. Twenty billion of these alone came from 2012, 2 billion of which came from the record-breaking month of December.

It is the top grossing games which are the most interesting in this space.

Many may expect the household names such as Angry Birds or Cut the Rope.

Instead, titles such as Clash of Clans and Kingdoms of Camelot are the games that generate their developers vast sums of revenue. Why? Because they have managed to attract loyal users who are engaged and willing to spend money to get further in the game.

Just how do developers and brands manage to engage and acquire new users while also encouraging loyalty?

The answer to this question will not come as a huge surprise to anyone who is a regular reader of the site: targeted mobile advertising.

However, mobile advertising should not be the only route to drive downloads and usage.

Retailers with other channels should use the channels to promote the fact that customers can now access their products through their mobile devices and brands ought to use packaging to help with the promotion.

But when it comes to the vast majority of other apps, mobile advertising has proven to be highly effective.

C sweet
As a starting point, it is vital to fully test mobile media to determine what works for the brand and for the target audience.

The mobile media landscape offers both rich and static opportunities to target the right type of user thanks to CPA, CPD, CPC or CPM across the various mobile media channels.

Generally, the most successful targeting techniques will use ads placed through networks which can be tested for both direct response and branding campaigns; premium placements to high-traffic destination sites such as news sites; search, without which consumers will not find marketers; social media; demand-side platforms and various ad-hoc opportunities.

Through intelligent tracking, measuring and tweaking it is possible to target the right users. This must be done cost-effectively, which is why it is important to understand the lifetime value of an engaged and loyal user.

To be successful, the cost to acquire the user must be less than the net lifetime value. Early testing will help to give an indication of what this will be, but it is important to walk before you run.

It is also worth remembering that loyalty can only be earned. All communications have to be relevant and on brand.

IF CONSUMERS believe they share values with a company, they will stay loyal to the brand.

This is not a simple process by any means. It is for this reason that there are thousands of examples of failed apps out there.

If you can get everything right and work with people who truly understand the space, the opportunities are there.

James Hilton is CEO of M&C Saatchi Mobile, London. Reach him at james@mcsaatchimobile.com.