eMarketer webinar: Mobile App Marketing—Acquiring and Retaining Quality Users at Scale

3. © 2016 eMarketer Inc. Why talk about app marketing now? 175% The percentage increase in iOS nonorganic installs across shopping apps (Oct vs. Sept 2016) 144% The percentage increase in Android nonorganic installs across shopping apps (Oct vs. Sept 2016) Source: AppsFlyer, September 2016 App marketers swing into high gear in Q4 Shopping apps:  High install rates in October and November pay off in in-apps sales on Thanksgiving, Black Friday and Cyber Monday. Gaming apps:  In-app purchase revenues spike around Halloween, Thanksgiving and Christmas.

6. © 2016 eMarketer Inc. An app might attract a crowd of new users, but most fail at keeping new users interested and engaged for long Source: Localytics, April 2016 23% of mobile app users worldwide gave up after using an app just once

7. © 2016 eMarketer Inc. Most new users disappear 24 hours after an app is first used iOS users: Only 24% to 29% of those who installed an app used it again within 24 hours of their first app session Android users: 27% to 40% returned to the app within 1 day Source: adjust, Q1 2016

8. © 2016 eMarketer Inc. A small sliver of new app users returned 30 days after their first app session 3.6% 4.7% 5.1% 5.3% 5.5% 5.6% 5.9% 6.1% 6.5% 6.9% 7.0% Books & Magaze Lifestyle Hobbies eCommerce Entertainment Travel & Transport Finance & Business Games Social & Comm. Utilities Education 30-Day Retention Rate for Android Apps Worldwide, By Category, Q1 2016 4.4% 4.5% 5.1% 5.1% 5.2% 5.2% 5.5% 5.8% 5.9% 6.0% 6.9% Books & Magazine Games Food & Drink Entertainment Lifestyle Utilities Hobbies Social & Comm. Travel & Transport Education Finance & Business 30-Day Retention Rate for iOS Apps Worldwide, By Category, Q1 2016 Source: adjust, Q1 2016 Android iOS

9. © 2016 eMarketer Inc. The trouble is the supply of apps is outpacing demand for them among consumers 33% Source: Apple, June 2016 The percentage increase in apps available in Apple’s app store in 2016 16% Source: eMarketer, March 2016 The percentage increase in smartphone and table users worldwide in 2015 8% The percentage increase in the number of downloads in Q1 2016 vs Q1 2015 Source: Sensor Tower, Q1 2015 vs. Q1 2016

13. © 2016 eMarketer Inc. App marketing budgets are getting bigger 89% Source: AdColony, Q3 2016 of marketers worldwide said they were spending more on app marketing this year compared to last year Source: AdColony, Q3 2016 According to eMarketer’s research, three factors are fueling increased spending: 1. Increased competition in the leading app stores. 2. More app-specific ad formats. 3. Better targeting capabilities, which allow advertisers to find and serve ads to those who look like the app’s most valuable users.

17. © 2016 eMarketer Inc. Mobile social app install ads received top scores for effectiveness A-  The qualities that attract most advertisers to social platforms—highly engaged users, enhanced audience targeting capabilities and substantial reach—also draw app advertisers to these platforms.  Facebook was the star performer among those assigning grades, while Twitter’s Audience Network proved particularly effective for some. Source: eMarketer, August 2016 Effectiveness Score for Mobile Social App Install Ads:

18. © 2016 eMarketer Inc. Video’s appeal varied among the app advertisers consulted B Effectiveness Score for Mobile Video App Install Ads:  Game app advertisers sang the praises of video ads, while those in the shopping and food categories weren’t yet sold on the ad format.  The latter group saw the potential of video, but most were still at the experimental stage. Source: eMarketer, August 2016

19. © 2016 eMarketer Inc. Rewarded video is particularly effective at attracting quality users at scale “You get almost a 100% completion rate and engaged viewers. People are happy to watch the ad because they get a reward in the end.” —Jarkko Rajamäki, Director, Unity Technologies “There is strong demand for rewarded video that is scalable. A lot of ad networks and publishers are shifting their rewarded-video solutions to programmatic.” —Beth Gilmore, Head of Global Demand, Twitter’s MoPub

20. © 2016 eMarketer Inc. The appeal of search advertising is growing among app marketers A majority of app marketers said they planned to increase spending on paid search (including app store search).

21. © 2016 eMarketer Inc. There are pros and cons with browser-based mobile search advertising B  The upsides: The intent-based nature of the channel attracts higher quality users, and the opportunity to deploy targeted campaigns at scale is powerful.  The downsides: The divide between the web and app channels makes installs harder to track; and for some, the users acquired were less likely to make in-app purchases. Source: eMarketer, August 2016 Effectiveness Score for Browser-Based Search App Install Ads:

22. © 2016 eMarketer Inc. App store search ads have yet to prove themselves in terms of effectiveness C  This low score is a reflection of the nascent stage of app store search.  Criticisms centered mostly around the limited scale of the ad type and advantages established brands have over lesser-known apps due to keyword targeting.  Conversely, the relevancy of the ad to the intent of the users and the context of the search results were hailed as the biggest benefits. Source: eMarketer, August 2016 Effectiveness Score for App Store Search App Install Ads:

23. © 2016 eMarketer Inc. 10 media sources outperformed all others for efficiently generating a high volume of quality users But the mix of companies in the top 10 varied by operating system and by gaming vs. nongaming app advertisers.

