Subscription apps are creating a new blueprint for retargeting users — and it's working. In 2021, subscription app revenue reached new heights. The top 100 non-game, subscription-based apps saw their consumer spend increase 41% to $18.3 billion— a 41% increase from 2020.
What can be learned from subscription app’s marketing tactics when it comes to retargeting and retaining your users?
Subscription app revenue is growing
As we’ve written about before, subscription business models have gained popularity in recent years. Revenue from the top 100 earning non-game subscription apps represented 14% of the total $131.6 billion consumers spent on in-app purchases in 2021. As mentioned above, this represents a 41% increase from the $13 billion in revenue generated in 2020.
In the U.S., the share of subscription app revenue is even larger. U.S. consumers spent $8.5 billion in the top 100 non-game subscription-based mobile apps in 2021, up 44 % year-over-year. This represented 21% of the total $40.7 billion U.S. consumers spent on in-app purchases last year.
Source: Sensor Tower
Who uses subscription apps?
According to a survey conducted by Adjust, on average, 25 - 34-year-olds spend the most on subscription apps at $25.85 a month. On the other hand, users who are 55 and over spend the least at $13.97 a month.
The average user pays for 4 subscriptions a month for an average total of $20.78. Streaming apps are the most frequently downloaded subscription-based apps (30.7%), followed by Gaming (9%) and News (4%).
Focusing just on OTT, streaming apps drive the most revenue of the subscription app category. Consumers spend an average of $33.58 a month for streaming and on-demand entertainment services. Netflix, Amazon Prime, Hulu, Disney+, and YouTube TV represent the top five favorite streaming services among users.
A note about subscription app models
Rather than a one-size-fits-all approach, there are a variety of subscription payment structures.
- Pay-to-use models such as Netflix or Masterclass in which the users pays for the service.
- Pay-to-upgrade or ‘freemium’ models in which there’s a free version with abbreviated offerings and a paid version with comprehensive offerings. Examples of this type include VSCO or Duolingo.
- Pay-to-pay-less subscription types that offer savings to users through the subscription (much like a loyalty program), such as Amazon shopping, Deliveroo and Uber.
Subscription apps: from new users to long-time subscribers
One of the drivers of subscription app growth in recent years is its success as being a reliable method of monetization. More and more apps are turning to subscription models not just to drive revenue but maintain it. That being said, apps with subscription models still face the same challenges as other apps, such as user churn. In fact, retention rates for subscription apps average below 50%, emphasizing the need to focus on retargeting strategies to maintain users rather than just acquiring new ones.
Subscription App Marketing Tip #1: Build a strong and devoted user base
This strategy applies to all types of subscription-based apps but is particularly relevant to freemium apps that offer an unpaid, core version of their app. For these apps, building a user base that is devoted and engaged is key to subsequent conversion upsells to the paid version of the app. How can an app create a strong base of users? Here are a few ideas.
- Invest in new features, functionalities and product offerings.
- Respond directly to user requests.
- Build a community around your app.
Subscription App Marketing Tip #2: Make the “Ask” at the right time
Highlight the value of your subscription offering at key moments in your activation flow. If your subscription sign-up offer is a mandatory step right after the download, communicate the benefits of subscribing to new users with UA creatives. Segment and retarget the users that engage with these creatives but drop off before conversion with an improved offer (“the first week’s on us”).
If your app's subscription sign-up becomes mandatory after a free trial period, build a retargeting campaign that segments users that dropped off at the end of the free trial period that communicates your subscription value proposition.
Finally, if you have a freemium model and subscription activation could happen at any time, focus on communicating the value of the paid features of your app. This could be in the form of retargeted creatives that highlight a feature only accessible through your subscription.
Subscription App Marketing Tip #3: Create value for your users
Create value for your users and they’ll respond in kind. You can do this by offering an opportunity for users to try the paid version of your app for a trial period before purchase. You could also create a program for extra features or discounts in exchange for new user referrals. Finally, highlight social proof of your app's success by showcasing ratings, reviews and case studies from existing happy users.
Takeaways on Subscription App Retargeting
Subscription business models have gained popularity in recent years. Revenue from the top 100 earning non-game subscription apps represented 14% of the total $131.6 billion consumers spent on in-app purchases in 2021, a 41% increase year-over-year.
- 25-34-year-olds spend the most on subscription apps at $25.85 a month.
- Streaming apps are the most frequently downloaded subscription-based apps.
- While subscription apps are growing, retention rates average below 50%, emphasizing the need to focus on retargeting strategies to maintain users rather than acquiring new ones.
- There are various structures of subscription models:
- pay-to-use models in which users pay for the service
- pay-to-upgrade or ‘freemium’ models in which there’s a free version with abbreviated offerings and a paid version with comprehensive offering
- pay-to-pay-less subscription types that offer savings to users through the subscription.
- To retarget users effectively, subscription apps should focus on building a strong and devoted user base, serving ads at the right time in their activation flow and creating value for users.
Looking to retarget users to your subscription app?
With the expansive growth of subscription apps in recent years, it’s time to focus on retaining the users rather than just acquiring new ones. Contact our team of retargeting experts to build a fully-optimized sales funnel for your subscription app!