MOBILE APP INSTALLS 2019...Apple App Store Worldwide, 2008-2018 2008 1.3 2009 5.4 2010 13.2 2011...

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In order to gain users in a saturated market, app developers and brands are becoming more sophisticated in their app install advertising and organic strategies. This eMarketer Report looks at the size of the app market, as well as the three major strategies that developers follow to acquire and engage app users. MOBILE APP INSTALLS 2019 Marketers Innovate to Land Coveted Home Screen Placement presented by

Transcript of MOBILE APP INSTALLS 2019...Apple App Store Worldwide, 2008-2018 2008 1.3 2009 5.4 2010 13.2 2011...

Page 1: MOBILE APP INSTALLS 2019...Apple App Store Worldwide, 2008-2018 2008 1.3 2009 5.4 2010 13.2 2011 20.7 2012 30.5 2013 37.1 2014 45.7 2015 54.5 2016 83.1 2017 62.6 2018 46.0 Note: the

In order to gain users in a saturated market, app developers and brands are becoming more sophisticated in their app install advertising and organic strategies. This eMarketer Report looks at the size of the app market, as well as the three major strategies that developers follow to acquire and engage app users.

MOBILE APP INSTALLS 2019Marketers Innovate to Land Coveted Home Screen Placement

presented by

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Dear eMarketer Reader,

eMarketer is pleased to make this report, Mobile App Installs 2019: Marketers Innovate to Land Coveted Home Screen Placement, available to our readers.

This report is a great example of eMarketer data and insights that look at the size of the app market, as well as the three major strategies that developers follow to acquire and engage app users.

We invite you to learn more about eMarketer’s approach to research and why we are considered the industry standard by the world’s leading brands, media companies and agencies.

We thank you for your interest in our report and Branch for making it possible to offer it to you today. Best Regards,

Nancy Taffera-SantosNancy Taffera-SantosSVP, Media Solutions & Strategy, eMarketer

eMarketer, Inc.11 Times Square, Floor 14New York, NY 10036

[email protected]

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MOBILE APP INSTALLS 2019: MARKETERS INNOVATE TO LAND COVETED HOME SCREEN PLACEMENT

In order to gain users in a saturated market, app developers and brands are becoming more sophisticated in their

app install advertising and organic strategies.

What is driving the app installation marketplace?

Consumer demand for apps is rising: Installs grew 11.6% year over year in Q1 2019, according to Sensor Tower. But that growth was driven heavily by developing markets. App installation in developed markets is slower, though the supply of programs continues to grow. Gaming still leads the sector, but it now competes for ad inventory more directly with a range of verticals, including retail, travel, utilities and others, which drives prices higher.

What are good app install strategies?

App install advertisers once judged campaigns on the number of installs produced, but they are now more likely to take post-install actions into account as well (i.e., in-app purchases or registrations). They also use this data to optimize ad targeting and messaging. The same data helps them get a better understanding of the lifetime value (LTV) of users and the true return on ad spend (ROAS).

How important are organic strategies?

App store optimization remains important, even as app store search ads proliferate. Most apps are downloaded organically, and they generally have the more engaged users. More companies, especially in retail, are also driving installs from their best customers through their website, email and other owned properties.

How big a problem is app install fraud?

App install fraudsters continue to innovate. Fraud prevention tools help cut down losses to fraud, but they can’t eliminate it completely.

WHAT’S IN THIS REPORT? This report will look at the size of the app market as well as the three major strategies that developers follow to acquire and engage app users.

millions and % changeUS Smartphone Users, 2019-2023

2019

232.8

3.0%

2020

238.5

2.5%

2021

243.0

1.9%

2022

246.8

1.6%

2023

250.6

1.5%

Smartphone users % change

Note: individuals of any age who own at least one smartphone and use thesmartphone(s) at least once per monthSource: eMarketer, April 2019247591 www.eMarketer.com

KEY STAT: The number of smartphone users is barely growing in the US and other developed markets. Developers face tighter competition to gain a foothold on users’ home screens.

CONTENTS2 Mobile App Installs 2019: Marketers Innovate to Land

Coveted Home Screen Placement

3 Background: What’s Driving the App Install Marketplace?

5 App Install Advertising Grows, and Grows in Sophistication

11 App Install Marketing Beyond Ads

13 App Install Strategies Beyond Android and iOS

14 App Install Fraud

15 Key Takeaways

16 eMarketer Interviews

17 Editorial and Production Contributors

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BACKGROUND: WHAT’S DRIVING THE APP INSTALL MARKETPLACE?

In any marketplace, supply and demand drives

prices, and app install advertising is no exception.

Advertisers are creating more apps because

consumers have made it clear that they prefer app

experiences—in the US, we estimate that 91% of

smartphone time takes place in apps.

Yet there is a relatively fixed number of smartphone users in developed countries. The competition to land a place on limited home screen real estate is pushing app developers and brands to spend more on install advertising and to become more sophisticated in their overall app marketing.

In developed markets, the fundamental constraint on growth in app installs is the slow growth of the smartphone audience. In the US, for instance, the number of smartphone users will grow just 3.0% this year. At the core, that’s what’s driving up the app install advertising prices and leading to more overall spending. “We’re all competing for the same eyeballs,” said Pepe Agell, chief strategy officer at mobile platform Chartboost.

millions and % changeUS Smartphone Users, 2019-2023

2019

232.8

3.0%

2020

238.5

2.5%

2021

243.0

1.9%

2022

246.8

1.6%

2023

250.6

1.5%

Smartphone users % change

Note: individuals of any age who own at least one smartphone and use thesmartphone(s) at least once per monthSource: eMarketer, April 2019247591 www.eMarketer.com

Even so, actual demand for apps is more nuanced than the slow rise in smartphone users in the US and other wealthy countries would suggest. For one thing, app demand in developing markets is growing rapidly. We estimate that the number of smartphone users in India will rise by 13.2% this year. In Indonesia, the smartphone users audience will grow by 12.1%.

App downloads in these countries are increasing even more rapidly. Between 2016 and 2018, downloads grew 165% in India, 70% in China, 55% in Indonesia and 25% in Brazil, compared with just 5% in the US, according to App Annie.

