App Marketing Costs Decline

The average cost per loyal user (CPLU) to app developers dropped by 10% last month to $2.47, according to Fiksu, a mobile marketing tech platform. CPLU represents total cost of advertising divided by the number of users who opened an app at least three times during the month.

Three out of four supporting cost metrics also declined since April. Cost Per Launch (CPL)—the cost of driving app engagement—decreased 31% on iOS to 28 cents in May, while Android CPL dipped 14% to 30 cents. Cost Per Install (CPI) dropped 31% to $1.46 at the Apple Store, but rose 12% for Android apps to $2.33. Fiksu attributes the wide variation in CPI between the operating systems to the fact that incent networks, like Tapjoy, that reward engagement are much more popular in the iOS realm.

Fiksu marks down the May cost decline as a market correction, as developers and brands make better use of their promotional funds via smarter targeting. “While we have seen seasonal slowdowns of app marketing during the summer months in prior years, May’s results also reflect brands implementing more precise audience segmentation,” said Micah Adler, CEO of Fiksu. “Rising CPIs in 2015 have caused some marketers to look for ways to reduce costs and focus their spend on the right groups of users.”

Spending on app promotions is likely to remain strong despite the downtrend in downloads. The Fiksu App Store Competitive Index, which tracks daily downloads of the top 200 free iOS apps, recorded a 17% drop to 6.7 million in May. A Fiksu spokesperson said it is not uncommon for top apps to spend as much as $300,000 to $500,000 a month on advertising. 

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