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Source: Localytics, 2012-01-18

In-app purchases are the lifeblood of many apps, and although it may seem like getting users to the sale proposition quickly is ideal, a new Localytics study finds that building relationships with app users and fostering long-term usage are more important. Of all users in Localytics’ study who made an in-app purchase, 44% did not do so until they had interacted with the app at least ten times. On average, a user who makes an in-app purchase will do so 12 days after first launching the app.

In research from last year, Localytics found that 26% of apps are used only once after being downloaded. As a result, the app publisher community has made a concerted effort to shift away from incentivized downloads and towards engagement and overall customer lifetime value (CLV).

With this new data, that shift is shown to be even more important. With a high correlation between highly engaged users and in-app purchases, developers and publishers with a goal of maximizing CLV have even more reason to obsess over user retention. The more your users interact with your app, the more likely you are to get a chunk of the $5.6 billion in in-app purchases expected by 2015.

Engagement leads to higher CLV

Even more, the users who wait and interact with an app multiple times before making their first in-app purchase are more valuable in the long run, making 25% more in-app purchases over their lifetime as a customer. First session purchasers will make an average of 2.8 purchases in a given app during their user lifetime, compared with 3.5 purchases for all other purchasers.

While moving users towards a purchase as quickly as possible is often considered the primary objective, this data suggests that turning purchasers into loyal, repeat users should be a top priority. While a first-session purchase is an excellent result, our data found that only 16% of users who make a purchase their first app session will go on to engage with that app 10 or more times, compared with 26% of overall app users. Thus, it is imperative that app developers and marketers pay special attention to their analytics solution’s loyalty features.

Grow customer lifetime value

By building your app’s engagement and your brand’s presence in a user’s mind, you can generate better overall revenue based on a loyal base of repeat users. Given the 12 day average time between downloading an app and making a purchase, driving loyalty across a period of weeks will often generate greater revenue.

At Localytics, we help app developers and marketers build more successful and profitable apps with the highest possible CLV through retention analysis and using funnel analysis to optimize in-app purchases. To enable these analyses, app publishers track each purchase and the steps taken to complete the purchase. For the purposes of this study, Localytics analyzed nearly 30 million users’ in-app purchasing to extract patterns publishers can use to benchmark their own apps’ performance.

Source: Getjar

In the last post, we wrote about the huge future the freemium model for mobile apps (65% of all mobile revenue by 2015). But setting up a successful freemium model is easier said than done. GigaOm had some statistics in an article that came out yesterday. Essentially, using data from Localytics, GigaOm shows that the longer a customer uses your app, the more likely they are to purchase in-app content. This should be a surprise to anyone that’s played a freemium game. Once you’re hooked, it’s difficult not to spend a buck or two to keep playing.

Essentially, you need to focus on loyalty over quick sales. After all, according to Localytics, 26 percent of app users abandon an app after one try.

You’re goign to lose that 26% no matter what, so focus on giving the remaining 74% a great experience. Ideally, such a great experience that they’re willing to buy some in-app content. It takes an average user 12 days after the first use of an app before they’re willing to whip out their wallet. On top of that, only 22% of users make a purchase on their first try of an app, and 33% buy something between two and nine uses. But here’s the kicker: 44 percent make their first purchase after 10 or more uses.

But this begs the question, how do you hook someone without being manipulative or too aggressive? There are a number of ways, but for starters, look at your barriers. For arguments sake, you have a fishing game. In this fishing game, there is a certain high value fish that swims by on a set interval. If a user wants the fish to swim by sooner, they can pay for that with in-game currency. If your set interval is too small, say a few minutes, the user will never pay to speed up the process. However, set you interval too high, say a few days, and the user may feel manipulated.  Asking a user who is unwilling or unable to purchase an item to come back in a few days is unreliable at best. At this point you’re going to start losing potential paying customers.