More recent numbers from app analytics provider Sensor Tower show the trend continues. In Q1 2019, global app installs were up 11.6% year over year.

billions

Mobile App Store Downloads Worldwide, Android vs.iOS, Q1 2018 & Q1 2019

Q1 2018

17.4

7.7

25.2

Q1 2019

20.7

7.4

28.1

Android iOS

Source: Sensor Tower, "Store Intelligence Data Digest: Q1 2019," April 18,2019247057 www.eMarketer.com

Other factors are driving the app market in developed markets as well. For one, the life cycle of apps is changing in a way that is increasing the LTV of a user. “Back in the day, apps used to be one-hit wonders,” said Srinivas KC, vice president and general manager of InMobi, a mobile marketing and advertising provider. “They’d get a huge spike of interest at the beginning, only to be followed by a long, slow decline. In the early days of the app store, top apps tended to be popular for only around 12 to 18 months at a time. More recently, we see subscription and repeatable app businesses scaling in a more sustainable manner.”

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Smartphone users also appear to be downloading more apps. In the US, the average iPhone user downloaded 47 apps in 2018, up from 44 in 2017, according to data provided by Sensor Tower.

The average number of apps installed on smartphones is rising. In the US, Japan, South Korea and Australia, users had over 100 apps downloaded on their phone in 2018, App Annie reported. In the US, that figure was up 15% from 2016.

Of course, smartphone users don’t typically use all those apps regularly. Comscore found in 2017 that most time with apps was spent with the top five (87%). By April 2019, that figure had dropped to 83%, with the top app dropping from 49% to 44%. Mobile time is still concentrated in a few apps, but slightly less so each year.

% of total

US Smartphone App Usage Rankings, by Share ofTime Spent, June 2017 & April 2019

June 2017 April 2019

1 49% 44%

2 18% 18%

3 10% 10%

4 6% 7%

5 4% 5%

6 3% 3%

7 2% 2%

8 2% 2%

9 1% 2%

10 1% 1%

11+ 4% 7%

Note: Android and iOS app users ages 18+; read as the averagesmartphone user spent 44% of total app time with their most frequentlyused app and 18% of total app time with their second most frequently usedapp in April 2019; numbers may not add up to 100% due to roundingSource: Comscore Mobile Metrix, June 2019248084 www.eMarketer.com

Overall, global demand for apps is rising, but the fundamental challenge of finding room on limited smartphone real estate remains.

THE NUMBER OF APPS CONTINUES TO INCREASE In June 2019, there were 1.8 million apps in the Apple App Store, and 3.1 million apps in the Google Play Store, according to App Annie.

Those numbers will continue to increase, though growth has slowed since its peak. Published data in July 2018 from mobile app analytics platform Adjust showed average numbers of apps added to the App Store per month dropped from 83,100 in 2016—when Apple tightened rules for apps—to a still-strong 46,000 in 2018.

thousands

Average Number of Apps Added per Month to theApple App Store Worldwide, 2008-2018

2008

1.3

2009

5.4

2010

13.2

2011

20.7

2012

30.5

2013

37.1

2014

45.7

2015

54.5

2016

83.1

2017

62.6

2018

46.0

Note: the App Store launched on July 10, 2008; 2018 data reflects averagesthrough MaySource: Adjust, "The App Store Turns 10," July 10, 2018240933 www.eMarketer.com

Games still dominated in app installs in Q1 2019, accounting for 35% of global downloads, according to App Annie. Even so, this figure is down from 39% in Q1 2017. New verticals, such as shopping, utilities and services, are now actively pursuing user acquisition strategies. “What that means is that there are more companies competing for those installs and driving the user acquisition efforts,” Agell of Chartboost said. “We’ve seen on our platform that there’s a broader variety of advertisement types.”

Moreover, many of the largest brands across industries are trying to establish apps and attract users in a much bigger way than they have in the past. Fashion and apparel, fast food and sports leagues are just some of the newer players starting to compete for the same inventory, according to Michael Paxman, product communications lead at Adjust. “What this means is that the days of buying an entire network inventory for the day are done,” he said. “You can’t ... If you try to buy big, you will lose to bigger pockets.”

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Gatorade Highlights

Gatorade introduced a new app in May 2019 geared toward young athletes. The app lets them film their best moves, shots or plays, which they can then augment with cartoon-like overlays. Jill Abbott, Gatorade’s head of consumer and athlete engagement, spoke with us about the brand’s install strategy:

What is your marketing strategy?

Abbott: Gatorade Highlights is our first digital product, meant for an audience of competitive teen athletes who primarily connect to the world via a mobile device. So, developing the strategy first meant focusing on where our athletes are spending their time while on their mobile devices. We are focused on moving athletes down the funnel, with app downloads as our key metric through a cross-functional marketing campaign meant to capture the attention of our consumers in authentic moments: while they are scrolling their social feeds, following their favorite athletes, or consuming the media they frequently read. And for those we’re not converting right away, we want to ensure we’re retargeting with compelling messaging to get them to take action. All of this will include significant tracking and agile decision-making on which channels are working hardest for us—and assessing what, if any, edits need to be made to our creative to drive a strong response.

What paid channel is most effective for you?

Abbott: At the end of the day, it’s staying hyperfocused on the athletes from creative to media leads to the most effective campaigns for our brand. Teenagers spend, on average, 3 hours a day on social media. So social is a critical place for the brand to engage with our consumers. We focus on the strengths of each channel to deliver the messages by creating bespoke content for our audience.

