New Report from Liftoff and AppsFlyer Finds Consumers Spending More on App Subscriptions Despite UA Budget Cuts

Consumer spend rose 35% on iOS apps and 24% on Android, while budget cuts led to a 41% drop in UA ad spend on Android and 30% on iOS

San Francisco, CA (July 26, 2023)Liftoff, the leading growth acceleration platform for the mobile industry, and AppsFlyer, a leading mobile marketing measurement platform, have published a new report revealing the key trends in subscription app spending.

The 2023 State of App Marketing for Subscription Apps report finds that while user acquisition (UA) spending and non-organic installs (NOI) have decreased, consumer spending has increased considerably in 2023. Many users are now either subscribing to more services or absorbing the price of hikes to their existing subscriptions, providing app developers with a predictable monetization and revenue stream.

The report is based on data from 5.2 billion installs of apps offering a subscription, and an analysis of over 6,000 subscription apps with at least 3,000 installs per month, between January 2022 and April 2023.

Key findings include:

User acquisition spending drops by 41%

The current state of the economy has led to a drop in ad budgets, moving away from growth and focusing on customer loyalty. As a result, global app install spending (user acquisition) plunged by 41% on Android subscription apps and 30% on iOS. The most cost-effective marketing tactic, owned media re-engagement, rose 48% in 2023.

Consumer spending rises by 35% despite economic climate

Despite a downward trend in marketing, there has been a 35% rise in total consumer spend on subscription-based iOS apps in 2023 and a 22% rise on Android apps, with consumers either subscribing to more services or absorbing the price hikes of existing subscriptions. 

The boost in spending is predicted to continue as subscription-based apps become more popular, especially if offered with a significant discount for an extended commitment.

iOS conversion rates are over 50% higher than Android

This reinforces the established perception that Apple users are a more natural fit for subscription-based services, with findings from previous reports consistently highlighting that iOS users are higher spenders than Android. Install-to-subscription conversion rates have also surged due to a significant push in deep paywall optimization, rising 20% on Android and 15% on iOS.

Almost half of ATT prompt interactions lead to consent

Nearly half of iOS users who have seen the app tracking transparency (ATT) prompt displayed in subscription apps consented to tracking, with utility apps having the highest rate at 59%. The report’s findings suggest that as long as the value proposition is clearly demonstrated, users are willing to consent in return for a better user experience.

Nearly 30% of subscription apps are games, but revenue share is significantly lower

29% of apps that offer subscriptions are games. However, the share of revenue that gaming apps generate from subscriptions is significantly lower than non-gaming apps, where subscriptions generate the vast majority of revenue. Apps from multiple categories use subscriptions for monetization, particularly utility, health & fitness, and entertainment apps.

Scott Reyburn, Senior Content Marketing Manager at Liftoff, said:

“Despite the economic downturn, app marketers should feel assured by our latest findings – which show a rise in consumer spend and revenue growth per user, especially where subscriptions are concerned. while certain subscription app genres, particularly health & fitness and education, should consider carefully timing their campaigns for the peak UA period in January to avoid high inventory costs in Q4.”

Shani Rosenfelder, Director of Content & Market Insights at AppsFlyer, said:

“Subscription-based apps have emerged as a beacon of stability amid global economic turbulence, with consumers subscribing to more services or absorbing the price hikes of their existing subscriptions due to inflation. Marketers can gain confidence from the rise in consumer spend and should shift to a profitability mindset for the rest of 2023, including expecting continued growth, at least in the short term, as revenue per user is going up and the average price is as well.”

Other key takeaways from the report for marketers include:

  • Start with paywall optimization and then test hybrid monetization with ads and in-app purchases (IAPs).
  • Make the most of app stores’ focus on subscription revenue, such as Google’s experimental paywall feature.
  • Prepare for SKAN 4, which is set to reach mass adoption.

For more details about Liftoff and to download the full report, visit here.