24. © 2016 eMarketer Inc. App marketers invest in more than just mobile ads Traditional media is one area of focus 25% of app marketers worldwide used television 9% of app marketers worldwide used radio and print Source: AdColony, Q3 2016

25. © 2016 eMarketer Inc. Television advertising is the domain of deep-pocketed app developers C-  Most are looking to extend their reach beyond mobile app advertising.  Primarily goal is to raise brand awareness among a broader audience.  The high price tag and difficulties in directly attributing installs to TV ads were the primary reasons the channel received poor marks. Source: eMarketer, August 2016 Effectiveness Score for Television App Install Ads:

26. © 2016 eMarketer Inc. Radio ads were ineffective except when used with a time-sensitive message or offer D Radio performed poorly for most of those that had used it. “We use digital radio in the peak shopping season. It’s a broad-reach vehicle and is something we can execute, target and put out locally or nationally pretty quickly.” —Marissa Tarleton, CMO, RetailMeNot Source: eMarketer, August 2016 Effectiveness Score for Radio App Install Ads:

27. © 2016 eMarketer Inc. Print promotions only make sense if there is little to no cost involved D Newspapers, magazines, direct mail, etc., were not viable channels for generating app installs. “If a newspaper ad is for the newspaper’s own app, then the cost to run that ad would be the ‘opportunity cost’ of other content on that page.” —Daniel Kahtan, Director, Market Development, AppsFlyer Source: eMarketer, August 2016 Effectiveness Score for Print App Install Ads:

28. © 2016 eMarketer Inc. Email, content marketing and influencer marketing are growing in importance 20% of app marketers worldwide expect to spend more on email promotions* Source: Apsalar, Aug 2016 42% of app marketers worldwide expect to spend more on influencer marketing* 29% .of app marketers worldwide expect to spend more on content marketing* * in the next 12 months

29. © 2016 eMarketer Inc. Game developers tapped influencers first, but more app marketers are employing ‘celebs’ “In the gaming space, they’re leveraging YouTube and social media influencers. And they apply traditional performance metrics in those influencer channels.” —Jarkko Rajamäki, Director, Unity Technologies “Most of our advertisers work with social influencers. They go through a third party because it’s just a bit of a hassle to work directly with a big YouTuber or an Instagrammer.” —Maor Sadra, Managing Director and CRO, Applift

30. © 2016 eMarketer Inc. The magic in acquiring and retaining quality app users comes from the mix of media used “Combined together, the channels elevate each other’s performance.” —Marissa Tarleton, CMO, RetailMeNot

33. © 2016 eMarketer Inc. The importance of install rates and clickthrough rates is declining Successful app advertisers “have become increasingly more sophisticated, and they don’t really care as much about the install anymore.” —Jehan Damji, Product Manager, Facebook One reason: Measuring clicks and downloads alone can steer marketers’ attention away from sources that are attracting a healthy volume of quality users.

34. © 2016 eMarketer Inc. A second reason: The future of the install itself is being called into question In May 2016, Google introduced Android Instant Apps, a means for apps to run on a device without requiring installation. “Android Instant Apps will allow a user to test drive an app without actually installing it, which means the ‘install’ will become even more irrelevant as a metric.” —Jenny Crosby, Group Marketing Manager, Intuit’s TurboTax brand

35. © 2016 eMarketer Inc. Retention, lifetime value (LTV) and return on ad spend (ROAS) have taken center stage “ROAS is emerging as the key metric to measure campaign performance.” —Arun Pattabhiraman, Vice President and Global Head of Marketing, inMobi  Marketers assign a value to in-app actions, and by tracking the actions taken by new users, projections are made about the potential LTV of that user  Such LTV calculations enable advertisers to project ROAS

37. © 2016 eMarketer Inc. There are a handful of reasons why valuable users force acquisition costs higher  Precision targeting tools are used more frequently  Greater competition for high-value audience segments  Increased use of more immersive—and costly—ad units

38. © 2016 eMarketer Inc. The number of marketers making decisions about future media buys based on cost measures alone is declining “It doesn’t matter how much you’re spending to acquire new users if you’re making a positive return on those users.” —John Koetsier, Mobile Economist, Tune Increasingly, the value of a media source is measured by weighing the volume of quality users acquired against the cost of acquiring those users.

39. © 2016 eMarketer Inc. To sum up…  Mobile app install advertisers face significant challenges—intense competition and declining user retention rates are chief among them.  Now is the time to ramp up app install marketing efforts because payoffs typically come over the holiday period.  Paid advertising is effective for attracting quality users at scale, especially mobile video, social and search ads.  Email, content marketing and influencer marketing are three other channels app advertisers plan to invest in more heavily.  To succeed, app advertisers are building multichannel user acquisition campaigns with retention in mind (LTV and ROAS).

40. Josh Todd CMO

41. © 2016 eMarketer Inc. Learn more about digital marketing with an eMarketer corporate subscription Around 200 eMarketer reports are published each year. Here are some recent reports you may be interested in: Q&A Session Made possible by You will receive an email tomorrow with a link to view the deck and webinar recording. To learn more: www.emarketer.com/products 800-405-0844 or webinars@emarketer.com Cathy Boyle Mobile App Marketing: Acquiring and Retaining Quality Users at Scale  US App Install Ad Spending Will Near $6 Billion in 2016  Snapchat Advertising: A Roadmap for US Brand Marketers and Digital Agency Executives  Digital Ad Pricing StatPack: CPMs and Pricing Trends for Display, Video and Social Ads Served Worldwide  US Mobile StatPack: An Atlas of eMarketer Forecasts to Keep at Your Fingertips All Year Long

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