When it comes to app growth marketing, there is an “ocean” of opportunity. Estimates on the size of the market vary, with AppsFlyer calculating that global app install spend will jump from the $57.8 billion we saw in 2019 to $118 billion by 2022. Looking at this year, the global app install market may reach over $76 billion — no small drop in the bucket.
These large spend numbers aren’t a surprise, considering the priorities of mobile app marketers: 71% rank “user acquisition” as one of their leading mobile app marketing goals. And yet, despite a market that is built for take-off, marketers are still swimming in the same limited lanes. Two of the biggest lanes crowding out any others should come as no surprise: Facebook and Google. These walled garden players are the most dominant in the mobile space, yet also create an ideal scenario for data black holes to form. This means it is impossible to truly optimize across multiple campaigns or stitch together a reliable customer journey.
What does a Red Ocean strategy look like?
Apps face an average CPI rate of $2.24 globally with zero guarantees of an app installer converting into a revenue-generating user. This challenge (and others) contributes to the “Red Ocean” in which marketers currently find themselves. The Red Ocean/Blue Ocean marketing theory is well known, highlighting the difference between struggling to survive in a crowded, competitive market (Red Ocean) versus exploring new solutions and differentiators instead (Blue Ocean). And when marketers swim in the Red Ocean, they have to strategize based on its rules.
A Red Ocean Marketing Strategy focuses on:
- Competing in existing market space
- Beating the competition
- Exploiting existing demand
- Making the value-cost tradeoff
- Aligning the whole system of an organization’s activities with its strategic choice of differentiation or low cost
Understanding the challenges of swimming in the Red Ocean
While it may seem safer to play the same game as others in the mobile space, the risk is greater than the reward.
The Red Ocean isn’t the right place to be. In a Red Ocean, app growth marketers are forced to focus solely on beating the competition at their own game. That takes several forms, as outlined below:
- Driving CPAs and CPIs as efficiently as possible: This must be done through the same channel that most other growth marketers pursue, and comes with a complex set of challenges. For example, despite massive redesigns to app stores, it remains exceedingly difficult for companies to stand out without prior popularity or a large-scale, expensive acquisition campaign — a classic chicken/egg scenario. Even when new users are secured, the average thirty-day retention rate is a mere 14% across a variety of app categories, according to eMarketer.
- Exploiting existing demand: The Red Ocean is about reaching the same target audiences that every other mobile app in your competitive space likely targets. Without access to message amplification or the ability to see outside of what you traditionally consider your target audience, you may be trapped thinking inside the box, no matter how hard you try to escape.
- Making the value-cost tradeoff: Ultimately, navigating the Red Ocean means that sooner or later you’ll have to choose between higher value at a higher cost, or lower value at a lower cost. For example, do you spend more to reach a larger, higher quality install audience who may become valuable revenue-generating app users, or do you spend less to reach a smaller, potentially lower quality audience with a lesser chance of converting them into revenue-generating app users.There is no such thing as the best of both worlds in a value-cost trade-off scenario, especially when you already exist in a competition-heavy market.
It’s plain to see that swimming in the Red Ocean isn’t a smart long-term strategy. But while the strategic challenges of Red Oceans listed above are one big reason to be wary of them, there are tactical challenges as well.
Looking at Red Oceans on a tactical level
Reliance on traditional, standardized channels for advertising is the biggest piece of the puzzle for most app marketers, and while that may seem like the best bet, it’s still flawed on a practical level.
Advertising usually proxies audience targeting for relevance — but this isn’t good enough. The context that they appear in often isn’t relevant. There’s also the consideration of context for the audience. Third-party data sources (DMPs) are fading, so everyone is rushing toward contextual advertising. Yet while it sounds promising in theory, there is still no good way to do it in-app.
Even when advertising plans go off without a hitch, app marketers face the additional challenge of audience resonance. Advertising as a whole doesn’t necessarily resonate as an authentic channel for younger audiences, which means that even a theoretically strong campaign can fail to generate ROI. When combined with issues of frequency and inaccurate or difficult-to-discern metrics caused by walled gardens, traditional methods of advertising quickly lose their luster.
Navigating to the clear water of Blue Oceans
After so long spent trying to stay afloat in Red Oceans, it’s time for app marketers to seek different, less crowded waters.
You’ve just taken a deeper dive into the biggest challenges facing marketers today when they choose a Red Ocean strategy. In part two of our “Oceans” blogs, you’ll gain a new understanding of the thinking behind a Blue Ocean strategy, and how it can provide you with the fresh ideas and the audience connections you need to find success. Here’s a sneak peak at what a Blue Ocean strategy looks like:
A Blue Ocean marketing strategy focuses on:
- Creating uncontested market space
- Making the competition irrelevant
- Creating and capturing new demand
- Breaking the value-cost trade-off
- Align the whole system of an organization toward differentiation and low cost
Can’t wait for the next piece to find out how to build a successful Blue Ocean strategy? Ask a growth technologist to help get your app marketing strategy swimming in clear waters by reaching out to grow@impact.com. See parts two and three in our deep dive into Blue Oceans and mobile partnerships.
