8 App Marketing Predictions for 2017

1Copyright © 2016 All rights reserved worldwide. | www.apsalar.com
App Marketing
Predictions for 2017
By Jim Nichols
VP-Marketing, Apsalar

• Advertising spend continued to rocket upward as the great app
“land grab” continued.
• App sectors like retail, travel and on-demand services gained
real share in both downloads and media spending versus the
long-dominant gaming category.
• “Brick and click” retail giants in North America and the EU
responded to the growth of pure play retail apps by investing
big in their own applications, and in acquisitions.
• In the developing world, install spending growth slowed as VCs
and other investors demanded that their app businesses start
making more money.
Many marketers saw their KPIs shift from a focus on raw install
counts to app revenue. Plus, install fraud and other forms of app
fraud became front burner issues across the industry.
While no one can predict everything that will happen next year,
the following list of predictions stand a good chance of coming
true during the next 12 months.
Post-Install Advertising
Will Capture More than
20% of App Industry
Marketing Budgets
While the app space has grown at a remarkable pace, our
industry still suffers from a massive user retention problem.
The average app loses the vast majority of its users in just a
few weeks. In fact, a typical app that acquires 100 installs on
day one can expect to have only 5 DAUs by day 90,
according to our analysis. (See chart on the next page.)
95% customer loss is a tragedy. What business can survive
and thrive on 5% retention?
1
INTRODUCTION
It’s that time of year. Time to look back at how app marketing
changed in 2016, and look ahead to what the future will hold.
App marketing has changed in so many ways over the past 12
months. Some highlights:

Fortunately, brands are learning that post-install engagement
advertising strongly increases user engagement. Across our
footprint, which is composed primarily of enterprise-sized app
businesses, the percentage of paid marketing events focused
on re-engagement has skyrocketed in just the past two years.
See chart in the next column.
$1.76 $35.20
CPI RETAINED
USER
By Day 90, 95% of Installers Have Been Lost Remarketing as a Share of Paid Events
(across in the Apsalar footprint)
Source: Apsalar Source: Apsalar
Q1 2015 Q4 2015Q2 2015 Q2 2016Q1 2016Q3 2015 Q3 2016
16%
14%
12%
10%
8%
6%
4%
2%
0%
1%
2%
3%
6%
8%
12%
14%
Post-install marketing's share of total paid events across ALL apps is likely lower, as
the largest category players tend innovate more quickly than do smaller app
publishers. But in a recent survey we conducted among mobile app marketers around
the world, 58% said that they had tested or implemented re-engagement marketing,
and another 28% said they would in the next year. (See chart on next page.)

Nevertheless, indications are that remarketing and re-engagement
will account for about 20% of total category media investments
by the end of 2017.
Investments across the industry were fairly modest in 2016, as
you can see in the following chart:
Brands with Large, Established
Install Bases Will Radically
Increase Their Post-Install
Marketing Spending
Related to the prediction above, we expect that large app brands – ones
with large install bases already in place - will funnel a far larger percentage
of their ad spend into post-install marketing by the end of 2017. Most such
businesses have already made huge investments in driving installs, but now
their plan objectives will emphasize revenue rather than vanity metrics.
Those brands will focus on retaining and monetizing users in a more robust
set of ways. Specifically, enterprise app marketers will implement post-
install re-engagement programs for:
• New user activation:
Advertising to get new installers to relaunch the app
• Converting cart abandons:
Delivering ads to bring users back to buy
• Driving reinstalls:
Getting people who have uninstalled an app to download it
again
• Reactivating lapsed users:
Driving people who have not launched an app in n days to return
• Cross-sell/upsell:
Stimulating incremental purchases from existing customers
Re-engagement ads work so well in part because they can reach everyone,
not just those that opt-in to CRM programs. Expect big brands to rely on
them as a primary tool to drive rich consumer engagement, transactions
and revenue.
Source: Apsalar
2
“Do you field re-engagement or
retargeting campaigns for apps? “
70%
60%
50%
40%
30%
20%
10%
0%
58%
Yes
28%
No But Plan to in
Next 12 Months
5%
No and No Plans to
9%
Don’t Know
3%
1%
1%
13%
23%
31%
28%
51-100%
31-50%
21-30%
11-20%
6-10%
0-5%
Don’t Know
0% 5% 10% 15% 20% 25% 30% 35%
“About what percentage of your total app marketing
budget is allocated to re-engagement/retargeting?”
Source: Apsalar

