Retargeting Drives 63% Revenue Uplift | AppsFlyer
6 Min. Read

App Retargeting Drives 63% Revenue Uplift, 50% Higher than UA Alone

Jillian Gogel Jillian Gogel Jun 18, 2019

In 2019, savvy app marketers are emphasizing not only the acquisition of new users to their apps, but also the re-engagement of their existing and lapsed ones through owned and paid channels.

Poor user retention, deeper measurement, improved data-driven skills, and better segmentation tools are all leading causes behind this phenomenon.

To understand the impact of re-engagement, particularly paid app retargeting, we’ve analyzed 4.5 billion retargeting conversions, and over 2,000 apps, in the last couple of years. We’ve found that this activity is rapidly gaining ground in the app space, helping apps improve their lifetime value and profitability.  

 

Increasing Retargeting Conversions Drive Continued Adoption

Judging purely from the increased share of retargeting conversions and the share of apps running retargeting, we can say that this activity has proven itself for most apps. In fact, between 2017 and 2019, the share of apps running retargeting has nearly doubled, while the share of conversions increased by more than 2.5 times. This year, 1 in 4 of all conversions are the result of app retargeting efforts.

A category breakdown yields the following:

  • Across all verticals, the average growth in the share of conversions from 2017 to 2019 was 3.5x. Notably, however, is Entertainment’s maturation, with the number of conversions an explosive 10x higher in 2019 than two years prior.
  • The Finance vertical saw the most even amount of conversion growth year over year, entering 2019 only 21% higher than in 2018 — this is consistent with the increase in apps running retargeting campaigns in this vertical. Conversely, Lifestyle apps saw the most extreme rates of growth moving into 2019 compared to 2018, jumping 11x year over year despite a steady increase in retargeting app share.
  • Stealing the show, Shopping apps experienced the highest growth rates across the board, 2.7x and 2.3x higher than the average rate of conversions and number of retargeting apps, respectively, in all other verticals combined.
  • Gaming apps had an 80% lower share of retargeting conversions and apps running retargeting campaigns than Shopping, the continued leader. The reality is that only a handful of Gaming apps run retargeting. Given the substantial revenue uplifts of Gaming apps that do retarget (see ahead), those that don’t are missing a major opportunity.

Does investment into retargeting actually result in lifetime value uplifts across the board? Find the answer to this question and others in the data below.

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Why Invest in App Retargeting?

Let’s take a minute to understand the benefits of running retargeting campaigns in today’s hyper competitive landscape:

  • Retention still a challenge. From our recent data study, we found that, while non-organic retention increased by around 20% into 2018, day 30 retention of organic users only increased by about 5% in all verticals. Overall, rates remain low, reaching only 5.5% and 6.8% on day 30, for non-organic and organic respectively.
  • User acquisition costs rising. The reality today is that it costs marketers more money to acquire new users for their app. Although not a pure apples-to-apples comparison when we compare CPI and CPC, the cost to acquire a user is 5-10x more expensive than the cost to re-engage a user. Showing the growing trend of prioritizing retargeting over UA, we found that roughly 1 of every 5 of marketers in 2018 increased retargeting at the expense of UA, and predict this will continue.
  • Accessibility of advanced measurement infrastructure. Before turning to the increasingly sophisticated marketing analytics tools, it’s also important to recognize the evolution of marketers, and the mobile ecosystem at the core of it all. While technology has allowed for richer analyses and better measurement, improved data-driven skills among marketers can also be credited with sharper segmentation and more effective retargeting efforts.
  • Availability of more robust segmentation tools. With increasingly more advanced segmentation tools at their disposal, marketers can drill down into their app’s unique audience segments to see which users deliver the greatest revenue and which are most likely to churn, among others. That way, they can avoid overwhelming the wrong users with retargeting ads and focus only on those with greatest potential.
  • Increased adoption of deep linking for personalization. The steady adoption of more sophisticated deep linking technology for personalized user experiences by marketers has led to an increase in the opportunity of retargeting as well. Working with targeted audience segments, deep linking smoothly delivers users to appropriate and customized landing pages within the app, increasing retargeting campaigns’ relevancy, decreasing churn, and ultimately improving overall profitability.
  • Performance. As evident in the data below, it is clear that retargeting positively influences not only the revenue from your users, but also the overall performance of your app in most cases.

