There are more smartphones in the hands of consumers than ever. The natural consequence of smartphone penetration is that more users are downloading more apps. It comes down to simple economic theory: as volume increases the cost of acquiring loyal users goes down.
Mobile app marketing platform Fiksu revealed new stats today showing January saw the highest download rate of iOS apps ever. Users downloaded the top 200 free iOS apps 6.79 million times per day in January, a 12% increase from the previous high in December. That kind of volume comes with benefits to publishers who are now spending less to acquire users than any time since June 2011.
Fiksu defines a loyal user as anyone that opens an app at least three times. That is not to be underestimated as users may download many apps but only use a handful. App marketers rushed to meet the holiday demand in December, spending $1.81 to acquire a loyal user during the holiday season. In January the marketers stepped off the throttle of their marketing campaigns but ended up seeing better return on investment as volume increased and averaged $1.14 per loyal user.
These types of fluctuations point to larger trends. App publishers are rapidly approaching an inflection point where download volumes will not fluctuate on a month-to-month basis but continue to rise as smartphones and tablets find their way to more people. With more smartphones and more apps the competition to remain relevant in the marketplace will become difficult. Overall that means that marketers will need to spend more and become more efficient in targeting loyal users.
Yet, while the bar for popularity rises, the ability for the mid-sized developer to make money goes down. The theory is that the top portion of the ecosystem will help the middle ascend.
The idea is to find the market inefficiencies. Fiksu points out that January was a great time for marketers to take advantage of all-time high download rates while spending less. The enterprising mid-sized publisher can create a base of users in these so-called "down" times by aggressively targeting users while the large budgets of the top publishers are less active.
"We've historically observed this spike in volume and costs around peak periods - such as major holidays or iPhone launches - then seen a return to more normalized costs levels once the initial rush dies down. This year was no exception. Cost-conscious marketers who chose to hold off on Christmas spending, preferring to target a period when costs were expected to drop, won big in January 2012," Fiksu's report states.
Update: The headline of this article has been altered from its original publication.