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Fiksu, a mobile app marketing company, released data today pointing to the increasing cost of acquiring a loyal customer on mobile app stores. The data highlights two trends:

  1. Developer demand for new users is outstripping 100+% y/y iOS user base growth.
  2. The mobile cost-per-install market is becoming more efficient and the iOS app store is less startup friendly.

New distribution platforms require creating different ways of thinking about customer acquisition. For example, the mobile app store’s chart metaphor incentivizes concentrated, short bursts of ad spend that drive apps to the top of the charts where they gather 3 to 6 additional free installs having only paid for one install. On the other hand, sustained spend succeeds on Google Search. The first company to figure this out reaps two benefits: (1) lots of early users (2) low user acquisition costs – likely the lowest cost ever seen on that platform.

When building on a platform, it’s critical to be early. For example, early on, Zynga mastered customer acquisition on Facebook and acquired users less expensively than its competitors. Today, they have the largest user base on Facebook. In addition, Zynga has the largest and most accurate dataset of Facebook marketing data – a huge advantage that helps them spend their marketing dollars more effectively than their competitors.

The same is now starting to be true for mobile applications and in particular, mobile gaming. New startups aren’t afforded the same first mover advantages in the iOS store as they were 18 to 24 months ago. Instead, it’s a battle of marketing dollars. With less data and smaller coffers, mature distribution platforms present more obstacles to success for startups than nascent platforms.

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