Lots More Companies Will
Deploy Mobile Marketing
Automation Platforms3 The automation sector has increased penetration in 2016, and we expect
that trend to continue in 2017. That's because messaging to your existing
installs and app users can help drive big boosts in engagement.
Mobile automation can really help with the app user retention crisis we
discussed in (1) above – at least among those users that opt-in to receive
emails and push messages. Data from Localytics show that use of push
messages results in 171% more app launches than when users don’t receive
push messages. And over time, delivering push messages results in about
240% higher app retention rates over time.
Any big brand that expects to drive revenue and cultivate long-term
relationships will be getting on the automation bandwagon in 2017 - if they
haven’t already.
Our recent survey of app marketers revealed that 23% of marketers
expected to add an automation platform in the next 12 months. That
represents 62% growth over 2016 penetration in our sample.
Opt-In Rates for Push
Notifications Will Drop as
Marketers Relentlessly
Over-Message to Drive Re-
Engagement
So here’s the flip side of our last prediction. More brands are
going to be delivering more marketing messages to users.
Some will do so prudently, with appropriate content and
cadence. But many others will press the push notification
“on button” too often, or deliver content that feels spammy.
In 2017, we predict that the rise in unwelcome push and email
activity will frustrate consumers. As a result, opt-in rates will
show significant declines. Over the past several years, average
opt-in rates have been in a slow but steady fall, and we expect
this trend to accelerate.
With lower opt-in rates, savvy marketers will definitely need to
pursue a COMBINATION of CRM and re-engagement
advertising to engage all app users and customers.
4

Marketers Will Start to Spend Big on
App Retention/Rewards Programs
We’ve already discussed using ads and CRM to improve retention. But in 2017, we
predict that many more marketers will incorporate tangible reward programs into
their apps, so they can retain and monetize more users.
A number of startups are focused on empowering app marketers to reward app
usage, and we expect more and more major apps to incorporate these tactics into
their core app experiences.
Rewards for engagement and retention come in a number of forms. Here are a few
examples:
• App-only discounts and offers that are only visible/available at launch.
• Escalating rewards and discounts for more frequent app launches and usage.
• Hyper-location-based rewards revealed as users shop store aisles.
Media Consolidation Will Continue at a
Fast Clip. Top 20 Media Partners Will
Capture 80+% of Total Category Dollars
The app media market is very fragmented. Apsalar, for example, has more than
1,000 integrations with a broad range of app markering vendors, from the top
social and search communities to niche mobile ad networks.
5
6
7
Nevertheless, over the past year we have seen significant
media consolidation, with the leading players grabbing a
larger and larger share of total install and remarketing spend.
Earlier this year we conducted an analysis across our own
media footprint, and discovered that the share of spend for
the top ten vendors grew by almost 40% over the past 18
months. Share of the second ten largest grew by about 20%.
All that growth came out of the hides of smaller players –
especially those with an exclusive focus on incentivized
inventory.
On our platform, we’re seeing the top 20 brands take about
70% of total paid installs in 2016. That figure will likely climb to
over 80% in 2017.
Optimizing to Conversions
Versus Installs Will Become
the Category’s New Normal
Historically, app marketers and their media partners optimized
media to maximize install counts. But over the past 18 months,
we’ve witnessed many marketers demand optimization to
some form of deeper conversion.
This is all part of an uber-industry-trend toward “user quality” –
recognizing that all users are not of the same value to a brand.
Given this, smart marketing maximizes attracting and retaining
more of an app’s most profitable customers.
In the mobile app marketer survey we conducted last summer,
78% said they were now more focused on user quality than
they were a year before. (See chart next page.)

