User Acquisition Costs Decline as Developers Adjust to Offer Wall Alternatives

The cost to acquire users for mobile apps is declining as developers get used to a new world without the use of incentivized installs on iOS, according to Fiksu.

The Boston-based company, which helps developers optimize their spending across a number of marketing channels from display ads to offer wall networks on Android and iOS, said that the average cost to acquire a user that opens their app at least three times declined to $1.20 in July from $1.27 the previous month.

Overall downloads for the top 200 free apps in the iOS store declined to 4.25 million in July from 4.51 million in June, reflecting the fact that developers have cut down on buying inexpensive installs through these networks. Downloads initiated through offer walls made up an increasing share of installs in the store up until April, when Apple started cracking down on the practice.

Since then, developers have turned to a number of alternatives like classic mobile display advertising. One promising alternative has been incentivized video ads, where users can watch a video trailer for a game in exchange for virtual currency. The conversion rate is not as high as when developers give users virtual currency for downloading other apps on offer walls. But these types of ads may help replace up to 75 percent of the revenue made through the old method, according to earnings calls from publicly traded gaming companies like Glu Mobile.  The only problem is that there aren’t enough of these types of units and inventory is often quickly sold out.