According to Statista, worldwide mobile app revenues will reach nearly $200 billion in 2020—more than double the revenue in 2016. TechCrunch reports that in 2017, there were 175 billion global app downloads and more than $86 billion in consumer spend. They also cited that smartphone users spent 7x more time in mobile apps than on the mobile web, and our own data showed that in North America, the conversion rate on shopping apps is more than three times higher than on mobile web.
That’s a lot of statistics to say one thing: apps are how people want to shop. But it’s not enough to invest in developing an app and getting installs. To see real ROI, you need ongoing app advertising. It’s worth it: our data showed a 30% year-over-year increase in the share of in-app transactions for retailers who promoted their app. And online-only retailers who promote their app see one third of transactions come from the in-app purchase channel.
Let’s take a closer look at the why, what, and how of app advertising.
App usage and the “7 day slump”
It’s clear from the stats and the anticipated growth over the short term that shopping apps are a very good investment. But simply launching an app isn’t going to instantly translate into big returns. The “7 day slump” is why.
Studies show that only 11% of app users remain active 7 days after install—that means 89% stop using the app after a week. A Localytics study showed that about 1 in 4 will abandon an app after just one use.
Localytics data also showed that retention rates varied slightly by industry, but by month 3 across all verticals, 80% were not using the apps they downloaded.
Boost retention with app advertising
Though the retention numbers can look discouraging, they simply highlight the need for more communication with users to bring them back and keep them active. Our data showed that retailers that commit to an ongoing app promotion strategy are the ones that see the biggest in-app transaction growth.
One of the smartest ways to keep the momentum going is with app advertising, where targeted display ads reach app users wherever they are and drive them back to your app. There are different types of app advertising, including retargeting and engagement. Here’s how each works:
Say Bill is looking for a watch in your app but decides he isn’t ready to purchase just yet. As he browses, his intent data is captured, and after he leaves to visit another app, he sees an ad for the watch he was looking at, as well as some related products. He clicks the ad and is taken directly to the product page within your app to complete his purchase.
Retargeting is a highly effective way to keep users active after that initial app use. And once you’ve hooked them, shoppers are 30% more likely to return and shop within the app without further encouragement.
App engagement campaigns allow you to target specific CRM or MMP audiences to re-engage lapsed shoppers. Similar to retargeting, these campaigns deliver dynamic display ads based on shopper data to entice them to come back to the app and convert.
Engagement campaigns can be used in a variety of ways, including to activate audiences that installed your app but never completed a purchase, to encourage users to re-install your app, to promote seasonal campaigns, and to re-engage app shoppers that haven’t bought anything for a certain period of time. For example, you could target a group of customers that haven’t made in purchase in the last 60 days with a coupon, or a special offer for a new product.
It’s a tactic that’s not to be ignored. According to a Google survey, 30% of app users said they would use an app again if they received a discount. Other incentives like offering exclusive content were also effective.
How to maximize app advertising performance
Not all app advertising campaigns are created equal. Here’s a checklist of capabilities you’ll want to make sure your app advertising partner can provide:
- Dynamic ads based on real-time individual purchase intent. Ads that only show the last product viewed or best-selling products are missed opportunities for marketers to engage individuals through other catalog items they are more interested in.
- Cross-device matching. A strong understanding of user behavior and purchase intent across devices and beyond walled gardens is crucial to delivering a cohesive and relevant experience. Inaccurate or limited cross-device matching can lead to wasted spend and ineffective ads.
- Broad reach. What’s the size of the network? How many apps could your ads appear on and across what exchanges? Obviously, the larger the scale, the more opportunities you have to connect with your audience.
- Dynamic creative optimization. Limited ad options in terms of size and creative can negatively impact performance. Personalized ads with a combination of visual elements tailored to engage each shopper will maximize engagement.
- Predictive targeting. Targeting by manually defined audience segments and app categories means you can miss opportunities to target valuable users because they didn’t happen to fit into any pre-defined audience segment. Look for a solution that allows you to target by individual behavior and purchase intent so that every high value user sees an ad.
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