APP INSTALL ADVERTISING GROWS, AND GROWS IN SOPHISTICATION

The increased competition in the app install

marketplace is compelling app developers and brands

to spend more on user acquisition advertising. A

2018 AppsFlyer forecast shows global app install ad

spending reaching $51.6 billion in 2019, up about 33%

year over year.

billions

Mobile App Install Ad Spending Worldwide,Attributed vs. Nonattributed, 2017-2020

2017

$17.9

$9.1

2018

$27.8

$11.1

2019

$38.4

$13.2

2020

$49.2

$14.9

$27.1

$38.9

$51.6

$64.1

Attributed Nonattributed

Note: nonorganic installs via mobile attribution providers (attributed) orwithout a mobile attribution provider (nonattributed); numbers may notadd up to total due to roundingSource: AppsFlyer, Aug 2018

240330 www.eMarketer.com

Given the increased competition for users, it’s not surprising that costs are going up. “We are seeing a steady increase in both the CPM [cost per thousand] and the CPA [cost per acquisition], the post-install action that we’re being paid on,” said Mark Ellis, CEO of mobile app marketing and retargeting platform Liftoff.

PlatformsThe bulk of this surge in spending on app install ads is going to the existing big ad platforms. “Over the past 12 to 18 months, we’ve seen an increase in ad spend with the major ad platforms—Google, Facebook, Twitter, Snapchat—and a significant jump for Amazon,” said Jeffrey Richardson, product marketing manager at Kochava, a provider of real-time data and measurement solutions for connected devices.

The largest platform among this group is still Facebook. An October 2018 study by Sensor Tower found that 43% of iOS app install referrals came from Facebook properties, compared with 6.6% from Google-owned properties.

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% of total

Top 10 iOS Apps Worldwide, Ranked by Share of AppInstall Referrals, Oct 2018

1. Facebook22.7%

2. Instagram19.0%

3. YouTube3.8%

4. Google2.8%

5. Snapchat2.3%

6. Facebook Messenger1.3%

7. Twitter0.7%

8. WeChat0.6%

9. Line0.5%

10. Baidu0.3%

Note: 12 months ending Oct 2018; excludes gaming appsSource: Sensor Tower as cited in company blog, Nov 14, 2018243662 www.eMarketer.com

Within Facebook, Instagram continues to gain a larger share of ad investment, according to numerous sources we interviewed. “Facebook’s own growth has shifted more to Instagram. Specifically, Instagram Stories has been a great area for growth for them,” said Harry Antonio, director of customer success at performance marketing platform Nanigans. “As the user base grows in that area, so too does the inventory, and that increasingly is where advertisers are finding their customers.”

Google app install business has been boosted by the introduction of its universal “App campaigns.” Unlike Facebook, which gives advertisers all types of product and targeting options, Google uses machine learning to make most of the decisions on where to place app install ads—for instance, whether a particular user should see the ad in YouTube or Google Search. “They’ve really been able to capture a large share of the marketing dollars that marketing teams are spending on growth for their apps,” Antonio said. “I’d say, in many ways, that rivals some of the larger social offerings. They’ve been around now for a good while, and they haven’t quite surpassed Facebook, but it’s certainly very popular. I would say Google is the go-to destination if advertisers start looking for something beyond Facebook.”

A fast-rising challenger is Apple Search Ads (ASA), which according to AppsFlyer in May 2019 accounted for 4% of iOS app installs, a 33% increase since March 2019. Apple Search Ads drove 12% of non-organic installs in May 2019. Apple shows only one ad per search, and it can include three screenshots, which increases the impact. “On the Apple side, optimization won’t necessarily get you the volume of eyeballs that the search ads can,” said Chris Costello, senior director of marketing research at Kenshoo, a digital advertising technology platform.

Overall, app advertisers are splitting their ad buys across more platforms. “We’ve seen an increasing level of sophistication among in-app advertisers,” said Lexi Sydow, senior market insights manager at App Annie. “Among the top 100 apps by downloads in the US, the average in-app advertiser has seen a sizeable increase year over year in the number of ad platforms they are using for each campaign. Game publishers, who often pave the way in the app economy, saw the greatest increase in the number of ad platforms they utilize—but the change was clear across genres and across both app stores.”

GROWING SOPHISTICATION OF APP INSTALL ADVERTISING The increased sophistication of app install advertisers extends beyond the number of platforms they use. “A few years back, everybody was just spending money mindlessly, without looking at what the return is going to be,” said Vikas Gulati, head of global performance at AdColony, a mobile video ad network. “It was all about trying to get more users, without having a business model in place. But today, the game has completely changed. Everybody starts with a business model first. They look at what the expected return on ad spend is, either through in-app purchases or through ad-based monetization. And then they define their user acquisition price.”

Better data, analytics and platforms are making real-time optimization feasible. Advertisers can see performance in real time and adjust their strategy in response. “Even monetization platforms are now making ad revenue data instantly available, allowing marketers to better optimize their campaigns for the greatest return on apps that rely on ad monetization,” Kochava’s Richardson said.

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Most sophisticated platforms are giving advertisers the option to optimize their buys on post-install actions, such as an app registration or in-app purchase.

Snapchat is a good example. It offers a set of “high-intent” user acquisition ad formats to let advertisers optimize their buys on app signups, “add to cart” and app purchases. Snapchat sells impressions on a CPM basis, but the impressions will be to users who are likely to take the post-install action.

Targeting Improves As the data improves, advertisers can target more finely tuned segments based on a better understanding of their existing users. This includes more lookalike modeling. “We work backward from our existing users,” said Jay Klauminzer, CEO of mobile payments and prepaid gift card platform Raise. “We look at how our customers are engaging, what they’re engaging in, and we’re able to tailor that to our mobile app install strategy.”

App advertisers are also using LTV, differentiating install value of different users. A user who will ultimately generate more money will be worth more to acquire. “It really gives them a longer-term view of the value of a customer and the money you want to spend on acquiring that customer,” said Stephen Mello, vice president of strategy at personalization platform Localytics.

Coupled with more sophistication in buying, advertisers are also demanding more transparency about where their ads appear, and app developers are paying more attention to which formats disrupt the user experience least. “Our clients are caring a lot more about placements, and understanding that not all placements are equal,” said Jason Santillano, director of marketing at mobile advertising and app monetization company Vungle. “Our advertisers and developers are always looking for new formats that’ll engage better traffic and won’t hurt their overall user experience and their retention.”

Google App Campaigns are bucking the trend toward transparency by making most optimization decisions for individual advertisers. “The challenge with Google is first around creative as it is with any social media platform and advertising platform,” Nanigans’ Antonio said. “But beyond that, it’s much more of a reporting and management challenge, rather than an advertising campaign configuration problem or optimization problem, simply because there aren’t the levers there that Facebook offers.”

