App Marketing Conversations:
M-Commerce This Holiday Season

In our latest App Marketing Conversations video, Apptentive’s Robi Ganguly is joined by Ian Sefferman of MobileDevHQ by Tune and Ryan Morel of Gamehouse to discuss the role of mobile in e-commerce this holiday season.

The conversation begins with a few interesting statistics on mobile commerce: (1) 25% of web sales this holiday season are predicted to be mobile, and (2) 40% of mobile sales will be app-driven. The video goes on to highlight how many companies, like Zulily and Amazon, are seeing an even larger proportion of sales on mobile devices, and the mobile market is expected to continue to grow as mobile wallets and Apple Pay take flight.

This installment also covers everything you need to know about the (lack of a) app store ratings and reviews freeze this holiday season and the challenges and costs of new customer acquisition. To dive further into these two topics, check out related posts on the Apptentive blog:

• Everything you need to know about the holiday app stores rush
• Save on continued increases in acquisition costs through retention marketing

Transcript:

Robi Ganguly: Hello and welcome to another App Marketing conversations. As always, I’m joined by Ian Sefferman, of MobileDevHQ by TUNE and Ryan Moral from Gamehouse and I am Robi Ganguly from Apptentive doing Movember so that explains this beautiful mustache. So a few weeks ago we talked a little bit about Apple Pay. We talked about e-commerce, want to talk some more, because the holidays are upon us. Next week is Thanksgiving, Black Friday and then that’s the sprint to the end of the year. So you’ve now used Apple Pay several times, you were telling us it’s pretty awesome, right?

Ryan Morel: Yeah, I think it’s pretty cool. I loved it. Some of the novelty of it is like, oh cool, right? And then there’s just the… that’s faster, that’s easier and at least from my perspective, I can clearly see the day where when I walk out of my house, I don’t have to grab anything off the table.

Ian Sefferman: Yeah.

Ryan: And I look forward to that day.

Robi: Except the three battery packs.

Ryan: Yeah well I mean we clearly get to a point where it’s either just a watch or even something smaller.

Ian: Yep.

Ryan: Where you can take your phone but you don’t have to. Okay, so.

Robi: And how about you? New insights or experiences on Apple Pay?

Ian: I actually haven’t used it again.

Robi: Okay.

Ian: I’m not sure if that’s telling or not. I kind of think that I just haven’t actually been buying a whole lot.

Robi: You been traveling internationally as well.

Ian: Yeah, exactly.

Robi: All right. And then let’s talk e-commerce and the holiday season. So there are several reports out talking about again this is going to be the biggest year ever. There are some specific identifications of stats, so I think one of the things that was most interesting was the powers that be in the forecast stats think that about a quarter of web sales this holiday season are actually going to be mobile sales, so that’s a combination of mobile web and mobile apps. So then they dig in further and they think that about 40% of the mobile sales are actually going to be driven by app. App commerce, right? So you get to see some of this data from your customer stat and just seeing in the marketplace. Does this sound right directionally?

Ian: I think it does sound right directionally and I think the other piece to that is I would actually say a lot of people are still buying on the desktop, on the web and that may be where the final portal is, but even more people are actually doing the research on mobile beforehand, and I think part of that is that quite frankly typing in credit card info and typing in all of your billing info on a smartphone really is pretty terrible experience.

Robi: It’s frustrating.

Ryan: Yeah.

Ian: Enter Apple Pay for developers. So I think the percentage of impact that mobile has actually outweighs the percent, mobile apps have, actually outweighs the percentage of dollars being spent. And that’s an interesting trend.

Robi: And what would you say this means for the app market that are listening and thinking about this stuff?

Ryan: So I’d actually say first that I think those numbers sound small for mobile. I think we saw Zulily come out with their…

Ian: Fifty percent.

Robi: Yeah.
Ryan: Right, and over 50% is mobile. Amazon, I think, has said that their numbers are something like that too, so only 25%, that feels small to me.

Robi: Yeah.

Ryan: So I think it’s becoming, we know where this is going right, so from an app marketer perspective, I think it’s twofold. So one, making sure that your app and the experience to purchase is as simple as possible. So whether that’s enabling Apple Pay or PayPal or whatever it is to avoid the, “Oh God, now I’ve got to pull out my credit card” and that crap. So that’s one thing. And then, two making sure that when you’re going through your user acquisition you’re doing a really good job of identifying who your customers are. Both running campaigns on Facebook, doing look-alike audiences for your good customers, right? So I think you have got to be really smart about the user acquisition part here because it’s going to be expensive.

