Consumer Spending on Subscription Apps Surges Despite Decreased Ad Spending

As mobile app marketers pivot their focus from growth to customer loyalty, ad spending on app installs has seen a significant decline. According to the 2023 State of App Marketing for Subscription Apps report by Liftoff and AppsFlyer, Android subscription app install spending dropped by 41% and iOS by 30%. However, this decline in ad spending doesn't appear to have dented consumer spending on apps.

While user acquisition saw a substantial decrease on both Android and iOS platforms, media re-engagement budgets surged by 48% in 2023. Coupled with this, there was a significant increase in total consumer expenditure on subscription-based iOS and Android apps. Spending on iOS apps rose by 35%, and Android apps saw a 22% increase. This surge in spending was likely due to users subscribing to more services or accepting the price increases of their existing subscriptions. The popularity of subscription-based apps is expected to continue to rise, especially when they offer attractive discounts for long-term commitments.

Data from the report reaffirms the widely held belief that Apple users are more inclined towards subscription-based services. Previous reports have shown that iOS users tend to spend more than Android users. In addition, the report shows a significant increase in the install-to-subscription conversion rates. On Android, conversion rates grew by 20%, while on iOS, they increased by 15%. Around 50% of iOS users who saw the app tracking transparency (ATT) prompt in subscription apps agreed to be tracked. Utility apps recorded the highest consent rate at 59%, indicating that users are more likely to consent to track if they see clear value in it, enhancing their overall user experience.

Although around 30% of subscription apps are in the gaming category, these apps generate a significantly lower revenue share from subscriptions than non-gaming apps. Non-gaming apps, which include categories like utility, health & fitness, and entertainment, derive the majority of their revenue from subscriptions. These apps utilize subscriptions as a key strategy for monetization.

In summary, despite a significant decline in app install ad spending due to a shift in focus towards customer loyalty, consumer expenditure on subscription apps continues to rise. Apple users, in particular, show a strong inclination towards subscription services, with higher spending and improved conversion rates compared to Android users.