Although some advertisers resist this lack of control, Google claims that it can optimize ads on its platform better than anyone else can, and the fact that Google is rising as an app install platform appears to back up the claim.

Better targeting also puts the onus on advertisers to design creative that can keep up with the analytic insights. Even if the advertising isn’t fully dynamic, it needs to at least have multiple versions geared to different regions, segments or even times of year. “It’s very important for advertisers and ad networks to really understand how each creative is performing and then understand how to be agile and how to create relevant creative,” Santillano said. “We work with our advertisers to create multiple variants of the creative and optimize them depending on where they’re running. We’ve also seen a lot of success in localizing content.”

For more information on personalization, see “Customer Experience 2019 (Part 2)—Personalization and Data-Driven Experiences.”

Formats on the Rise Along with the rise of programmatic and better targeting, the ad formats themselves are becoming more varied. “More advertisers are utilizing the full complement of ad formats, whereas a few years ago, banners were still the primary ad format of choice,” Ellis of Liftoff said. “We’ve seen an aggressive growth of video ad formats as well as interactive and/or playable ads.”

Some of the most successful formats are those that give users a preview of the app. Both playable ads and video can do this—playable ads by letting prospects engage with a small snippet of the app, and videos by showing them real game scenes. Some networks combine the two with a preview video ending with a playable card.

Increasingly, advertisers have showcased the most engaging parts of games rather than the first level. “Giving users the ability to get a taste of the game at the most impactful moment of a playable is showing a lot of good results,” Santillano said.

Although nongame apps can use playable ads, video is more versatile and is becoming a core format for most app advertisers. “Video is a very emotive platform,” AdColony’s Gulati said. “You’re fundamentally connecting better with the user.”

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Smaato and Liftoff reported that video ads for apps have higher post-install action rates, likely because they provide a better preview of the app and a more complete brand story. Install-to-register rates for video were 35.1% in Q1 2019 on the Liftoff network, compared with 28.5% for display ads.

Mobile In-App Ad Performance Metrics Worldwide:Post-Install Action Rates, Display vs. Video, Q1 2019

Install-to-register35.1%

28.5%

Install-to-purchase4.8%

4.0%

Video Display

Note: represents activity on Liftoff's platform, broader industry metricsmay varySource: Smaato and Liftoff, "In-App Engagement and Conversion Report,"May 21, 2019247534 www.eMarketer.com

Video itself comes in various formats. Rewarded video is often served in gaming apps and gives users a reward, such as extra lives or reaching the next level, in exchange for viewing the video. Various social video formats allow different lengths, shapes and orientations. “I would recommend that clients have a broad range of different formats for their video concepts,” Nanigans’ Antonio said. “Ideally, you produce a few different variants and try each out on the different placements available to you.”

Yet, despite the rise of a variety of video and other formats, banners still can be cost-effective, in part because their prices remain lower. In another Liftoff study of activity on its platform in October 2018, banners had the lowest CPI and CPA of major formats.

Mobile App Ad Performance Metrics Worldwide, byOS and Ad Format, Oct 2018

Android iOS Total

Cost per install (CPI)

Video $2.75 $6.25 $4.05

Interstitial $2.57 $7.28 $3.37

Native $1.63 $4.48 $2.96

Interactive $1.15 $4.80 $2.48

Banner $1.42 $4.64 $2.31

Cost per action (CPA)

Video $8.51 $17.27 $12.16

Interstitial $8.34 $21.99 $10.68

Interactive $4.60 $21.33 $10.39

Native $4.55 $11.17 $7.65

Banner $3.73 $13.53 $6.18

Install-to-action rate (ITA)

Native 35.8% 40.1% 38.7%

Banner 38.1% 34.3% 37.4%

Video 32.3% 36.2% 33.4%

Interstitial 30.8% 33.1% 31.5%

Interactive 25.0% 22.5% 23.8%

Note: represents activity on Liftoff's platform, broader industry metricsmay vary; 12 months ending Oct 31, 2018Source: Liftoff, "Mobile Ad Creative Index: 2019 Performance Trends &Benchmarks," Jan 24, 2019244945 www.eMarketer.com

With various formats available, advertisers have a dizzying array of choices, but the same data that lets advertisers optimize targeting can also help them choose the format that works best in the moment. “The industry is less and less ad format-centric; we want to have as many ad formats as possible for each advertiser so we can serve the one that our algorithms determine to be the best-performing for that user in that specific context,” Chartboost’s Agell said.

Retargeting Retargeting ads in the install market aren’t new, but their use is on the rise. These ads target users after they install an app with the goal of turning a new user into an active user.

In most countries, the average smartphone user engages with only about a third of the apps on their phone, although the average is closer to half in developing countries, according to H1 2018 data from App Annie. This likely has to do with the number of smartphones with less storage space for apps.

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Average Number of Apps Installed vs. Used AmongAndroid Smartphone Users in Select Countries, H1 2018

Australia

US

South Korea

Japan

UK

Germany

France

Mexico

Brazil

Indonesia

India

Total number of appsinstalled on device

103

102

100

98

93

92

90

77

70

62

62

Number of appsused

39

37

40

34

36

36

36

37

33

33

35

Note: represents activity on App Annie's platform, broader industry metricsmay vary; monthly average among Android smartphonesSource: App Annie, "2017 Retrospective: A Monumental Year for the AppEconomy," Oct 15, 2018242561 www.eMarketer.com

Every app category shows a drop-off in retention and engagement after the first day, with some of the biggest drop-offs in shopping (25% engagement after the first day, but 8% at 30 days) and travel (20% after the first day and 6% after 30 days), according to research published by Adjust.