 

Retargeting Drives Revenue Uplift

While the consistent rise in performance metrics, seen in the data above, still only implies the success of retargeting efforts, revenue uplift, especially measured between two groups of paying users in the same apps, tells a different tale of retargeting’s benefit to your app marketing.

 

Year Over Year Revenue Increase

Although not a pure apples-to-apples comparison, when isolating large apps (we examined the top 500 revenue generating apps that ran retargeting and the top 500 revenue generating apps that did not run retargeting), a clear trend emerges.

  • Overall, apps running retargeting campaigns in both Q1 2018 and 2019 increased revenue by 63%, nearly 50% more than apps that did not invest in retargeting.
  • While the Gaming, Travel, and Food & Drink verticals averaged a 21% revenue gap between retargeting and non-retargeting apps, Shopping saw a significant 55% higher revenue for apps that invested.
  • Similar to the conversion rate and spend trends, Gaming falls behind other verticals with a 23% revenue boost for apps running retargeting campaigns – a nice uplift on its own, but still about 50% lower than the overall increase.

 

Average Revenue Per Paying User (ARPPU) Uplift Among Same Apps

To go even deeper, we examined two groups of paying users among apps that run retargeting: those who were exposed to a campaign and those who were not. We then compared the revenue uplift (an overall ARPU comparison would not be as accurate because of significant variance in the audiences, since apps tend to retarget hiqh quality users).

  • In contrast to the low share of both retargeting conversions and number of apps actually running those campaigns, the payout for Gaming apps that do retarget users is massive — 4.3x higher than the average ARPPU of all other verticals, in fact.
  • Despite Shopping’s strong lead in the share of retargeting conversions these apps enjoy, the revenue from such efforts in this vertical is not extreme in relation to other categories; both Lifestyle and Travel are only slightly ahead of Shopping with 21%, 20%, and 18% uplifts, respectively.
  • Out of all verticals, only Entertainment experienced a revenue drop, 127% lower than the average growth of the others. This may reflect the way that retargeting can also backfire as a marketing activity if applied incorrectly (i.e. overexposure of users, irrelevancy of ads, etc).

 

Key Takeaways

  • Retargeting not a luxury, but a necessity. Given that apps running retargeting campaigns year over year increased their revenue by an astonishing 63%, it is evident that these campaigns directly and consistently support performance and profitability. Additionally, with 65% of advertisers across all verticals increasing their retargeting budget since Q1 2018, these high payouts are likely in more cases than less. Moving forward, investment in retargeting is no longer reserved for savvier marketing teams; instead, it should be considered a vital component of your app marketing efforts overall.
  • Launch dynamic app retargeting. The best results are often achieved through a dynamic retargeting campaign rather than a static one. Increased relevancy and personalization can make all the difference. Here’s a good read that will help you get started.
  • Big payouts for Shopping. In general, we can see the massive opportunity of shopping apps: according to Criteo, mobile retail generated 3x higher conversions in-app than on mobile web. This adoption, along with the consistently positive correlation between retargeting campaign spend, high number of conversions, and revenue, makes it clear that the Shopping vertical will continue to enjoy increased profitability through retargeting efforts.
  • Gaming vertical as an anomaly. From our data, we can see that 11% of apps in Gaming run retargeting campaigns versus 53% of apps in Shopping. Despite, or perhaps because of, the savviness of marketers in this vertical, retargeting is not prevalent, at least partially because of the complexity involved in measuring these campaigns. We will not explore these questions in depth in this report; however, we can only conclude that there is clearly a missed opportunity here. Retargeting is on the rise, with high payouts (in terms of performance uplift) for apps that invest, and yet, only a very small share of Gaming apps actually do.
  • UX is everything. That’s why understanding when to start retargeting, for which audience and how often, is critical, as increased frequency can generate serious problems and potentially damage a brand beyond repair.
  • Incremental measurement for true retargeting analyses. Measuring retargeting is best done by looking at the incremental effect. There are so many things that might affect your users’ experience beside the retargeting ad – where they were acquired (maybe even organic), their stage within the app, their overall app experience – so make sure you isolate the retargeting effect. How? Read about it here.

 

Good luck re-engaging!