Acquisition costs for subscription-based apps are down almost 50%

The app subscription model has made considerable gains over the last 12 months according to new data by Liftoff, the mobile user acquisition company and Leanplum, the mobile engagement platform.

Based on the analysis of 257 billion ad impressions across 58.4 million app installs, the report found that acquisition costs for subscription-based apps dropped almost 50% year-on-year down to $86.99 from last year’s $162.22.

The cost to convert subscribers however remained fairly high. However, the model seems to be paying off with engagement rates increasing 32% to 3.3%.

“Acquiring users for this app category isn’t inexpensive by any means, but the year-over-year data showcases major momentum for subscriptions. Now pair that with Apple’s recent report that revenue from subscription-monetized apps is up 95 percent since 2017,” explained Mark Ellis, Liftoff co-founder and CEO. “And there’s no question that the long-term benefits of the subscription model, in the form of loyal users and stable cash flow, are worth the investment in service quality and marketing spend.”

Meanwhile, the report noted that women were driving significantly more conversions this year than men and were also proving to be more engaged.

Although acquisition costs for female users are higher (10% premium), their conversion rate was 40% higher than that of men.

Similarly, women are more expensive to acquire for in-app purchases ($91.16), but offer more than twice the conversion rates of men (3.8% to 1.8%).

The report had mixed news for mobile game app developers. Although acquisition costs were generally lower and engagement rates increased, the cost to acquire a user to make an in-app purchase remains steep. In fact, costs to drive in-app purchase conversions rose to $101.58, up 56% from 2017, whilst in-app purchase rates dropped 2.9%.

“These days, to be successful on mobile, you need to understand that mobile user acquisition and retention go hand-in-hand,” concluded Joyce Solano, SVP of Global Marketing at Leanplum. “The best way to protect your acquisition investment and retain customers throughout their lifecycle is by forming a relationship — and that starts with contextual mobile messaging. In fact, our data shows this approach can increase retention by 62%.”

The study added that the free-to-play model was likely driving up the acquisition costs for in-app purchase engagements.