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Creating a budget for marketing a mobile app

Author's avatar By Expert commentator 27 Jun, 2014
Essential Essential topic

How much does it cost to market a mobile app?

As a starting point for creating a budget for an app you need to be clear on the benefits for business and consumer of investing in the app. Why does your business need a mobile app distinct from a mobile responsive website? These reasons include:

  • The need to offer a mobile-optimized experience for your users, whether: shoppers, readers, and social network communities. For example, Zappos offers its smartphone users to shop via a mobile app.
  • A desire to create a stand-alone mobile app business with a free-to-play, ad-based or subscription-based business model. Games, useful apps and news services fall into this category.
  • The necessity to establish the brand’s presence in a mobile domain. Games and useful tools help users continue to interact with the brand on mobile devices. For example, Lego and McDonalds offers free smartphone games for kids.

Once the benefits are agreed and app creation, what becomes critical to the success of the app strategy is the mobile app marketing. This blog post provides some practical steps including why to advertise your app, calculating your budget, planning your installs - associated costs and ROI.

Why advertise your app?

Gone are the days, when the millions of users came to your app through a sheer luck or by word of mouth. By now there are over a million apps in the App Store alone and the battle for the top positions is heating up. Most of the users discover their new apps by searching the app stores or browsing the top 10, top 25 or top 50 rating. So if your app appeals to the mass audience, you should be prepared to fight for the most lucrative top positions in the app stores. In special cases however, for example, when your app users are the existing clients of a regional bank or heart surgeons, a more targeted approach to marketing the app through digital even offline channels is more preferable.

How do you calculate mobile app marketing budget?

If your app is intended for a mass audience, and your objective is to acquire new users rather than pleasing the existing ones, you should plan your advertisement campaign starting with the required budget.

To calculate the budget you should first establish how many users you should have, or if your funds are limited, how many you can afford to acquire. Then you will need the cost per install to arrive to a total daily ad budget.

It is cheaper to get to the top of an app category in a smaller country. The most expensive is the top free apps in the App Store in large countries such as US, Germany or China.

How many installs should I plan for?

For example, to get your app to the top 10 free apps in the US App Store in the category Music, your app should generate 111,551 installations per day. You find this by looking at the number of daily installs of the top 10 apps in this category.

The app store rating is calculated based on the previous day’s installs. Once your app stays in that rating for a few days, the organic installs increases. By organic installs we mean the installs by the users who found your app not through the advertisement but through the app store charts or word of mouth. You can estimate that after a few days, let’s say 4 or 5, the number of organic download will be three times higher than the number of paid downloads (the installs you paid for with your advertising dollars).

What is the cost per install or CPI?

This is probably the most difficult question, but the answer to it is $1,2-$1,6. The actual problem with evaluating a CPI is because the effectiveness of ad platforms differs greatly. Some platforms will sell you so-called incentivized traffic whereby the users download the app in exchange for free in-app currency or other virtual goodies. Those users are not interested in your app and are likely to delete it soon thereafter. Still, if you are not after the revenue but the number of installs to push your rating, even those installs will help.

Some ads work better than others because of banners, or because of the targeting. Aim to capture only those users that would be interested in your app: think about cliché examples such as women and shoes, targeting improves cost per installs because more people who see your ad choose to install the app.

There are some marketers that claim to be able to milk Facebook native mobile ads to get CPI of $1 and below. Some complain that for them they do not work at all. It is all comes down to  banners and targeting. In addition, there is also fraud that pushes CPI up. The mobile tech industry did not find a solution for this problem yet.

How to get the most installs for your money?

So how do you get to the CPI of $1,2 or even $1,6? Here is what you need to do:

  • Manual work

Hire a small army of marketing analysts.  The objective of your analysts is to design an ad campaign for each of the ad platforms: be it Facebook, AdMob, Twitter or various traffic exchanges. They should then run campaigns and track what platforms users come from, how long they use the app for and how quickly they delete it from their device. Having ranked the sources they will provide you with a useful list of those platforms that send you real, engaged, interested users that are more likely to download your app than others.

  • Automated tools

Use an automated mobile app marketing service that will automatically analyze user actions and filter out the platforms that bring poor-quality results. Those are installs that do not result in further actions, low percentage of installs, high number of app removals. An automated service will experiment with a large number of traffic sources and select those that bring the best users at the lowest cost of installs. If you are a game developer with a large budget, go for AppLift. If your daily ad budget is below $20,000, test AppInTop.

This is your ad budget

By now you have established how many downloads you need to get to the top charts. We use the US free music app as an example.

  • Assume that you have optimized your cost per install to $1,2.
  • Then your daily ad budget will be: number of required daily installs multiplied by CPI equals 111’551 * $1,2 = $133’861.
  • Once you keep it up for a few days, for example 5 days (so expect spending at least 5 * $133861=$669’305), the organic installs will gradually represent about 75 percent of downloads. Then you can gradually reduce your daily ad spending to $33’465 and still remain at the top 10 until someone else’s app will up the ante.


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