With connected devices on the rise around the world, smartphone apps have changed the way that people research, browse and shop. Consumers spent $25 billion on purchases made from their phones and tablets in 2012 – an increase of 81% in one year. Clearly, mobile advertising should be a priority for retailers in 2013.
In a highly competitive market with millions of apps in the App Store, how do you acquire the highest value shoppers for your mobile retail app? We’ve put together six best practices that outline how retailers can acquire shoppers and not just users for their mobile apps:
1. Use cohort analysis to optimize ad investment and sustain long-term user acquisition
Cohort analysis is a way of measuring the performance of a group of users acquired within a specified timeframe. Most retailers define a cohort as all of the users acquired during one week. They then monitor the performance of that cohort, measuring how much those users purchase over the next ten weeks versus other cohorts.
The major benefits of this type of analysis are to gain insight into the lifetime value of a given set of users, demonstrate user retention, and optimize campaigns based on performance of the group. For example, retailers know that advertising in December will help attract holiday shoppers, but they might not know which channel will yield the best return on investment. Cohort analysis provides rapid feedback on what is and is not working so retailers can direct ad dollars to the best channels.
2. Create campaigns that generate the highest revenue, not lowest cost-per-download
Retailers need to acquire shoppers who spend in their apps, not low value users acquired with the cheapest possible download. Optimizing to the lowest cost-per-download is a simplistic approach driven by incorrect assumptions about app marketing. It assumes that all users acquired are of equal value, but they are not.
For retail apps, acquiring a high value shopper is far more important than just a download. For example, one advertiser achieved a revenue return of 96% on ad dollars invested using ad creative A, which had the highest cost-per-download of all creatives they ran. Conversely, ad creative B, which produced 30% more downloads at a lower cost-per-download resulted in just 47% revenue return on ad dollars invested. In this case, optimizing campaign creative based on revenue generated yielded greater ROI with shoppers who spent significantly more in the app.
3. Double mobile ad performance by maximizing creative and messaging
We have seen campaign performance double by maximizing ad creative and messaging. Providing users with an easy to understand, mobile-specific value proposition creates urgency and is the best way to get users to take action the moment they see an ad.
Ad concepts with messaging that showcases mobile-only functionality deliver significant performance boosts. For example, common mobile-specific features may include click-to-call, geo-location or mapping, or the accelerometer. Lastly, A/B testing your ad enables you to understand and optimize messaging and creative that resonates best with mobile users.
4. Measure creative performance to identify messages that resonate with your target audience
It is well understood that popular brands like Coke and Nike receive a certain amount of ad performance lift because people are more likely to click through an ad for an advertiser they know. In fact, our ad performance measurement recently revealed that popular brands achieve as much as a 90% performance boost over new brands.
Because there is lack of general awareness about a new brand’s products or services, finding the right messages that resonate with your target audience is key. New brands should focus heavily on A/B testing creative messaging to learn what works best.
5. Data proves that retailers targeting high value users should advertise on iOS
Recent data by Forrester Research revealed that the average household income of an iPhone user is $105,200 per year, while the average household income of an Android user is$89,300 per year. That’s a delta of nearly $16,000 per year, which is a significant amount.
Retailers targeting U.S. shoppers should be aware that of the 250 million iPhones that have been sold worldwide to date, 80% of them were sold in the U.S. In addition, iOS users enjoy a significantly better in-app experience. Apple has created a platform that optimizes for great design –both in the physical form of the device and display of content on the screen. The combination of higher expendable income of users and phenomenal in-app experience make iOS advertising a clear priority for retailers.
6. Move advertising dollars from PC to mobile to acquire new shoppers at the lowest cost
Our research has found that user acquisition cost on mobile is about one fifth of what it is on PC using Google AdWords. Mobile is the clear winner with higher margins, as price points for retail goods remain the same no matter what platform they are being purchased on. The greatest opportunity for retailers is to transition from PC to mobile and acquire new shoppers at a lower cost.
The bottom line is this: The best strategy for any retailer is to act now, move your web business to mobile, and acquire high value shoppers for a low cost before acquisition costs increase.
Gregory Kennedy is vice president of marketing at TapSense.