危机 – wēijī

*****UPDATE: we launched a ‘Psychic Octopus app for a bit of fun, I’ll update with learnings from that too in due course: http://bit.ly/9MzNPh*****

I launched an iPhone app earlier this year, it’s a location-based celebrity mag – enabling the user to choose venues near them based on which are popular with the stars. I came up with the idea by thinking through what might disrupt the traditional celebrity media industry, geo-location was top of my list for obvious reasons, there’s more on the app below.  I thought I’d share some thoughts on the whole experience (when I tried to do research on the subject I could find shockingly little).

The goldrush is over, now it’s just a rush.

Seeing the potential in the iPhone developers rushed to launch applications in 2009.  It was a genuine goldrush – the apps that appealed to the iPhone’s early adopters became very popular and often sold in significant numbers – fairytales of kids becoming millionaires from their bedrooms emerged. Everyone saw the value in being in there early – hence the rush to be one of the apps available for download when the iPad launched in March. And these early developers were followed in a big way: Apple announced last week that there are now over 225,000 iPhone apps available for download, collectively downloaded over 5bn times (although given the platform war between Apple and the Android I’m slightly sceptical of the numbers)

The problem is it’s unbelievably tough to get noticed with this many app’s around, particularly as big brands with existing customers have entered the space – driving awareness of their apps from outside the itunes store.  Imagine having a stall at a market with 225,000 stalls around you – some of which are household names…

However, the app store remains an important channel to build awareness of any app – mainly because the users are converts and it’s only one click away from purchase.   The problem is that there are only a couple of ways to get noticed in this bustling market – be ‘featured’ or be in the ‘charts’.

There are three opportunities to be featured – New and Noteworthy, What’s Hot and Staff Favorites – and each has room for only 32 Apps.  The challenge here is that Apple (understandably) seems to favour proven brands (I assume because they’re statistically more likely to deliver revenue and they’re better for the Apple brand).  So, if you’re an independent developer you’ve got to be lucky to be featured. And, in order to benefit from the main type of exposure – being in the charts – you obviously have to already be selling in significant numbers (therein lies the catch 22).

My conclusion is that you need a plan to start the ball rolling outside of the app store (unless you’re a powerful brand or lucky) so that you can benefit from exposure from within the app store.

The new media needs old media paradox

We managed to secure positive reviews on app sites, e.g. here, (relatively easy to do, particularly if you issue them free promo codes to test the app) but they didn’t drive much traffic.  I should caveat this by saying that the demographic that we were targeting was the celeb-obsessed 18-30 year old (a gross oversimplification so apologies to those I offend!).

This demographic had begun to adopt the iPhone and iPod Touch in decent numbers because the iPhone had shifted onto multiple service providers as of December 2009 (you can find stats on that stuff pretty easily) but they weren’t using the app review sites much as far as I could tell.  This isn’t surprising given that they are all so clearly pitched at the ‘geeks’ that adopted the iPhone first.

We also tried Twitter, Facebook, and viral videos to build awareness.  This was more successful but didn’t really show any signs of meaningfully driving sales.  To put these first few days into some sort of context we were ranging between positions 200 and 300+ in the charts. It became clear to us pretty quickly that we would need traditional media to start the ball rolling.  Thanks to the help of a fantastic PR agency based in London we managed to secure phenomenal coverage in London’s Evening Standard (circulation c600k) – amazingly we were the first app to ever be covered on the front page.  This incredible coverage in an evening paper was terrific – because it led to coverage the following day on all of the main channels, I was shocked how often the media companies were happy to run a story from the night before e.g. Sky News here

We were also featured on the BBC show “Something for the Weekend” as you can see here:

This exposure moved us 200 places up the charts into the Top 10 in the Entertainment category in the space of an hour because our sales rate increased approximately 10 times, we remained in the top 20 for the following week and maintained momentum thereafter.  This was excellent given that we were the only app in there over 59p often.

Apple is all about control

The Apple business model has in part been built on control (this is reflected in its astonishing secrecy around new products and its relative vertical integration).  I’m a major fan of its business model – see my blog posts here and here –in some cases control is good.  For example I think it was right for Apple to recently clear out many app’s from the store that didn’t offer any real value proposition – this should make it easier for better app’s to get noticed.

