App Success Is Shifting From Downloads To Engagement

As app downloads slow down due to a maturing ecosystem (dropping 20% among the top 15 US pubs, according to a mid-2016 Nomura/SensorTower report), developers are turning to a new success metric: Usage.

“Usage is the new currency for the app economy, not downloads, because downloads just tell you that first part of the story,” said Danielle Levitas, head of research at App Annie. “Everyone gets hung up on that metric because that’s what they were trained on six or seven years ago, but it shows a lack of understanding of what the app market is all about.”

In a mature market, success is, or at least should be, determined by time spent, she said.

The app market is all about is lifetime value, engagement and reengagement, because that’s when the monetization happens.

A year-end analysis released by App Annie earlier this month found that time spent in apps was up by 25%, and that in 2016, publishers made more than $35 billion across the App Store and Google Play – a 40% yearly uptick. China and India drove most of that growth.

And there’s little to indicate that global growth will slacken, at least for the moment.

“There’s no platform larger than the smartphone, and there’s no chance of that changing within the next five years as we see India, Africa and China continue to jump on board,” said John Koetsier, mobile economist at mobile analytics company TUNE.

But download rates in these emerging marketing will eventually soften, as they have in the US, Germany and Japan.

In a sense, Apple and Google themselves are complicit in fueling misconception that installs are the main indicator of health, as both rank discovery in their respective app stores based on downloads and revenue generated, rather than engagement metrics.

“If there was a third rank by engagement, independent of raw installs and top grossing, we would see a different set of apps at the top,” said Charles Manning, CEO of mobile attribution company Kochava.

But not all engagement is created equal, Manning said, and the metrics necessary to track engagement are nuanced.

Tracking when an app is launched, for example, is far less meaningful than looking at the duration of a session. A launch metric would give the same credit to a 10-second session as a 5-minute session, and those people should be segmented into different cohorts.

The metrics used for tracking engagement should also be different depending on the app, and developers need to be smart about what signals they collect. Tracking Day One, Day Three or Day Seven user retention in a travel app is far less relevant than tracking plane ticket purchases pegged to airport codes, as several travel app clients of Kochava do, Manning said.

As the app economy grows up, app marketers are getting more sophisticated. And although the boom may be over, the market is not going bust, said Michael Oiknine, CEO of mobile attribution company Apsalar.

“It’s the classic internet hot-or-not – too many people think that categories can grow at triple digits forever,” Oiknine said. “Once a user has a broad selection of apps, it’s only natural that they will install fewer in the future. That doesn’t mean there’s less opportunity for good new apps, but it does mean that mediocre apps will fail even faster than before.”

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