App market saturation and the rise of app install fraud means that advertisers must make customer lifetime value (LTV) the most important metric to measure and act on.
This finding is part of a joint report by AppsFlyer and Facebook that looks at the maturity of the market and the apps in it, providing insights into why marketers need to prioritize the LTV metric, and how they can and should re-engage their users instead of doing what apps have typically done — focus on app download numbers.
"The most sophisticated app marketers are integrating LTV as a key indicator of sustainable and profitable growth," said Bryan Wang, head of marketing science at Facebook. "By measuring LTV — and taking actions based on those insights — they are giving themselves a clear competitive advantage over those who are only looking at CPI."
The report derived its conclusions by analyzing 250 million non-organic app installs on iOS and Android for shopping, gaming and travel verticals. To measure the value of focusing on LTV, the report analyzed 3,800 apps that generated $2.4 billion in Q1 2018, serving seven markets: Brazil, China, Indonesia, India, Russia, the UK and the US.
The study by AppsFlyer and Facebook recommends that advertisers and agencies should maximize the potential of multiple revenue streams such as in-app purchases (IAP), in-app advertising (IAA), paid-for apps and subscriptions.
It also included common recommendations for app marketers across the gaming, travel, and shopping verticals, notably that industry benchmarks must be kept in mind when deciding when to re-engage existing users for monetization purposes. This varies with the vertical, platform and user intent.
Across all three verticals, China's customer LTV data was categorized between developing and emerging around the vertical benchmarks, "representing an exciting opportunity with increased revenue, a high rate of paying users and a massive audience."
With the vast majority of the app ecosystem dominated by the freemium model, app publishers must focus heavily on post-install revenue optimization.
"To maximize revenue among the few users who actually become paying customers, revenue events should be measured granularly and connected to attribution data," the report concluded. "This helps pinpoint which channels, networks, campaigns, ad groups, and even creatives delivered revenue-producing users and which did not."
Measuring customer LTV means that advertisers and agencies can identify, engage and re-engage the audiences that make apps profitable and ensure growth.
An earlier study by AppsFlyer found that mobile app marketers were exposed to over $700 million in ad fraud relating to app installs. In another study, device ID resets were found to cost advertisers over a billion dollars annually due to click injections and app spoofing.
These are among the ecosystem problems which can hurt the viability and lifetime of apps, with complications in the acquisition side of marketing meaning that a different approach is required to ensure relevance.
"Maximizing the value of non-organic installs is key as they become increasingly important," states the report. "With the right data in hand, marketers can make the right decisions to ensure this goal is
This is especially relevant in a time of General Data Protection Regulation (GDPR), where companies face more privacy barriers in obtaining consumer data for marketing around customer acquisition and app installs. While companies are ensuring that they comply with GDPR laws, it might be more prudent for them to work with data they already have for now.