Top 4 retargeting strategies to maximize revenue for on-demand mobile apps

In this article, we look at data-driven retargeting strategies that app businesses can employ to improve revenue and retention rates

The rise of on-demand platforms and the channels they advertise with

In the digital-first world, consumers have become accustomed to convenience and immediacy. From streaming services and food delivery, to e-commerce and comparison sites, our needs can be fulfilled with just a few clicks on a smartphone. Apps and websites were quick to provide digital solutions for what were previously-offline products and experiences – and in doing so, they laid the path for what we know today as the on-demand economy. The industry has grown tremendously since it began, most notably between 2016 and 2019, during which the number of on-demand customers has more than doubled. Today for example, it’s estimated that in America alone, over 50 million people regularly use food delivery apps.

In more recent years, increased competition in the app space has led to a gradual but inevitable plateau in market penetration. This means that on-demand businesses (and the ad agencies who represent them) are forced to make more strategic marketing decisions to ensure customer growth and revenue. While the approach may vary according to the products or services on offer, a wide range of advertising channels have proven to be suitable avenues for most on-demand businesses – including offline channels like satellite television or out-of-home ads such as billboards.

However, because on-demand businesses exist as web or app-based platforms and can make use of the extensive data points they collect on their users, online marketing channels tend to be the most valuable for running highly-targeted and performance-driven campaigns. Owned channels such as organic social, email marketing and push notifications are not only free of cost, but a great way to re-engage existing customers. Paid channels on the other hand, (such as social media ads and in-app advertising), are arguably even more valuable because they can be directly connected to your app’s data stream. This helps you to identify and target new customers, while still allowing you to retarget your existing user base.

The importance of combining user acquisition with retargeting

Advertising an on-demand business through paid online channels requires a two-prong approach. The first stage is user acquisition (UA), in which your ads typically focus on conveying brand awareness and product benefits to potential customers who haven’t yet downloaded your app. The goal of these ads is to acquire new users and to increase your install rate. Getting users to download your app however is only the first step in your marketing funnel because a new install does not guarantee that the user will purchase from your app, or even engage with it. Studies have shown that in 2022, 49% of all downloaded apps were uninstalled within the first 30 days.

Because revenue and retention is the key to business success, the next stage of your marketing strategy should involve retargeting campaigns. Retargeting is when you show ads to your existing users who have already installed your app. By segmenting these users into groups based on their in-app behavior, you can present them with highly tailored messaging that encourages them to perform specific actions – such as registering an account after the installation, using certain features within the app, or making first-time and recurring purchases. This helps to move users through your sales funnel and reduce customer churn. It also helps to drive retention, in-app engagements and revenue events like purchases, which increase a user’s lifetime value (LTV).

Retargeting campaign ideas and best practices

Once your UA ads have been set up and optimized to acquire a steady flow of new users, it’s time to think about which retargeting campaigns you want to run so that your newly acquired and existing users continue to use your app. As mentioned, the traditional approach to retargeting is to segment users according to where they are in your sales funnel, then run ads with tailored messaging to move each group closer to the point of purchase. This approach addresses key stages across the user’s journey and can be scaled to your whole user base – but there are many specific campaign types and user signals that app businesses can use to improve their ad performance, and return on ad spend (ROAS).

1. Timing
On-demand apps are used spontaneously by their customers – but this doesn’t mean their behaviors are hard to predict. By analyzing your existing user’s purchasing history, you can retarget them with ads in anticipation of peak sales windows. A food delivery app for example can drive up sales by retargeting its users shortly before meal times. Pair that with a sense of urgency, (like offering them a discount on their favorite restaurant if they order before 1pm) and the user is much more likely to make a purchase within your app.

2. Location targeting
In-app and social media advertising also offer you the chance to retarget your existing users based on their location. Although segmenting your audience to target specific geographic areas can be somewhat time consuming, there are many ways that on-demand apps can benefit from it. For example, people living in an area that is relatively underserved by supermarkets or public transport may be more inclined to purchase from on-demand apps that deliver groceries or offer mobility services – such as car hailing and bike rental.

3. Personalized recommendations
On-demand apps with a wide range of products (such as shopping platforms), can leverage your user’s previous purchases to recommend items that they might wish to buy in future. You could target users with ads for a product that they’ve viewed before but never purchased, or you might advertise a product to them that they’ve bought a few times in the past and may wish to buy again. You could even show your users entirely new products, in the knowledge that these products have proven popular among other users with similar attributes.

4. Dynamic product ads
Dynamic product ads (DPAs) can connect to your app’s ‘product catalog’ and automatically populate itself with relevant product recommendations based on the attributes of the user who is being retargeted. This means you don’t need fresh ad creatives and copy for each product ad, because the information is pulled directly from your app. You can even use deep links in your DPAs so that when a retargeted user clicks on the ad, they will arrive directly at that specific product within your app. This allows for a much shorter user journey as the user does not have to manually search for the product in your app.

Because in-app advertising and social media are so effective at delivering highly-tailored ads, it makes sense to use both of these channels to facilitate data-driven retargeting strategies like those outlined above. Facebook’s advertising tools are useful self-service platforms which allow your team to easily and independently experiment with retargeting campaigns. In-app advertising on the other hand (where your ads appear in other apps) is done in collaboration with a mobile advertising partner – also known as a display side platform or DSP. While DSPs, (such as Remerge) are typically ‘managed services’ rather than self-service platforms, they offer unique advantages like greater flexibility for customization, more personalized support, access to higher quality users, and better overall performance due to the experience and expertise that managed DSPs have developed.

Summary

Marketers tasked with promoting on-demand apps must advertise more strategically to gain revenue in an increasingly competitive marketplace. User acquisition campaigns are as important as ever for driving app growth, but retargeting remains the best way to retain users and increase their customer lifetime value. App businesses can work with many advertising channels, but the most valuable for retargeting are arguably paid online channels such as social media or in-app advertising. These channels can be connected with an app’s data stream to leverage real-time customer insights like their purchasing habits, current time or current location. Doing this allows app businesses to identify and retarget their existing users with personalized ads that are most likely to convert.