So, you consider building an app to deliver the ultimate experience to your mobile customers or want to start a mobile app business? Either way, you need a solid budget to propel your app to the top of the App Store and Google Play charts. How much does it really cost to market a mobile app?
Cost of marketing an app: behind the numbers
Although the global app market will top $ 77 billion this year, less than 0.01% of all mobile applications out there are considered successful by their publishers.
The average US user spends as much as 5 hours a day on mobile devices (with apps consuming 92% of the time); however, smartphone owners use just 30 apps every month. These include social media titles like Facebook and Snapchat, popular messaging apps, mobile games, shopping applications like Amazon (which is the #1 app Millennials and Centennials can’t live without) and occasional edutainment applications.
The chances your app makes it to the lucky 30 are relatively small, so you need to spend extra $ to get your app noticed.
According to Fiksu’s 2015 research, it cost publishers around $ 200 thousand to push a mobile app to US Top 25 (iOS) through ads. Entrepreneur claims a company that’s been in business for one to five years should spend anything between 12% and 20% of their projected annual revenue on marketing. Some companies (especially game dev studios like Snowman, the creator of the Alto’s Adventure mobile game) had no classic marketing budget at all and still made it big. What’s the ideal marketing budget for a mobile app then?
As usual, the truth lies somewhere in between.
Your app marketing spending depends on several factors, including your app category, target market and the goals – that is, the number of downloads/chart position/revenue – you’d like to achieve.
In order to determine your perfect marketing budget, you should study market-wide data, calculate your projected revenue (in case you’re a start-up and aren’t making any profit yet, take your working capital as a starting point) and measure your potential customer’s lifetime value (CLTV).
There’s a formula for that:
CLTV = ARPU x 1/churn rate + referral value
ARPU stands for Average Revenue Per User; the churn rate is the amount of users that stop using your app; the referral value is the value of new users your potential customer refers the app to.
Suppose you’re working on a Match-3 game similar to Candy Crush (which will cost you $ 90-110 thousand to build if you outsource software development to Eastern Europe and up to $ 1 million if you partner with a US-based mobile vendor) and going to monetize it through in-app purchases. That basically means that only 5% of your game population will spend money on artefacts unlocking further gameplay; however, those paying users will bring 2500% more revenue than all the rest.
Now you should divide your total projected revenue over a certain period (let’s say 3 months) by the amount of active players within the same period; if you want to make $1 million and hope to acquire 500 thousand active users, your ARPU will be $ 2.
Then goes the churn rate (the number of customers you’ve lost over the course of 3 months). According to recent studies, only 25% of users continue to play a mobile game after 3 months, so your churn rate is 75%. Now divide 1 by 0.75. 1.3 months is the predicted lifespan of a player.
Measuring referral value (or virality) is perhaps the hardest part, and most app marketers just skip it. However, all those players who will share your game on social media asking friends for game resources and inviting new users could be a gold mine for your business. In order to calculate the referral value of a user, you should track the number of invites sent by a player over a given period and the number of invites that actually convert; the exact numbers are hard to predict until your game goes live, so we’ll have to make do with the lifespan and ARPU for now.
Thus, your LTVL is $ 2 x 1.3 months. That’s $ 2.66.
If you want to justify the game dev expenses (and make some profit!), your LVTV rate should be higher than the cost per install (CPI) which, in its turn, is your ad spend divided by the actual number of app installs.
CPI is driven by several factors including your target platform (approximately $ 0.53 for Android and over $ 1.2 for iOS apps), the duration of an advertising campaign, target market (the competition in mature app markets like the USA, Germany and China is really tough) and the ad networks you’re going to use.
Once you know how much you can afford to spend on acquiring app users, you can develop a marketing strategy.