Mobile App Performance Metrics Worldwide: Average30-Day Retention Rates, by Category, 2018

Casino (games)

Dating

News

Communication

Sports (games)

Casual (games)

Comics

Marketplace & classifieds

Social network

Music

Midcore (games)

Weather

Health

Banking

Video & streaming

Tools

Deal discovery

Recipes

Shopping

Ride-hail & taxi

Travel booking

Food delivery

Day 1 afterinstall

39%

39%

39%

38%

38%

38%

37%

37%

35%

33%

32%

32%

31%

30%

30%

29%

25%

25%

25%

24%

20%

16%

Day 7 afterinstall

20%

20%

31%

27%

20%

22%

28%

25%

24%

23%

18%

24%

21%

24%

19%

19%

21%

18%

14%

15%

11%

11%

Day 30 afterinstall

17%

16%

24%

20%

10%

12%

20%

17%

16%

16%

10%

17%

15%

19%

12%

13%

15%

12%

8%

9%

6%

6%

Note: represents activity on Adjust's platform, broader industry metricsmay varySource: Adjust, "Global App Trends 2019," May 14, 2019247431 www.eMarketer.com

It’s no surprise then that these two verticals increased their retargeting efforts between 2017 and 2018, according to data on the AppsFlyer network. In fact, 86% of shopping apps and 83% of travel apps increased spending on retargeting. In both categories, more than two-thirds also increased spending on user acquisition. Even so, about a quarter of each category raised retargeting spending while lowering spending on user acquisition. In gaming, spending increases were more moderate for both types of ads. “While the primary spending will always be user acquisition, we are seeing an uptick in investment in re-engagement,” Ellis of Liftoff said.

% change vs. prior year

Change in Retargeting vs. User Acquisition CampaignSpend Among Select App Publisher VerticalsWorldwide, Nov 2018

Increased both retargeting and user acquisition

Increased retargeting, decreased user acquisition

Decreased retargeting, increased user acquisition

Decreased both retargeting and user acquisition

Shopping

61%

25%

6%

8%

Travel

59%

24%

10%

7%

Gaming

31%

18%

12%

39%

Note: represents activity tracked by AppsFlyer, broader industry metricsmay vary; based on 1.6 billion nonorganic installs and retargetingconversions among 650+ apps that ran both activities during Oct-Nov of2017 and 2018Source: AppsFlyer, June 2019248068 www.eMarketer.com

Advertising isn’t the only way that companies can re-engage users. “We notice that savvy app businesses have turned their mobile marketing automation platforms into full-fledged CRM [customer relationship management] tools, where they are able to connect with users via email, notification, text, and programmatic display and video ads—all controlled centrally—to drive retargeting and re-engagement,” InMobi’s Srinivas KC said.

As a result of these strategies, global retention rates are slightly rising. AppsFlyer found that 32.7% of app users were still using an app after Day 1 in 2018, up from 27.7% in 2016. And 5.5% were using them after a month in 2018, up from 4.6% in 2016.

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Mobile App Performance Metrics Worldwide: 1-Day,7-Day and 30-Day Retention Rates, 2016-2018

2016

27.7%

10.8%

4.6%

2017

30.5%

12.1%

5.1%

2018

32.7%

13.0%

5.5%

1-day retention rate7-day retention rate

30-day retention rate

Note: represents activity tracked by AppsFlyer, broader industry metricsmay varySource: AppsFlyer, June 2019248067 www.eMarketer.com

Just as importantly, users are spending more within apps. According to Jasper Radeke, senior director of marketing at AppsFlyer, conversions in retailer apps that had retargeted their users grew 154% between 2017 and 2018. And an AppsFlyer study published in June 2019 found that one in four in-app conversions across all apps this year could be traced to retargeting efforts. This represented a roughly 350% growth in share of conversions since 2017.

Reinstalls Another category of advertising promotes reinstalls, or ads targeted to users who have uninstalled an app. “Reinstalls and returning users have huge potential,” Adjust’s Paxman said. “They’ve already been through the process of learning about the app, so they really have potential to be super valuable users.”

People uninstall apps for a variety of reasons. Many just didn’t give them the value they were looking for when they downloaded it, but sometimes the reasons are more subtle and leave openings for advertisers to lure users back.

Some companies track uninstalls to look for patterns. Shopping app users uninstall after the holiday shopping period, or travel app users uninstall an app after vacations are complete. Other times, technical problems with an app lead to a surge of uninstalls, and sometimes, immediate reinstalls. In other cases, apps that take up a lot of room create problems for users in countries where phones may have limited storage memory.

Knowing why people uninstall an app is crucial for figuring out how to get them to reinstall it. “There’s a lot of personalization involved in that strategy,” AdColony’s Gulati said. “You find that the users act based on specific attributes or certain messaging.”

Reinstall advertising is often part of a broader strategy. “What we’ve seen is that brands will not necessarily get right back up in somebody’s face and try to get them to reinstall the app,” Localytics’ Mello said. “They’ll use other channels to continue the conversation or relationship with the customer. But they will still look for opportunities to recommunicate the value of the app, especially if they have something new they think will be of interest to a customer.”

Metrics Focus More on Post-Install As advertisers focus more on ROAS and LTV, they’re tracking post-install metrics with more granularity. “The full measurement of all kinds of downstream KPIs [key performance indicators] is vital to facilitate optimal performance insights and is a major shift,” Kochava’s Richardson said.

iOS users are more likely to take actions in apps after installing them, such as registering or activating a service. That pattern has led to higher per-install prices for app install ads served to iOS devices, but similar cost per registration for both Apple and Android devices, according to figures from Liftoff and Leanplum.

Mobile Finance App Performance Metrics Worldwide:Average User Acquisition Costs and Post-InstallAction Rates, by OS, 2018

iOS Android Total

User acquisition costs

Cost per install $8.58 $5.15 $6.93

Cost per register $25.75 $25.71 $25.73

Cost per activation $31.18 $41.75 $37.05

Post-install action rates

Install-to-register 33.3% 20.0% 26.9%

Install-to-activation 27.5% 12.3% 18.7%

Note: represents activity on Liftoff's platform, broader industry metricsmay vary; 12 months ending Dec 31, 2018Source: Liftoff and Leanplum, "Mobile Finance Apps: 2019 User AcquisitionTrends and Benchmarks," April 10, 2019246821 www.eMarketer.com

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Many marketers use certain threshold actions as a proxy for an engaged user. Sarah Chafer, senior vice president of global performance at mobile ad platform Tapjoy, pointed to the example of a dating app that found users who uploaded a picture were three times more likely to stay. “Every advertiser has the challenge of finding that point of adoption where once the user gets to this level, they tend to play 10 times more often or become the user who opens the app every day for the next 30 days,” she said.

