The Rising Cost of Engagement for Mobile Travel Apps

Last week we released our latest report in the Skift Trends series, Effective Mobile App Strategies of Consumer Travel Brands.

Below is an extract. Get the full report here to get ahead of this trend.

Just as the app economy grows larger by the day, so does the cost of enticing consumers to download and remain engaged with each app.

Fiksu, which develops technology for mobile marketing, estimated several months ago that the cost of acquiring a loyal iOS app user – defined as those who open an app three times or more – rose to a record high of $4.04 in August, marking a 36 percent month-over-month increase and more than doubling the cost during the same period in 2014. That investment can pay dividends, though, for businesses that have built apps that consumers value, according to Dr. Phil Hendrix of the market research firms immr and Gigaom Research.

“While only a subset of customers will install and use a brand’s app, those that do — provided the app does indeed deliver value — are likely to have more positive experiences and exhibit greater brand loyalty. — Dr. Phil Hendrix, immr and Gigaom Research

“While only a subset of customers will install and use a brand’s app, those that do — provided the app does indeed deliver value — are likely to have more positive experiences and exhibit greater brand loyalty,” Hendrix told Skift. “However, brands can’t rely solely on their own apps – it’s imperative that they also leverage third-party apps to reach customers who haven’t yet and may not ever install their app. Leveraging one’s own and third-party apps are complementary strategies. Retargeting users who have installed an app can also be useful to simply remind them of the app already on their device and the value it delivers.”

The cost of customer acquisition is particularly important in the mobile gaming market, where countless titles are available through the freemium business model. But the figures are also applicable to the crowded market of travel and hospitality apps. And as those customer-acquisition costs increase, a few major marketing models have gained traction among publishers.

There’s no universal “right” marketing strategy – each publisher should customize its own strategy based on its app and the goals it hopes to achieve – but some of the key factors to consider include:

• App-install ads have quickly gained traction as a way to boost downloads through sites such as Facebook, Twitter and Google. These targeted ads direct users to download a mobile app and often leverage deep links, which can deliver users directly to the download page within an app store with a single click. App-install ads can be costly but also offer high click-through rates and relatively accurate ROI measurement — once the app is downloaded, the user’s activity inside the app can be tracked and traced back to the ad. The marketing firm Kenshoo recently reported that mobile app installs from Facebook ads grew 346 percent from the second quarter of 2014 to the same period in 2015.
• Cross-promotion is an affordable way to make consumers aware of B2C apps and encourage websites, within other apps and through social media. Additionally, brick-and-mortar businesses can use signage and other physical marketing tools to engage customers at the front desk or ticket counter.
• App store optimization, or ASO, can be a valuable tool for attracting the attention of users who are already searching for apps in travel or another genre. ASO strategies include using the right keywords in describing the app, which can result in higher rankings when consumers use those specific terms to find what they’re looking for. Content such as screenshots and compelling descriptions can also help attract attention. And travel businesses should not only encourage users to post reviews but should respond to those reviews and tweak their apps based on customer feedback.

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