5 ways to market a mobile app
There are several ways to boost your app’s commercial performance. These include:
- Paid advertising. Here the “paid ads” term refers to several activities including social media advertising, in-app ads/rewarded ads and AdWords campaigns that can help you drive traffic to your promo website and acquire beta-users. According to TechCrunch, you need 70 thousand daily downloads to push your app to the US Top 10 Free Games chart; once you get there and stay for a couple of days, you’ll start getting organic downloads, too (about 75% of all installs). However, 77 thousand x $ $ 1.2 x 5 days is $ 462 thousand. That’s probably more that your app cost you – and that’s why app start-ups often resort to alternative marketing techniques;
- Blogging and SMM. Once you set up a promotional website for your app, you can document the entire dev process through well-written posts, videos and photos showing your team working their fingers to the bone (which will also help you create a brand with a human face). Then you need to register brand accounts on Facebook, Instagram and Twitter to build a community before your app is released to the market. Also, you should get in touch with popular gaming platforms like Gamasutra, Touch Arcade and Pocket Gamer; some platforms might review your app for free. Publishing a sponsored post (websites like VentureBeat, for instance, charge as much as $ 6 thousand per article; platforms that get around 100 thousand monthly unique visitors seldom charge more than $ 100 per post; some platforms accept guest posts for free) will not necessarily result in a million downloads. However, the pre-launch buzz may help you get the app noticed by the App Store and Google Play editors;
- App trailer. An app trailer (especially a mobile game trailer!) is something that can make or break your business. Going back to Alto’s Adventure, it is the beautiful trailer featuring game layouts and atmospheric music that had sparked public interest months prior to Alto’s launch. With Photoshop and After Effects (or iMovie/Windows Movie Maker), you can make a stunning trailer for free (or nearly free); however, you’d better enlist the help of a professional UI designer to make sure it looks professional, provides detailed info about you and your project and captures the essence of your app. According to Pavel Shylenok, CTO at R-Style Lab (you can check his portfolio here), a high-quality CGI trailer with an original soundtrack will cost you about $ 10 thousand;
- ASO (App Store Optimization). With over 5 million apps available on Google Play and the App Store, you can’t be too serious about ASO. A beautiful and informative app icon, preview video, SEO-friendly title and description, as well as stunning screenshots and excellent reviews, is something that can boost your download rates tenfold. However, the ASO issue should be addressed early in the dev process and often requires professional help;
- Influencer marketing. Although the strategy is often overlooked by app marketers, the average company makes $ 6.5 on every $ 1 spent on influencers. In order to choose the right influencer, platform and type of promo content, you should obviously study your target market. Going back to our Match-3 game, your audience mostly consists of female players (about 80%) aged 21-35 (40%) or above 35 (40%). It turns out Facebook is your final destination (over 1 billion daily users, used by 83% of your target market); what’s next? Now you can approach influencers your audience looks up to. It might not necessarily be a celebrity-level influencer (rumor has it Selena Gomes charges as much as $ 500 thousand per Instagram post!); it’ll cost you $ 70-2000 to get your app reviewed by a niche influencer. You should, however, provide creative freedom to the media person; if he gets really excited about your application, you’re doomed to success!
Cost of marketing a mobile app: summing it up
So, how much does it really cost to market a mobile application?
Suppose you’re operating on a budget and make do without ad networks, you need:
- $ 1.2-1.4 thousand to put up a simple WordPress promo website and about $ 10 thousand to drive traffic to it through Google AdWords;
- $ 3-5 thousand to hire an experienced content manager to handle the blogging/SMM part;
- At least $ 5 thousand to publish several sponsored posts on gaming websites. Some platforms like Gamasutra do allow developers to publish posts for free; however, they will not accept purely promotional content, so you should craft high-quality articles like “Challenges of Making a Match-3 Game” instead. If your post gets featured, more people will get acquainted with your story (the website has over 5 million monthly visitors);
- Provided you address a reliable mobile app dev company, you probably won’t have to spend a cent on ASO (or get it for a nominal fee);
- Hiring influencers will add another $ 1-10 thousand to our estimate;
- Finally, you may attend a game dev conference to showcase your product and meet important people; this will cost you around $ 10 thousand/day.
Thus, $ 30 thousand is the minimal mobile app marketing budget; according to Pavel Shylenok, you’ll have to spend $ 50-90 thousand on marketing a Match-3 game like Candy Crush.
That being said, no marketing strategy will bear fruit unless your app is actually useful, fun and performs well. Focus on app quality, develop a marketing strategy early on and think success – and success will eventually follow!