Fiksu: iOS app download volume down 8% year-on-year, but user acquisition costs rise

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By Kathleen De Vere Comment

iOS app downloads in April were down for the third month in a row, declining 4.9 percent to an average of 4.23 million apps a day, according to user acquisition company Fiksu.

According to the company’s App Store Competitive Index, the volume of daily app downloads for the top 200 free apps in the U.S. has has fallen 37.7 percent since the all-time peak of 6.79 million downloads per day in January. App download volume is also down 8.24 percent year-on-year. In April 2011 Fiksu reported U.S. consumers downloaded an average of 4.61 million free apps a day.

Fiksu attributes the continued decline to two factors — first, lower public interest in the absence of a major Apple event or product launch; second, the continued fallout of Apple’s decision to punish developers who use download bots to artificially inflate their app’s chart position.

Although downloads were down, user acquisition costs rose significantly April, increasing 12.3 percent to $1.46, up from $1.30 in March, pushed up from competition in the social networking and games categories. The cost to acquire a loyal user — defined as someone who opens an app at least three times — is up 43 percent year-on-year, from $1.02 in April 2011, but at that time Apple still allowed offer walls, a pay-per-install practice that developers used to incentivize downloads.

Overall, user acquisition costs appear to be creeping up again, and are now at the same level they were when the iPhone 4S launched in October 2011 — bad news for developers competing for what is now a much smaller pool of (legitimate, non-bot) downloads. Higher user acquisition costs cut into profit margins and can also reduce the overall lifetime value of a user if the company isn’t able to offset the cost with increased monetization through in-app purchases and advertising.