AppNationSF brought together some great minds in the mobile space to assess the current app ecosystem and relay best practices to the audience to help them succeed. The overall take away was that product quality is of the utmost importance and that brands and indie developers alike should test what works for them. More after the jump.
Is there a bubble?
It’s that time again in Silicon Valley when emotions are soaring high and dreams of acquisitions seem to be entrenched in everyone’s mind. Valuations have increased for companies that normally wouldn’t see such valuations – but is it really because of a bubble? many experts at the conference felt that companies have started creating real long term value unlike the 90s where venture financing decisions were being based on power point presentations.
The web and mobile industry’s fast growth has made it easy and exciting for anyone to enter. Most seed companies nowadays need far less money than they did before. Entrepreneurs are operating companies with increased efficiencies as there is usually little capital to work with. At the early stage of the market we are seeing a democratization of capital and there are different types of money available for various categories. Because the effects of money aren’t trickling on to Main St., if there is a bubble then it’s at the early stage scene. It’s also true that there may be a set of bubbles that matter differently across various verticals.
For every Angry Bird there are a 1000 failures, or companies that don’t achieve the scale necessary to operate their business. The key question to ask yourself is: are you looking to operate a lifestyle business or create a company of scale. In addition, its important to plan for the long term. Many panelists recommended reducing platform dependencies as much as possible and focus on being a category leader. Whether its the heart category or diet, paying attention to the potential size of the category is important when forecasting growth.
Almost every service has gained help from a partner in one way or another. Prior to social networking sites, Internet 1.0 leaders were almost like parasites or symbioses on hosts. Google, in the early days, leveraged AOL and other distribution partners, eventually relying on the open web. Skype used Kazaa to draw in users and there are plenty of other examples out there as well. Figure out what will jump start your app and start gaining activity so you can measure user behavior analytically and make the necessary changes to achieve a satisfactory user experience.
Operating a live service
Different teams have different operational strategies they abide by on a daily basis. Some spend 95% of their efforts on development, constantly creating new content and improving gameplay to cater to their community. Others think deeply about their product, figuring out ways to incorporate elements of storytelling to instill emotional connections within their player base. It’s also important to figure out new ways of making money, whether that’s exploring new distribution channels such as new app stores or exploring brand licensing opportunities.
Monetization and User Acquisition
User acquisition is also a topic that was on a lot of the audience’s mind. We learned that acquiring users through display advertising may not be worth it as user acquisition costs are close to $10 through such methods. Unless your average revenue per user exceeds $10, it would not make sense to use that channel to acquire users. Social media is also not a strong channel for promoting paid apps as we’ve learned from panelists in several conferences.
Developers are trying to figure out ways to let consumers experience the app before they buy it. But which model works best? Is it better to create a paid 99 cent app that’s consistently updated and also have a free version that offers a sneak preview? Although this specific strategy was popular in the past, most of the bigger guys are shifting towards fermium models that focus on distributing a free app with hopes of selling in-app purchases to users. According to a few panelists, this model works better for games as opposed to utility apps.
There are a number of mobile advertising firms offering advertising solutions ranging from opt-in lead-in type forms to rich mobile media for developers to use in their apps. These companies report high eCPMS in the range of $30 to $100 but I have no solid evidence of this.
There are also companies like tap.me that help with brand integrations into games in interesting ways. Apps and games alike can use ads to monetize their users, but you have to have a lot of users if you plan on building a solid business around this.
Free apps dominate on Android as the users are not trained to spend money like they are on iOS. This is expected to change since Google has recently rolled out a smoother purchasing process and in-app purchases on Android. For now, Android apps are best being free and monetized with ads.
Although word of mouth marketing may be the pillar of mobile apps spreading from friend to friend, creating ‘viral’ apps on mobile isn’t really possible without the right channels in space. For example, mobile gaming network PapayaMobile is strongly focused on executing viral campaigns for its apps within their gaming network and I’m sure that involves a lot of knowledge and experience of managing these social networks.
With that said, app review sites and top 10 lists are the most commonly thought of marketing methodologies when it comes to mobile. One panel discussing search revealed that search was too premature for discovering mobile apps although there are upstarts in this space attempting to solve this problem of discovery via search. Within search social recommendation may play a role but it remains to be seen. People are actively searching for specific app names vs. doing vague term searches, indicating that some brand awareness usually precedes search. This was the experience for some of the panelists, whereas others saw that people were searching for more broader terms.
Regardless, it’s important to generate metadata via user generated content and audience actions that allow them to be indexed overtime. The ability to link into the app in search will also be important although this area is quite nascent as of now.
- Mobile becoming primary gateway to social world (social network + apps + LBS)
- Embedded payment factors (i.e. motorola atrix 4G with Dock Connector)
- Since devices will get faster and smaller, all our media consumption will be channeled through the mobile device
- Mobile as social gateway (85% of Mixi’s users are accessing the service from mobile devices, a number that’s reversed since 2006)
- Mobile device as wallet and Personal ID
It’s a great time to be an app developer but its important to test, iterate and figure out the right model that works for you.