Another issue could be your in-app currency exchange rate. In your hypothetical fishing game, the in-game currency is called Fish Bucks. A user can earn Fish Bucks, or they can purchase bundles within the app. If you price fish bucks at a one to one exchange real world dollars, a user can put a real dollar amount on the purchases. If a feature costs  2 Fish Bucks, is costs 2 real life dollars, which can be  harder for a user to justify. However, if you change the conversion rate so that 1 real life dollar is equal to, say, 1000 Fish Bucks, it comes harder to compare to real world money and thus easier to spend. There are many real life examples of this: Arcade tickets, Disney Dollars, gift certificates, etc.

Being successful in this space is all about walking a fine line between providing an engaging experience and getting paid for your hard work. What works for your? Let us know in the comments!

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Source: Marketing Charts, January 23, 2012
When reviewing and evaluating agency relationships, the majority of multi-national client marketers look at strategic contributions (57%) and business value created (56%), according to [download page] a CMO Council survey released in January 2012. Other key considerations include agency efficiency and effectiveness (50%), market impact and success of campaigns (42%), and creative excellence (42%). Yet although senior marketers appear to have an array of methods by which to evaluate their relationships, slightly more than two-thirds do no have solutions or hosted services that improve the agency benchmarking and evaluation process. Similarly, only about one-quarter have developed a best-practice model or formal guidelines for client/agency relationship management. More significantly, 65% do not employ any form of ad scoring or tracking services, and 38% rate their ability to extract optimal value and return from agency partnerships as poor or in need of improvement.

Alignment Leads to Improvement

The top technique for improving collaboration, output, and performance between clients and agencies is ensuring teams are fully aligned and in-sync with objectives and deliverables, cited by 71% of brand marketers. Other popular tools for improving relationships include identifying and addressing points of friction and disruption (52%), using or developing performance scorecards or metrics (40%), continuously auditing and assessing competency and effectiveness (39%), and refining marketing operational processes to maximize efficiency (37%).

Although campaign alignment is seen best for improving collaboration, that may be difficult to implement, at least among online advertisers: according to a survey released in January 2012 by Digiday, sponsored by Vizu, although nearly all (97%) brand advertisers reported wanting their primary marketing objective to be well defined in advance of their online campaigns, only 18% of agencies said they are able to establish a single objective against which ROI will be measured with their clients in advance of a campaign.

Clients Keep a Broad Eye for New Insights

Meanwhile, a search for new ideas may be driving brands to increase their volume of agencies on retainer worldwide: according to the CMO Council’s “More Gain, Less Strain,” the most important value and gain from outside agencies include fresh ideas, analytics, and perspectives (48%) and new methodologies and creative approaches (39%). About 3 in 10 brands cited quicker, more efficient turnaround of work, as well as objective third-party advice and counsel.

Agencies’ Client Retention Gets More Difficult

Results from the report indicate that agencies may have some difficulty holding onto their client relationships: almost half of the survey respondents report they are hiring specialized digital marketing solution and service providers to implement new social, mobile, and interactive strategies. Another 47% plan to build internal capabilities and use incumbent agency services less, while an additional 45% are bringing in outside consultants to help set up and structure digital programs.

In fact, only 36% of marketers are committed to their agency relationships this year, with 49% saying that they may consolidate or change their global agency rosters. And just 5% of marketers report longstanding relationships with their agencies. A notable 32% are looking at selective replacement in their agency rosters, 9% see increased turnover of resource, and another 9% are decreasing the use of agencies.

Other Findings:

• When it comes to new areas of outside service provisioning and agency use, the majority of marketers are focused on mobile applications and mobile content (62%), social media engagement and buzz building (60%), multi-channel digital marketing (52%), web design, development, and performance improvement (51%), and SEO – paid and organic (51%).
• Just 9% of marketers believe traditional ad agencies are doing a good job of evolving and extending their service capabilities in the digital age, in contrast to 22% who view their agencies as struggling to transition their business models and service offerings.
• 58% of marketers are unsatisfied with the current process of measuring their agencies’ advertising effectiveness, and two-thirds expressed interest in adding new tools, technologies, and services for tracking ad impact, influence, recall, and response.
• 55% of senior marketers do not systematically evaluate creative impact, and 58% are unsatisfied with the evaluation process associated with benchmarking their agencies’ creative advertising effectiveness.