However, Apple’s approach does have its downsides for developers.  Perhaps the best example of this is Apple’s reluctance to offer any steer in advance of an app being submitted whether it is likely to be approved or not.  This means many developers will invest significant resource to be told at the point of submission that the app isn’t appropriate.  I think that we can expect to see Google differentiate around this point and be far less controlling with the Android platform which may prove to be a significant competitive advantage. The good news is that once the app is approved Apple offer a good developer’s interface and make it relatively easy to shift release date and price.

Another disappointment for developers is that Apple is blocking startups from building programming tools to allow development of applications across multiple handsets.  There is some logic to this – Apple wants to ensure that his means that its platform’s differentiators are preserved, e.g. touch-screen, motion detection.  However, this means that potentially developers have to develop a separate app for every platform – a very expensive process.  You can see Steve Jobs’ response when he was pilloried by developers and the tech press here

Freemium or premium?

Unfortunately, the average pricing of app’s is on the way down, fast: a staggering amount of them are simply marketing tools to drive monetization elsewhere, e.g. Apple itself launched an app on June 15^th to enable its users to order the latest version of the iPhone. Given that not all apps drive income from other channels I had assumed that there must be a viable model in giving away the app and monetizing embedded advertising – I therefore met a couple of the leading service providers and left both meetings underwhelmed.  I couldn’t see the revenues being significant unless there is a social element to the app (which would drive larger numbers of page views and therefore advert impressions).  This made it very difficult to justify giving up the screen real estate as it would diminish the user experience – particularly as many of the adverts that I have seen in other app’s tend to be shockingly off-target (a vendor of fake iPhones was particularly amusing).  This is likely to change in the near term as the advertising market develops, not least because Apple will be launching its own advertising platform to enable the placement of adverts inside apps.

We chose to price at £1.79, benchmarking ourselves against celebrity magazines rather than the existing apps in the Entertainment section.  Much of what I had read on price elasticity was fairly anecdotal but inferred that the market is quite elastic – with hindsight I think that this doesn’t reflect the changing demographics of the iPhone users and the drop in average prices. If I had to call it I’d say that we made a mistake – I think that the sales we made were fewer than I expected given the media coverage that we received.  My guess is that we would have sold more than 3x as many had we priced at 59p and the reviews would have been better as it would have offered greater perceived value.

Launch

Launch strategy is probably a blog post in itself – our strategy was to seek approval to launch the app a couple of months forward and then once approved bring it forward to the time that we were likely to secure most media exposure. We decided on a launch on April Fools Day – partly because we figured it might generate a few ‘is this serious?’ stories. Probably another mistake as it didn’t.  In fact, we didn’t get any press till the following week (which fortunately was relatively quiet in terms of breaking stories).

One note is that it’s key to plan the launch carefully but allow some time for the links to all run through to the store – particularly if you aim to release a press-release with an option of clicking through into the app store page (which is, I think, essential).

The future

I cant help thinking that Apple will have to open up and that the store is going to be used more and more as free distribution.  In the future relatively few app’s will be paid for, and those that are will often use the emerging subscription model so that they can offer trials for free (lowering the barrier to adoption).  Media and gaming companies are already using apps as wrappers for their existing content and offering additional features – they will give away apps and then monetize the content subsequently.  Apps are likely to be portals in the future.

Conclusions

Think again if you’re just doing it for cash. I’d be surprised if 10% of apps that go on sale in the App Store make back the money it cost to produce them, the privately developed ones are usually a labour of love. This is true more than ever because of the number of apps out there and falling average price.

Go global. The US market for apps is the biggest by far – 54 per cent of iPhone and iPod touch users were in the United States last year.  France, Germany and the UK each had more than five per cent of all iPhone and iPod touch devices.  If volume matters to you, aim for all of these markets at once.

Enjoy it. I have loved the whole experience.  What Apple has done is given virtually anyone the opportunity to develop an offer for a global platform and taken away much of the hassle – it’s possible to develop something in a day and have it on peoples’ phones in dozens of countries in less than a couple of weeks – pretty cool!

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