App Marketing: The Next Critical Step in Mobile ROI

sumall_origami_ecommerce_dollar_shirt_businessIn the past few years, marketers have been diligently converting to mobile-optimized sites, with dedicated mobile sites or, more commonly, through responsive design. But many brands are missing out on mobile revenue by not having a native app. Native apps command 86% of U.S. consumers’ mobile time, six times more than the mobile web does. The real progression in mobile behavior is toward apps, which means that’s where the money is.

App revenue is growing, proving that investing in how your consumers actually use mobile is a lucrative opportunity. Still, one of the biggest mistakes brands make in rolling out their app is assuming that the best way to monetize is to launch as a pay-to-download app.

Traditional mobile monetization strategies are no longer able to generate real ROI. When it comes to the future of mobile revenue, it’s clear that the fastest growing segments are those fueled by app marketing. This doesn’t refer to a marketing strategy that drives users to download an app, but rather, the marketing campaigns you run to engage, retain, and convert current app users. In this post, we review where mobile app revenue is trending, where the real opportunities are, and how to use app marketing as the next step in boosting ROI.


The State of App ROI

Fewer and fewer brands are launching paid-for apps. Unless you have extensive brand recognition and trust, launching a paid app probably won’t pay off. Today, there are a multitude of unpaid alternatives to your app. And while these apps tend to be of lower quality, when faced with options, a user is more likely to choose a free model.

So the number of paid apps on the market is plateauing as brands turn to other revenue models. When you look at overall mobile revenue, non-app store revenue is substantially greater than app store revenue. App stores are no longer the primary source for monetization; what’s become clear is that engagement and loyalty drives profit. In this funnel, the app store is at the very top, making it the least likely place to generate substantial revenue.

non app store revenue

Source: Gartner, Sept 2013, eMarketer, Sept 2012 & Sept 2013


The Future of App Revenue

The largest mobile growth area is now mCommerce. Consumers are becoming more accustomed to buying on the go, and often research and purchase via mobile devices. Because of the ease of mobile app purchasing, and the number of eCommerce businesses that have invested in apps, mCommerce is set to take off in the next few years. Success in mCommerce is reliant on similar marketing factors as eCommerce success. An mCommerce app is still a virtual version of your store, and needs targeted campaigns and marketing techniques to improve revenue. These are the tactics evolving and driving this revenue bucket.

mcommerce revenue

Source: eMarketer, September 2012, September 2013


Similarly, proximity payments made through digital wallets such as Google Wallet are rising in popularity. Mobile usage is now more common at brick-and-mortar stores because of loyalty programs, mobile rewards cards, and other easily accessible offers. Starbucks, for example, has a popular mobile app that many customers use for purchasing on a daily basis, making mobile revenue a growing portion of their profits.


Optimize for Better ROI with App Marketing

So, what does this mean? It means that in order to recognize a real return on your mobile investment, you have to invest in non app-store revenue channels by utilizing optimized marketing campaigns.

App marketing effectively uses communication based on behavior to drive loyalty and retention. In running app marketing campaigns like in-app messaging, push notifications, and A/B testing, you can use your app analytics to segment users for targeted promotions, boosting return and efficacy.

When it comes to the growing sector of mCommerce revenue, app marketing is just as crucial to the conversion process as digital marketing is to boosting web revenue. Think of it this way: if you’re conducting email marketing with sale offers to drive web purchases, it only makes sense to also run push or in-app messaging campaigns to drive mobile purchases. Mobile represents the next level of targeted, personalized marketing, and is even more important to optimize when you consider the growth trends around usage and revenue.

Here are the tools you should be using to drive app marketing:

  • Acquisition management allows you to track the acquisition of users from paid efforts, and, more importantly, allows you to measure the ROI of campaigns and user segments by lifetime value (LTV). LTV is a critical part of measuring ROI, as it allows you to track how much a user is worth over his or her lifetime, and isn’t identified based on vanity metrics like downloads.

    Getting started: Learn more about acquisition in our post on 5 ways to improve your app acquisition strategy.

  • In-app and push messaging are notifications sent to your app users while they are currently in the app or if they are outside of the app, respectively. The messages are typically meant to convert the user on an action, such as taking a survey or using a mobile coupon. These campaigns can be highly targeted and personalized to the user segment, allowing you to create campaigns with a better return.

    Getting started: Get the details on push vs. in-app messaging, when to use each, and sample campaigns here.

  • A/B testing is just as important to running mobile app campaigns as it is to determining what converts best on your website. Until recently, app A/B testing has been difficult to do, requiring app store re-submissions. Now, with the right platform, you can run A/B tests easily to test and measure, to identify bottlenecks, reduce friction, and increase conversions.

    Getting started: Download our eBook on the subject: The Ultimate Guide to Mobile App A/B Testing.

With the right app analytics and marketing platform, you can see significant returns on your mobile investment.

Download the Beginner's Guide to App Analytics by Localytics