Ian: Yeah.

Ryan: I mean, it’s already… We’re seen CPI’s as high as eight or nine dollars for games. So these are things with LTVs sub $20, but a commerce app has an LTV way higher than that. You can expect your CPIs are going to get higher.

Robi: Yeah. To put that in context, right. So there’s been a lot of controversy lately around Uber but some numbers came out from the beginning part of the year, like Uber’s financials in various markets and they’re saying in San Francisco, the average Uber customer spends $50-$60 per month.

Ryan: Yeah.

Robi: Right? And that’s obvious they’re all coming through apps, they’re not going to the Uber website right?

Ryan: Yeah.

Robi: So is all through their apps. Average customer $50-$60 per month. How much is Uber willing to spend to get that person?

Ryan: A lot.

Robi: Twelve times 50 probably, right? That’s a ridiculous amount of money to you know kind of slosh around the ecosystem from a user acquisition perspective.

Ryan: Yeah well, and so to that point. If you’re trying to acquire users and you’re competing with someone like Uber who isn’t probably willing to spend 70% of their LTV, so Uber takes 30%. Do the math really quick, so they’re making $200 a year. They’re probably willing to spend 70% of that. So they’re willing to spend $140 on an acquired user like, now watch.

Robi: Yeah.

Ryan: Watch your budgets.

Robi: And then, so to your point right, Zulily is out there saying over 50%. Amazon saying it’s turning towards 50%, in some areas it’s higher than that. The typical retailer about a third of the mobile revenue that they’re seeing is coming through their apps. So that means if you’re an app marketer and you’re not at a third today in your business and you do have e-commerce activity, you’re behind. This holiday season, I’m sure a lot of people are already feeling a lot of stress and pressure on this, but if you’re not at 30% coming out of the holiday season, your number one priority is what are we going to do to catch up and make this actually happen. Because it’s not that the consumers aren’t ready. It’s that you’re not ready to take their dollars.

Ryan: In my view, it’s an incredibly dangerous time not to be ready right? Because people now have really high expectations. We were looking for furniture and I went to download an app from a big company that we were looking to buy some piece of furniture from and their app is literally a catalog and I nearly threw it away and now are unlikely to buy furniture from them.

Robi: Wow.

Ryan: Right? Because it was like there was another company who was very similar right next to it saying, I’ll show you all my furniture right.

Robi: Right.

Ryan: So I think consumer behavior is to the point where we don’t have a lot of time, things are accessible really easily and there are options.

Robi: What else do you think app marketers should take away or be thinking about as they roll into this holiday season, and they watch their consumer spend money and they think about how to allocate dollars and present themselves?

Ian: Not necessarily about allocating dollars or anything like that but obviously my world exists inside the App Store and I think that we have seen some changes to the App Store. I think were going to see some more changes to the App Store before the end of the year. My guess is that I don’t think were going to see a lockup of the top charts this year. I think that they’ll probably actually stay open or at least mostly open much more than they ever have been in the past. So that’s interesting from a marketer’s perspective, is still a guess but it’s kind of the way that I’m imagining it happening.

Robi: Yeah, we just recently wrote a post about the historical App Store freeze were you can’t post stuff and then there’s historically the ratings and reviews and rankings freeze and we charted it and over the years it’s declined in terms of how long the freeze has happened so I think we agree. That’s likely to be more dynamic this year than in years past. And you guys just released attribution for YouTube ads to app installs.

Ian: We did yeah.

Robi: Particularly in the retail space, do you think that’s meaningful?

Ian: Yes I do obviously retail is huge on video and should be huge on video so it’s a much more visual communication, right? And I would love to see the YouTube channel light up as well because there are obviously huge amounts of viewership there that they could drive.

Robi: Any other thoughts?

Ryan: Yes. This is a tangent, one thing that I think we’re missing in mobile and what we see in the web a lot until we are obnoxious is good re-targeting. Right? Like I know today that if I go, because we all do this, we go to an app. We put something on our card and we leave it there. I don’t ever see a re-targeted ad for that even though they exist in a lot of other apps. So I think marketers probably need to be thinking about how are we going to bring people back into the card experience because there’s a lot of interesting and simple technology that you can use to do that. So I would say don’t just think about re-targeting on the web. Think about how you’re going to do it on mobile to get things done more.

Robi: Yeah. Make sense. All right well. Make sure to like this, check out the other installments of app marketing conversations this week. We talk about Geck and Echo and some other interesting things in space and be sure to support Movember and beautiful mustaches everywhere.