APP INSTALL MARKETING BEYOND ADS

As valuable as paid app store advertising is,

most installs still result organically. In fact, April

2018 Sensor Tower data shows that 88% of game

downloads and 69% of nongame downloads on

Android in the preceding year were organic.

% of total

Android Mobile Game vs. Nongame App Install ShareWorldwide, by Source, May 2017-April 2018

Organic Third party AdWords Google search

Note: represents activity tracked by Sensor Tower, broader industry metrics may vary; via Google Play only; numbers may not add up to 100% due to rounding; *less than 1%Source: Sensor Tower as cited in company blog, June 19, 2018239490 www.eMarketer.com

Nongames69% 23% 7%

1%

Games88% 10%

2%1%*

There are two major ways developers and brands can encourage app downloads without spending money on advertising: app store optimization and referrals from owned properties and media.

APP STORE OPTIMIZATION (ASO) For developers, optimizing an app on the Google Play Store or the Apple App Store is a crucial part of ensuring installs—and it’s much cheaper than paying for ads. “If we were to give one piece of advice to marketers who are looking to increase traffic to their apps, it would be, obviously, take app store optimization seriously—and the biggest part of taking app store optimization seriously is to continue to optimize your apps regularly,” said Randy Nelson, head of mobile insights at Sensor Tower.

Key Elements of the App Page

■ App title

■ App icon

■ App subtitle (iOS) and short description (Android)

■ App description

■ Screenshots

■ Keywords field (in iOS)

■ App preview (iOS) and promo videos (Android)

■ Ratings

Optimization on Google Play and the App Store work with the same basic elements, but the algorithms differ substantially in how they weigh those elements in ranking. In the end, it’s not just about how the app ranks in the algorithms, but also how users convert once seeing it.

In Google Play, the title and the description are most important for ASO. The short description is akin to the subtitle in the App Store, but it gives developers a maximum of 80 characters, so it’s important in selling the app to consumers. But for ranking by the algorithm, the keywords within the long description play an important role.

In the App Store, keywords in the title are still important for ranking, but people scanning the site will also see the subtitle and screenshots, which means the title doesn’t have to be quite as descriptive. Developers can use only 30 characters (and 30 in the subtitle), a bit less than the 50 allowed on Android. The long description is useful for explaining the app to users, but it doesn’t play a role in ranking.

The app preview in the App Store can be 30 seconds long and is primarily useful for converting page visitors. Developers can also add 10 screenshots.

Developers need to constantly monitor their keywords and landing pages, since their effectiveness constantly changes. “It’s a holistic approach that really pays off the most when you address all of these areas,” Nelson said. “A lot of marketers in this space could really drive even more significant results with organic installs if they understood that it’s not a one-and-done strategy.”

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Ratings also play a role in optimization, albeit a smaller one than the title or the description. Nonetheless, they are important enough that developers need to monitor them, and if they’re negative, respond to them proactively in a way that addresses the complaints. “Based on our experience, anything below 4.2 in terms of ratings is something that you should be worried about,” said Enric Pedró, CMO of Lab Cave, a mobile gaming company specializing in optimization. “You have to fix the issues or try to come up with ways to actually improve these ratings.”

Google adjusted its algorithm to give more weight to recent ratings and reviews. “This change could incentivize developers to emphasize testing and debugging version updates before launching to avoid negative app store reviews,” App Annie’s Sydow said.

Google and Apple also are prioritizing apps that are efficiently designed. In much of the world, cheaper smartphones put a major constraint on the number and type of apps users can download. Both Apple and Google appear to take this into consideration when ranking apps.

Conversion Rate Optimization App store optimization increases the chances that a potential user sees the app when browsing or searching the app store. Conversion rate optimization (CRO) ensures they actually download the app once they see it. “CRO has to do with the look and feel of the icons and the screens,” Pedró said. “It’s the visual aspect of how you try to attract your customers’ eyes.”

Various elements can influence whether someone will download an app: whether it has a call to action on the screen, there’s a video, or there are emojis in the description. “There are many factors that account for how well you’re going to do in terms of CRO,” Pedró said. “The only way to really figure it out is by first doing A/B tests on as many iterations as you can. And by seeing what your competitors are doing.”

Google Play includes a tool called “Google Play experiments,” which gives developers the ability to test different icons and screens for free. On iOS, developers need to pay for a third-party tool.

Interestingly, it’s also important to localize icons, descriptions and previews by country. What works in Japan may not work well in the US.

CRO is also important for advertising. If the ad doesn’t match what the app store displays, conversion rates will fall. “You work hard to bring the user to the app experience, which is the doorstep,” Liftoff’s Ellis said. “But if they get to the landing page, which ultimately promotes and further converts their interests, if not equally thought of and thought through, you could be ruining the opportunity to convert them. So that’s one area of app store optimizing, the actual landing page, that is definitely critical.”

Above all, conversion rate optimization is about the app. If you don’t make a good app that people are interested in getting, no amount of ASO or CRO will save it. “The App Store is always very important, but the quality of the app and the purpose of the app are the main things,” said Samir Addamine, founder and chairman of FollowAnalytics, a mobile marketing automation and engagement platform.

Organic Growth via Search Engines In some verticals, Google Search plays a role in driving app installs. Sensor Tower found that 7% of App Store downloads in mid-2018 came from web referrals, mostly from search, but some verticals had much higher percentages. “Our data shows that finance, shopping, and food and drink apps see two to three times more traffic than the average from web search at 15%, 16% and 22%, respectively,” Nelson said.

Google Search does look at some of the same factors that drive ASO on the Google Play Store. “For what I know, the number of reviews, downloads and keywords used on the Google Play Store page does have an impact,” Lab Cave’s Pedró said. Backlinks (URLs pointing to the App Store page) also probably affect Google Play and Google Search rankings, although they seem not to have any effect on iOS rankings.

