Series: How to Adjust Your Mobile Retargeting Strategies Across Verticals – Shopping Apps, Part I

Justin Michael - YouAppi
Justin Michael | March 19, 2020
RVP Sales

Part I: Mobile Retargeting Across Verticals – Shopping Apps 

All apps stand to gain from retargeting, but the strategy of your campaign should depend on the vertical. While it’s difficult to predict the exact impact COVID-19 quarantine measures will have on app usage, one fact is certain: people will be using their phones more and more to shop for groceries, play games, and stream entertainment. 

In part one of our three-part series, we spotlight the retargeting challenges faced by shopping apps to better optimize re-engagement campaigns. 

Retargeting is effective

Mobile retargeting is one of the most effective tools for driving in-app activity while increasing retention and lifetime value (LTV). Read that again.

AppsFlyer reports the share of apps running retargeting doubled from 2017 to 2019, coinciding with a 2.5x conversion increase. Moreover, in 2019, 1 in 4 of all conversions were a result of app retargeting efforts. 

The reality today is that it costs more to acquire new app users than to re-engage them. On average, the cost to acquire a user is 5-10x more expensive than the cost to re-engage a user. Our research shows that re-engaging existing customers can increase conversions by 70% or more. Marketers are aware of this trend and they are responding to it in droves. In 2018, roughly 1 of every 5 marketers increased retargeting at the expense of UA. With 90% of marketers vouching for the effectiveness of retargeting, we believe the trend towards retargeting will continue the hockey stick trajectory in the future.

YoY Revenue Increase per app vertical q1 2018 vs q1 2019

Source: AppsFlyer

AppsFlyer’s study identified a clear trend: apps that run retargeting campaigns drive significant revenue uplift compared to apps that don’t. Apps running retargeting campaigns increased revenue by more than 60%, nearly 50% more than apps that did not. The most significant uplift were apps in the Shopping category, which saw a 55% higher revenue for apps that invested. Retargeting vs non-retargeting ARPU Uplift

Source: AppsFlyer

 

Different verticals pose different retargeting challenges

It’s also interesting to compare the revenue lift between users that were exposed to a retargeting campaign and users who were not. The results show a massive opportunity for gaming apps. Game apps that invest in retargeting earn 4.3x higher than average revenue per paying user (ARPPU) than other verticals. Interestingly, only 11% of gaming apps run retargeting campaigns versus 53% of apps in shopping. This shows that gaming apps that do invest in retargeting stand to earn huge payouts in performance uplift. Also notable is the entertainment vertical which showed a 127% revenue drop. This illustrates how retargeting can also backfire if applied incorrectly (i.e. ad fatigue, irrelevant messaging, etc.).

All apps stand to gain from retargeting, but the strategy of your campaign should depend on the vertical. In our three-part series, we spotlight challenges for apps in shopping, gaming, and entertainment to help optimize your retargeting campaigns based on your vertical.

Shopping Apps

Shopping apps lead the way in the share of apps running retargeting campaigns and the growth of retargeting conversions. Retargeting on shopping apps is especially critical with over 71% of mobile sales happening in-app. Mobile in-app shoppers browse more products and convert at a higher rate than mobile web users. It’s no wonder e-commerce apps have invested in retargeting more than any other vertical to date. EMarketer reports that shopping apps display the greatest drop-off in retention and engagement after a user downloads an app. Twenty-five percent of users engage the first day and only 8% after 30 days.  

Mobile Retention rates

Source: eMarketer

 

To get users back, retailers have a range of options at their disposal. This includes showing dynamic retargeting ads containing items from users’ in-app shopping cart and deep linking or offering enticing promotions. Retargeting is particularly important for shopping apps as e-commerce user churn rates are especially high. According to Adjust, only 18% of users return to shopping apps after a three-month break. This isn’t surprising as shopping apps aren’t as conducive to casual browsing or regular interaction as social apps, for example. Often, users only open the app with a specific need such as searching or ordering a product.

To confront these challenges for a major retail chain, Kochava worked with a retail app and saw a 25% discount mobile offer to shoppers who returned to the app to make another purchase within one week of a prior purchase. Shoppers were sent one push message 24 hours after their purchase and a final reminder push 24 hours before their 7 days ended. The results from the mobile offer showed an impressive 14% push open rate. Additionally, 9% of rewards members converted on the special offer to drive $23K in additional retail sales.

Shopping App Retargeting Best Practices

Offering shopping app users more content, promotions, and interaction will help inspire loyalty and brand affinity. Here are our best practices for shopping app retargeting strategies:

  • How to segment: Segment users based on whether they have viewed or favorited an item in-app or added an item to their shopping cart but failed to check out. 
  • How to personalize: Show retargeting ads containing items from users’ in-app shopping cart and offer an enticing promo. Increase the frequency of dynamic personalized ads around major shopping holidays like Cyber Monday or Singles Day. Use deep links to drive users straight to specific in-app product locations based on their mobile browsing behavior.
  • How to message: “Still interested in X? Here’s 20% off because X will look fly on you. Check it out now.”

Takeaways

Shopping apps display some of the highest drop-off rates for retention and engagement after a user downloads an app. To overcome this challenge, marketers should use deep linking and promotions to inspire continued engagement. Sending well-timed and targeted mobile offers can drive brand loyalty and retail sales.

Although we can’t be sure how the spread of COVID-19 will affect app usage, it’s safe to assume there will be a boom in the use of retail and grocery apps as consumers are restricted from leaving their homes. In fact, to respond to the surge in online shopping, Amazon announced it will be hiring 100,000 new employees in the United States. This shows it’s not only important for shopping apps to invest in retargeting for long-term marketing efforts but also to respond to the short-term surge in demand during the Coronavirus pandemic.