Mobile app downloads fell by 30 percent, or 2 million downloads, in March, returning to pre-iPhone 4S launch levels. The cost of acquiring a loyal user (one who opens an app three times) fell slightly from $1.31 per user in February to $1.30 per user in March. That is a surprise since new market entrants such as Japan’s Gree were believed to have spent heavily (a force that could driving marketing costs up) during March, where Gree revealed its first U.S.-made apps.
Fiksu concludes that new hardware sales has driven application downloads of late, in particular the release of the 4S. I believe content drives hardware purchases and this recent decline is caused by additional factors. I suspect there are fewer new “must have” applications and the proclivity to download 5 applications per month is waning. But these are just conjecture.
Initially, I was surprised to learn the decrease in downloads predates Apple’s new policy of rejecting apps that use UDID. I suspect April will suffer a further decline as cost-per-download advertising budgets decrease until an accurate enough surrogate can be broadly adopted, perhaps OpenUDID. CPI rates should also fall because advertisers can’t measure effectiveness as well as before and will be less likely to spend large amounts of money without accurate measurement. MoPub forecasts this decline to be 25%.