About the Data: The CMO Council teamed with Ace Metrix in the second half of 2011 to conduct a quantitative audit of 250-plus strategic and operational marketing stakeholders involved in the supplier relationship management, performance evaluation, and procurement process.

Tech Crunch Josh Constantine, Sunday, January 1st, 2012

“In the future we might not prescribe drugs all the time, we might prescribe apps.” Singularity University‘s executive director of FutureMed Daniel Kraft M.D. sat down with me to discuss the biggest emerging trends in HealthTech. Here we’ll look at how A.I, big data, 3D printing, social health networks and other new technologies will help you get better medical care. Kraft believes that by analyzing where the field is going, we have the ability to reinvent medicine and build important new business models.

For background, Daniel Kraft studied medicine at Stanford and did his residency at Harvard. He’s the founder of StemCore systems and inventor of the MarrowMiner, a minimally invasive bone marrow stem cell harvesting device. The following is rough transcript of an interview I did with Kraft at the Practice Fusion conference, which I’ve arranged into 6 big ideas:

Artificial Intelligence

Siri and IBM’s Watson are starting to be applied to medical questions. They’ll assist with diagnostics and decision support for both patients and clinicians. Through the cloud, any device will be able to access powerful medical AI.

For example, an X-ray gun in remote africa could send shots to the cloud where an artificial intelligence augmented physician could analyze them. Pap smears and some mammograms are already read with some AI or elements of pattern recognition.

This has the potential to disintermediate some fields of medicine like dermatology which is a pattern based field — I look at the rash and I know what it is. Soon every primary care doctor is going to have an app on their phone that can send photos to the cloud. They’ll be analyzed by AI and determine “oh that mole looks like a dangerous melanoma” or “it’s normal”. So the referral pattern to the dermatologist will slow down.

On the plus side, there are consumer apps likeSkin Scan where for $5 you can take a picture of lesion and send it to the cloud, and it will at least give you an idea if it’s dangerous or not. If it is, it can help you find a nearby doctor, which could help dermatologists get more business. Many fields are going to change because of artificial intelligence, pattern recognition, and cheaper tests.

Big Data

We’re gaining the ability to get more and more data at lower and lower price points. The primary example is the human genome and genomic sequencing. It cost a billion dollars or more 10 years ago to get a complete human sequence. However, the cost and speed of getting that data has dropped faster than Moore’s law to the point where it’s less than $5,000 when ordered online. From23andMe you can now get a cheap SNP test, and it has a pilot program for $999 for a whole exome.

Maybe there were 10,000 patients sequenced last year. Next year it could be 100,000 and soon millions. A genome sequence could be the cost of a blood count today.  When that information becomes queryable in an a crowdsourced and cloudsourced way we can be more predictive about what you’re more likely to get based on your genomics. You can then take preventative steps or get screened more often.

So we’re pulling in huge data sets from low-cost genomics to proteomics (analyzing the proteins in the blood) to quantifiable self. The challenge is to make sense of that data and make it actionable information without making the patient or doctor overwhelmed.

I think we need to make smart dashboards like they have for fighter pilots. They would piece together data from ubiquitous sensors, like those made by GreenGoose, and Microsoft Kinect that can measure your activity around the house. It would be like the OnStar for your body that could give you clues about when you’re about to get in trouble, and it could call for help or guide you to appropriate therapy.

3D Printing

3D printing has been around for a while but now it’s being applied to medicine in ways such as being able to scan the remaining leg of a patient that’s missing one from an accident. It can then build a prosthetic leg with skin and size that matches. 3D printing is integrating with the fast-moving world of stem cells and regenerative medicine with 3D ink being replaced by stem cells. In the future we’ll probably use 3D printing and stem cells to make libraries of replacement parts. It will start with simple tissues and eventually maybe we’ll be printing organs.