Pedró added that it only makes sense to pay attention to SEO in a few verticals—and even in those verticals, ASO takes precedence. “ASO-wise, the focus is within the user journey in the App Store, so it’s a nice add-on but not really a focus for most app marketers,” he said.

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PUSHING APPS FROM OWNED PROPERTIES The final way that companies encourage app installs is through their own properties, such as their websites, social media pages, stores or emails. The strategy has two big advantages: It’s free, and it offers existing customers a chance for a better experience.

“I would love to see traditional marketers completely stop buying app install ads and focus much more on product promotions or getting the user engaged with their platform on the web,” said Alex Austin, CEO and co-founder of deep-linking platform Branch. “Then, when they’re ready to be committed, when they want to become a recurrent user, then get them into the app. And it’ll make much more financial sense than trying to warm up the user from scratch to install some random app that maybe they’ve heard of before but don’t really want.”

Pushing apps from owned properties works well for companies that have multiple touchpoints with consumers. For gaming apps, which may not have a presence beyond the app, this strategy is less of an option. But for retailers, travel companies, banks and others, it can make a lot of sense. Not only does it drive the user to a better mobile customer experience, with likely higher conversions, but it brings high-value users closer to having a unified experience across channels.

Deep links are links that send users to a particular page within an app, and they play a crucial role in linking together different platforms in a seamless way. They can let users pick up an experience they were having on the web and continue it within the app. If the user already has an app downloaded, deep links can re-engage them by sending a notification or email to let them pick up where they left off in a shopping visit.

This redirection method also plays a big role in user acquisition. If the user doesn’t have the app downloaded, more sophisticated deep links will take them to the App Store or Play Store to download the app first. Once downloaded, the program will open to the intended page. This is known as a “deferred deep link.”

These links can be very effective in personalizing the initial experience with an app following an advertising-induced install. For instance, men and women might go to a different landing page after installing a shopping app specializing in fashion.

Austin sees the future of app install marketing in many verticals shifting away from ads and toward this more incremental approach, beginning with customer engagement on owned properties before they’re encouraged to move to the app. “We’ll see it in the future, but it requires a couple things to happen,” Austin said. “First you must have a marketer who is actually incentivized cross-platform on revenues, whereas we find a lot of traditional organizations are still very siloed by platforms. The other key piece is being able to measure it, which is so complex.”

APP INSTALL STRATEGIES BEYOND ANDROID AND IOS

The majority of app install strategies currently revolve

around iOS and Android apps. In the future, however,

there are other platforms and devices that may

become important as well.

There is already demand for some cross-device app installation. “For instance, if you’re CBS and have a sport viewing app, you’re not getting pre-installed on an OTT [over-the-top] device,” Austin said. “The biggest challenge they face is awareness. Somebody needs to know how to go to the store on the OTT device—which is often complex and different for every platform—and then search for the app and install it.”

Beyond OTT, smart speakers or auto systems may also offer opportunities down the line. For all of these different devices, however, the technology for linking information on one device to an install on another remains very clunky.

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APP INSTALL FRAUD

Fraudsters always follow the money, and they’ve

infiltrated the multibillion-dollar app install

advertising market in a big way. The tools to combat

fraud continue to evolve, but criminals are often one

step ahead. “It’s basically a cat and mouse game,”

AppsFlyer’s Radeke said. “The platforms, publishers

and app owners firm up their security mechanisms,

and the fraudsters move on to the next thing that

somehow works for them.”

Fraud rates vary month to month, but in general, they’re higher globally than in the US. AppsFlyer found that fraud in the US slowly increased in the half year between May and October 2018, when it hit 14.7%. Globally, the rate increased from 21.3% in May to 25.9% in October, although in a less linear fashion. More recent data from AppsFlyer indicates that global fraud rates fell to 16% in the period from November 2018 to April 2019.

% of total paid app installs

Mobile App Install Fraud Rate in the US andWorldwide, Jan-Oct 2018

Jan

8.6%

20.8%

Feb

10.8%

18.5%

Mar

10.3%

24.6%

Apr

13.5%

23.5%

May

11.2%

21.3%

June

11.6%

25.8%

July

13.8%

31.7%

Aug

13.6%

29.4%

Sep

14.0%

29.3%

Oct

14.7%

25.9%

US Worldwide

Note: represents activity tracked by AppsFlyer, broader industry metricsmay varySource: AppsFlyer, Nov 2018243153 www.eMarketer.com

In terms of overall volume, Kochava found that around 70% of clicks sent for attribution processing were flagged for possible fraud. According to Richardson, the majority of those were click flooding.

Interceptd, maker of an ad fraud prevention tool, found that fraudulent installs were slightly higher on Android than on iOS. In 2018, 27% of Android installs were fraudulent, compared with 21% of iOS installs.

% of total app installs

Mobile App Install Fraud Share Worldwide, Androidvs. iOS, 2018

Note: represents activity tracked by Interceptd, broader industry metricsmay varySource: Interceptd, "Mobile Ad Fraud Report," Feb 2019245462 www.eMarketer.com

iOS Android

Clean installs79%

Fraudulentinstalls

21%

Clean installs73%

Fraudulentinstalls

27%

Not all verticals face the same level of fraud, AppsFlyer reported. Gaming has years of experience fighting fraud. And as a result, game-makers have developed or bought the antifraud tools. Consequently, only 2.5% of game app installs were fraudulent in February 2019. Finance, retailers, travel apps and utilities, on the other, had much higher levels of fraud.

% of total paid app installs

Mobile App Install Fraud Rate Worldwide, by AppCategory, Feb 2019

Finance 48.2%

Travel 33.7%

Shopping 32.9%

Utilities 16.1%

Gaming2.5%

Note: represents activity tracked by AppsFlyer, broader industry metricsmay varySource: AppsFlyer, June 2019248069 www.eMarketer.com

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Major Types of Fraud:

App install fraud comes in a number of varieties:

■ Device farms: A large number of real devices constantly load apps. Installs look real because they come from real devices.