While it can be difficult to scale CPA media buys, many marketers
are keeping their CPI and CPC contracts but asking their partners
to optimize media spend to maximize the number of deeper
conversions. We expect more brands to pursue this "dual
objective" strategy in the future.
“Our team is more focused on the quality
of installs than we were a year ago.”
Somewhat Agree,
28%
Strongly Disagree, 1%
Don’t Know, 6%
Strongly Agree,
50%
Neither Agree Nor Disagree, 11%
Somewhat Disagree, 4%
Around the World,
Consolidation in the Retail
App Space will Accelerate
Credit a tightening of VC funding, or a recognition that there
may be too many pure play commerce startups in some
categories. But these days, the biggest players are snapping up
the midpack to grow scale and reduce competitive threats. The
trend is most pronounced in India, where VCs who once cheered
INSTALLS INSTALL INSTALLS! are now asking for revenue in
addition to install growth. Some examples:
• India’s travel giant ibibo acquired bus booking service redBus.
• India’s hotel booking app Oyo Rooms bought its competitor,
Zo Rooms
• India’s m-commerce leader Flipkart first acquired Letsbuy, then
fashion retail apps Myntra and Jabong
But it’s not just an India phenomenon. Consider:
• French retailer Vente Privee’s acquisition of a series of retail
concerns, including Złote Wyprzedaże, Designers and Friends,
Privalia and Vente Exclusive.
• China’s Alibaba purchase of a controlling interest in Southeast
Asia mcommerce leader Lazada
• Rocket Internet’s acquisition of multiple food delivery companies
including HelloFresh,Delivery Hero and Food Panda.
Expect this type of consolidation to continue throughout 2017.
Source: Apsalar
8

Apsalar is the leading mobile app marketing measurement and
audiences company that empowers marketers to maximize their
ROI. Through a combination of mobile measurement, analytics and
segmentation services, we help bring data-driven marketing to the
burgeoning mobile app marketing sector. With enterprise grade
security and easy-to-build business rules, we enable marketers to get
better results while retaining complete control of their first-party data.
The new Apsalar Mobile Marketing Cloud helps you improve the
effectiveness of user acquisition and re-engagement programs by
providing BOTH essential marketing measurement/user insights AND
audience tools for customized, data-driven marketing.
ABOUT APSALAR
FOR MORE INFORMATION ABOUT
THE APSALAR MOBILE MARKETING CLOUD
contact us at
info@apsalar.com or visit our website at
https://Apsalar.com
GET MORE GREAT IDEAS AND INSIGHTS
ABOUT APP MARKETING BY VISITING
www.apsalar.com/resources
ABOUT THE AUTHOR
Jim Nichols is VP of Marketing for Apsalar.
Jim has 20+ years experience in over 80
different categories, including developing
successful positioning and go-to-market
plans for more than 40 adtech and
martech companies. He joined Apsalar
after several years as VP of Marketing for
Conversant, where he led various efforts
in the successful rebrand of the
company from ValueClick, Inc. The
rebrand and associated industry attention
for the company contributed to the $2.3B
sale of Conversant to Alliance Data in
December, 2014. He is a prolific writer for
digital trades on brand marketing,
mobile, video, data, and customer
profiling. Publications include iMedia
Connection, Inside Radio, VentureBeat,
ad:tech, ShellyPalmer.com, Jack Myers,
and many consumer publications. He
holds a B.A. in U.S. History from the
Uni-versity of Pennsylvania and an MBA in
Marketing from the University of Chicago.
ATTRIBUTION
MEASUREMENT
BUSINESS AND
USER ANALYTICS
AUDIENCE
CREATION
AUDIENCE
DISTRIBUTION

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