Social Health Network

Social networks have the ability to change our behavior. When you wireless weight scale shares metrics with your friends, you get praised for success and pressured if you’re not maintaining your diet. Social networks are also quite powerful for tracking and predicting disease. James Fowler, co-author of the book Connected is now working with Facebook to look at health data. Not surprisingly, the more friends you have, the earlier in the flu season you’ll get influenza. This could help predict when you’ll get the flu and let you take steps to avoid it.

We’re in the Facebook era, and are more open to sharing information in the healthcare spectrum. Individuals will share their whole history through services including PatientsLikeMe andCureTogether where patients with similar problems from migraines to Lou Geghrig’s disease will consolidate health information. This will enable improvements in clinical trials.

Genomera is trying allow for low-cost web-based clinical trial around any question. Practice Fusioncan also crowdsource that data from its electronic medical records. By collecting data from all the patients within a hospital or a region you can see trends and almost run clinical studies on the fly. For example you could see all the patients that have this gene and that are taking this drug, and determine if that drug is effective for them or not.

Communication With Doctors

New communication platforms similar to a Skype or FaceTime will help you communicate differently with your clinician. Many of these things are basically already here. The challenge is often not the technology but the regulatory and reimbursement markets around them. If you’re going to be talking with your clinician on your iPhone you may need to do that in a HIPAA privacy protected way. The physician is also going to want to be paid for that in some way. They’re not going to want to get all your data every time you have a hiccup or look at your iPhone pictures of your rash unless there’s a way to get paid.

The regulatory system needs to adapt towards to becoming Accountable Care Organizations, which reward clinicians and healthcare plans for keeping patients healthy opposed to paying them to do extra procedures. This contrasts with a model of paying them for service like putting in stents and doing things after a problem has already progressed. Incentives need to be aligned and reimbursement needs to change to enable some of these new technologies to actually enter the clinic.

Mobile

The ability to have your phone tie to your healthcare record and track medical metrics will have vast repercussions. Though some aren’t cleared for sale in US yet, devices like the Alivecor electrocardiogram can monitor your heart in realtime, send the data to the cloud, and allow your cardiologist to look at it instantly. Other devices are turning phones into otoscopes for looking in your ears, or glucometers for monitoring blood sugar.

Quantified self devices like the Fitbit, Jawbone Up, and more medically themed devices will take what you used to do dsin a clinic or hospital and bring it home. This will allow therapies to be tuned much more effectively than scribbling data on a piece of paper and bringing it in to your doctor months later.

Eventually these devices will converge into the equivalent of Star Trek tricorder that can perform a wide variety of medical functions. There’s even an $10 million X Prize proposed to reward the inventor of the first functional tricorder.

Unfortunately, the strict regulatory system and entrenched, interested of the United States are pushing innovation offshore. A lot of the work for using mobile phones for health care is happening in Africa and India. Since there are few physicians in some of these areas mobile health and telemedicine are taking off. For example, microfluidics allows multiple tests to be done on a small chip at pennies per test, with the ability to connect to the web for analysis. The US will need to find a way to solve these regulatory problems while keeping patients safe, otherwise jobs and revenue could slip abroad.
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To learn more about what’s happening next in healthtech, check out Singularity University’sFutureMed 2020 program, watch Daniel Kraft’s Ted Talk, and browse our healthtech channel.

[Image Credits: Shutterstock, koya979, Guiacirugiaestetica.com, shopping.com]

Our two cents:
Apple is certainly on to something here, but the price point for tablets, doesn’t exactly make the iBook play egalitarian.  And while few would disagree with the fact that iBook is more visually appealing than standard textbooks, the real issue is whether or not iBooks boost student performance levels, specifically in math and science. If Apple can link the iBook to these kind of metrics, then they’ve truly got something revolutionary. But it won’t be easy. After all, they aren’t just taking on an industry like they did with iTunes, they are taking on the entire educational system.