Measuring App Retention Strategies: Twitter will probably be fine



What happens when you take a look at a well-established app in a mature market?

You will probably see something like this:

app retention strategies
Download trend in the US, Sept.2014-Feb. 2015

Twitter’s past 18 months have been stable in terms of downloads, slightly decreasing since July, 2015 (~150k Downloads/Day) — The spike in downloads in February, 2015, can be attributed to the app being featured on the iTunes homepage in 121 countries. If we look at Facebook, now the most popular app in the United States (77% of smartphone users), for comparison, we also see a flattening download pattern:

app retention strategies
Download trend in the US, Sept.2014-Feb. 2015

The ‘gold rush’ of app downloads, back when the app stores first opened their doors, is over. What do we see looking into the future? We expect growth in revenue from app usage -and from advertising- to surpass the growth in app downloads.

In mature markets, users have integrated smartphones into their lives for enough time to have formed defined app usage habits. Research speaks to this: users have rather small pools of apps they have a use for, and the (very considerable) amount of time they spend in apps every month is centered amongst an even smaller number of them. Users pretty much have their ‘app needs’ covered, and its mostly by companies that were already established before mobile. Download growth is going to become characteristic for emerging markets, and for Android (mostly because of its wider variety of devices).

What does this mean for companies like Twitter? Well, probably that it has a tough road ahead of it in the public markets if active user growth continues to decline. This week has been rough for the service (and its investors), as it announced user growth for new users in Q4 and underwhelming revenue guidance for Q1.

My view is maybe a bit contrarian: Twitter has done the hard work in mobile - acquiring users. Now they can turn their attention towards growing revenue per user, a point astutely made by @pkedrosky this week:

app retention strategies

Seems like just the task that product savant @jack should be able to fix by getting twitter’s sh*t together, for example by changing the @reply system that is rather confusing for new users.

What does this mean for the app economy as a whole? That revenues will most definitely be coming from advertising and premium in-app features, as users have defined a roster of apps that they dedicate most of their time to. The rule is simple (and also an alliteration!): Downloads (down) * usage (up) = (more) money.