Apps are a hot topic for the mobile industry lately, especially on the conference circuit. Verto Analytics’ CEO, Hannu Verkasalo, has been sharing his thoughts about app metrics and the need for a new, more comprehensive way to measure the ROI on apps at industry shows across Europe and the U.S.
When it comes to app downloads, we’ve been emphasizing the importance of quality over quantity. As Hannu has noted, “Downloads matter less, as mobile app revenue models have changed towards freemium and advertising.” Apps have notoriously abysmal retention rates. The typical 30-day retention rate stands at around 5-10%; social media and communications apps are a rare and notable exception. This is one of the reasons Google recently followed Apple’s lead by overhauling the Google Play store, taking steps to provide better support for payment platforms and incorporate elements of Artificial Intelligence (AI) into its functionality.
As we’ve said before, the important metric isn’t downloads, it’s long-term users (i.e. those that remain 30 days after download).
We looked at Verto Analytics data on the two biggest app marketplaces, the Google Play and Apple App Store, to analyze which ecosystem is attracting and retaining the most users (among U.S. adults, ages 18 and above), and what this translates to in terms of revenue for app publishers.
Overview: Google vs Apple
Verto Analytics data shows that while the Google Play Store has higher overall reach among the online population in the U.S., as well as higher session numbers (the number of visits to the Google Play Store made per user), Apple App Store users spend a longer amount of time per session in the store, as measured by session duration. The average Apple App Store user spends more than two-and-a-half minutes in the store, compared to about a minute per session for Google Play. Those longer store session times may equate to greater overall revenue – despite reaching fewer overall users, Apple App Store revenue outstrips Google Play by a factor of double or even quadruple, depending on who you ask.
Games versus Social: The Cost of Acquiring a User
So how does user behavior in the app marketplace translate into actual revenue, user retention rates, and profit? Regardless of the operating system ecosystem, a key success metric is the average cost of retaining long-term users (defined as those who remain 30 days after download). The higher the cost of retaining the long-term user, the lower the profit margin for the developer or app publisher.
Verto Analytics calculated the average cost of retaining long-term users based on app category, as seen below; travel and gaming apps have some of the highest costs, at $5.30 to $5.60 per user, while the average social media app user (an app category notable for its relatively high retention rates) costs less than half of what an average mobile gaming app user costs to retain for more than 30 days.
Quality Over Quantity
Despite its lower overall reach and user sessions, Verto Analytics data shows that iOS outperforms Android in terms of the average cost of long-term user. In fact, the average cost of retaining a long-term iOS user is nearly 30% less than that of retaining a long-term Android user. Digging one layer deeper, the user’s mobile device type is far less important than the operating system in determining these long-term costs per user.
While developing for both Android and iOS is already a foregone conclusion for most apps (for both app developers and publishers) it also presents the classic “quality versus quantity” dilemma. Android apps present the opportunity to get your app in front of more users (and greater market share), while iOS is a more lucrative market for long-term monetization. This also applies to app discovery tactics and advertising budgets, especially to those with limited resources: app developers and publishers will increasingly need to make data-driven marketing decisions based on their individual app’s goals and KPIs.