■ Click injection: When a mobile user is about to download a new app from an app store, code running in the background of a previously downloaded app detects the activity and “injects” a fraudulent ad click to take credit for the download.

■ Bot/emulator: False signals sent from networks or malware that imitate downloads and even in-app actions.

■ Click flooding: Networks send a “flood” of fake clicks in order to up the odds of getting credit as the last click.

■ SDK spoofing: Code on an installed app sends false signals of ad clicks and downloads of another app. (Really a subset of bot fraud.)

App install fraud constantly changes as fraudsters try to stay ahead of developers and fraud prevention tools. For instance, Interceptd published fraud types by quarter in 2018. Device farms gradually accounted for a smaller share of fraud, while bots increased in share.

% of total fraudulent app installs

Mobile App Install Fraud Share Worldwide, by Type,Q1-Q4 2018

Q1 201838% 21% 11% 10% 9% 6% 5%

Q2 201833% 22% 12% 13% 7% 9% 4%

Q3 201828% 21% 9% 16% 10% 11% 5%

Q4 201825% 20% 9% 18% 8% 13% 7%

Device farmIncent abuseClick spamming

Bot/emulatorClick injectionSDK spoofing

Other

Note: represents activity tracked by Interceptd, broader industry metricsmay varySource: Interceptd, "Mobile Ad Fraud Report," Feb 2019245461 www.eMarketer.com

AppsFlyer saw a big jump in bots as well, but this changed suddenly in December 2018, when device farms again supplied the bulk of fraud. Even so, bots remain the most sophisticated challenge for fraud prevention. “Now you see these bots browsing the app, adding items to a cart, and even making real purchases with real money just to appear more natural,” Radeke said.

Although prevention tools can combat a variety of fraud, fraudsters will test sites to see which don’t have proper protection. “If they find out that app A is protected by a fraud prevention suite, they don’t give up and go home, because they just wanted to defraud that app,” Adjust’s Paxman said. “They’ll move to the next app. So, yes, we rejected 300 million installs, but that does not mean the number of fraudsters on the whole went down by 300 million. It just means that 300 million failed.”

% of total fraudulent app installs

Mobile App Install Fraud Share Worldwide, by Type,2018

Click injection47.7%

Click spam25.6%

SDK spoofing17.3%

Fake installs9.4%

Note: represents activity on Adjust's platform, broader industry metricsmay varySource: Adjust, "Global App Trends 2019," May 14, 2019247432 www.eMarketer.com

“I don’t think mobile app fraud will ever go away, but now we’re in a position where we have enough knowledge; there are tools and knowledge to help seriously combat it,” Vungle’s Santillano said.

KEY TAKEAWAYS ■ Although the consumer demand for apps is rising, the supply of apps is increasing even more quickly. App install marketing is gaining importance as more apps—coming from more verticals—are fighting for a relatively fixed set of users in the developed world. As a result, the amount of money flowing into app install advertising is growing quickly.

■ App install advertising is getting more sophisticated. Developers are more likely than they were a couple of years ago to track post-install actions and develop marketing plans based on ROAS. They’re also becoming smarter about targeting and attribution.

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■ App store optimization remains very important.Although search ads within the app stores have helpeddevelopers, optimizing app listings in app storesremains a cheap and effective way to get potentialusers to see an app. This approach also addressesconversion rate optimization—making sure that peoplewho see an app in the store decide to download anduse it.

■ App install fraud continues to a be a problem.Many companies offer ways to mitigate the threat ofapp install fraud, but fraudsters continue to innovate.Companies can’t avoid the need to protect themselves.

EMARKETER INTERVIEWS

Samir Addamine Founder and Chairman

FollowAnalytics Interviewed June 3, 2019

Pepe Agell Chief Strategy Officer

Chartboost Interviewed May 17, 2019

Harry Antonio Director of Customer Success

Nanigans Interviewed May 23, 2019

Alex Austin CEO and Co-Founder

Branch Interviewed May 28, 2019

Sarah Chafer Senior Vice President, Global Performance

Tapjoy Interviewed May 21, 2019

Stan Coignard Americas CEO, Co-Founder

S4M Interviewed April 17, 2019

Chris Costello Senior Director, Marketing Research

Kenshoo Interviewed May 23, 2019

Mark Ellis CEO

Liftoff Interviewed May 28, 2019

Vikas GulatiHead of Global Performance

AdColony Interviewed June 7, 2019

Peter Hamilton CEO

Tune Interviewed May 21, 2019

Srinivas KC Vice President and General Manager

InMobi Interviewed June 7, 2019

Jay Klauminzer CEO

Raise Interviewed May 30, 2019

Chris Maddern Chief Product Officer

Button Interviewed June 4, 2019

Randy Nelson Head of Mobile Insights

Sensor Tower Interviewed May 23, 2019

Michael Paxman Product Communications Lead

Adjust Interviewed May 21, 2019

Enric Pedró CMO

Lab Cave Interviewed May 20, 2019

Jasper Radeke Senior Director, Marketing

AppsFlyer Interviewed May 24, 2019

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Jeffrey Richardson Product Marketing Manager

Kochava Interviewed June 3, 2019

Jason Santillano Director, Marketing

Vungle Interviewed May 30, 2019

Lexi Sydow Senior Market Insights Manager

App Annie Interviewed June 28, 2019

Jill Abbott Head of Consumer and Athlete Engagement

Gatorade Interviewed June 14, 2019

Stephen Mello Vice President, Strategy

Localytics Interviewed May 23, 2019

Caleb Yarian Associate Partner, Strategy

Work & Co Interviewed June 14, 2019

EDITORIAL AND PRODUCTION CONTRIBUTORS

Anam Baig Senior Editor Joanne DiCamillo Senior Production Artist Donte Gibson Chart Editor Katie Hamblin Chart Editorial ManagerDana Hill Director of ProductionErika Huber Copy EditorAnn Marie Kerwin Executive Editor, Content StrategyStephanie Meyer Senior Production ArtistHeather Price Deputy EditorMagenta Ranero Senior Chart EditorAmanda Silvestri Senior Copy Editor

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