Developing Perspective

#42: Good money after Bad


00:00:00   Hello and welcome to Developing Perspective. Developing Perspective is a podcast discussing

00:00:05   news of note in iOS, Apple, and the like. I'm your host, David Smith. I'm an independent

00:00:09   iOS and Mac developer. This is episode number 41, and today is Tuesday, May 8th. Developing

00:00:15   Perspective is never longer than 15 minutes, so let's get started.

00:00:19   All right, for today's kind of topic, something that I've been thinking about, but I think

00:00:23   maybe relevant to a lot of other developers, is the role that advertising and promotion

00:00:29   can play for your apps. So you can be thinking about it in terms of, you know, are there

00:00:36   ways that you can, in a reasonable way, put out money, spend money on marketing, on advertising,

00:00:42   on something, and then recoup that and return that to yourself in a way that makes sense.

00:00:47   Since that for every dollar I'm putting into something, we need to at least get it back,

00:00:52   if not get back more hopefully, otherwise it's kind of counterproductive. And so I was

00:00:57   kind of walk through a couple of different places that you can do this, some of the experiences

00:01:01   that I've had, and then just kind of talk more generally about the topic. So first,

00:01:06   sort of my own experiences, I've tried some of the platforms that are sort of in-app advertising.

00:01:12   So I've tried iAd for Developers, AdMob, I've tried App Circle with Flurry, and a couple

00:01:18   of others. And generally speaking, none of those sort of returned anywhere near sort

00:01:26   of the installations and purchases that would be necessary for it to be financially reasonable.

00:01:32   Sort of the most important thing if you're kind of thinking down this road is to think,

00:01:36   what is my, you need to have sort of what's the value of a user to you. Now if you just

00:01:41   sell an app, that's pretty straightforward, it's just the value of the app, so if you

00:01:44   sell a 99 cent app, it's 70 cents a user. If you have an app purchase, or if you have

00:01:51   subscriptions, or you have other things, you know, it's kind of looking at that and working

00:01:54   it out. And so you can kind of say, "Okay, because of the in-app purchases and things,

00:01:59   an average user for me is worth 89 cents," or "is worth 5 cents on a free app with advertising,"

00:02:06   or whatever. And so you can kind of work out, "Okay, so that's what I'm trying to hit."

00:02:11   And this is just sort of the analytical way that I do it. I'm sure other people could

00:02:14   sort of approach this in different ways. But whenever I've done those types of advertising

00:02:19   platforms--I've tried AdMob, iAd for developers, all those kinds of things--you end up with

00:02:24   sort of a cost per installation that is for me I found is

00:02:27   typically at least well above a dollar.

00:02:30   Well above kind of spending one dollar to get one user

00:02:34   to buy your app, which for me the economics of that

00:02:36   just don't make sense.

00:02:38   I don't get that much from the user.

00:02:41   And so it just kind of, I'm just feeling like you're

00:02:43   kind of throwing good money after bad if you keep doing that

00:02:46   because you're, you know, it's like I'm paying,

00:02:51   say I'm paying a buck fifty to get a dollar back, pay a dollar fifty to get a buck back,

00:02:56   that doesn't...

00:02:58   you know, that can't keep going.

00:03:00   Now if it could, and if I could ever find a

00:03:02   network or a platform or something that returned me, you know,

00:03:07   I could buy a user for seventy cents, well,

00:03:10   I guess that would make a lot of sense, you know, it's like I can just keep doing that.

00:03:14   In theory, if that was the case, I should be putting almost all of my money in

00:03:18   there until I got diminishing returns.

00:03:21   because it's like the interest rate that I'm getting on that investment is fantastic.

00:03:26   If I'm getting 30% back on every dollar I spend on advertising, then great.

00:03:32   But that's just never been the case.

00:03:34   I've tried out all manner of things like that and I've just never found any of them to be

00:03:38   high enough that sort of it was worthwhile.

00:03:43   So that's kind of the first thing that I said.

00:03:45   I've just never found that to be worthwhile.

00:03:46   I'm sure some people have, but either it's the nature of my apps or the nature of the

00:03:52   people, the networks I've tried or who knows.

00:03:55   So then the next kind of place you can try is to advertise on blogs, networks, things

00:03:59   like that.

00:04:00   There's a variety of these that you can kind of do.

00:04:03   I mean, some of the ones that I was looking at in preparing for today's show were things

00:04:07   like you can advertise on during Fireball, you can advertise on a blog like marker.org,

00:04:12   you can advertise on the syndicate, you can advertise on the deck, you can advertise on

00:04:15   five by five. Now obviously these are very kind of focused, Apple-centric group of blogs.

00:04:21   These are places that I read, places that I go. And so I was curious and so I kind of

00:04:25   looked at them to see what kind of the rates would be and kind of what, if you look at

00:04:29   the economics of that, what it looks like. So say for you take for example Daring Fireball,

00:04:34   probably one of the best followed, you know, most revered blogs in the Apple industry,

00:04:39   and you kind of look at that. So right now, you know, you can buy an RSS sponsorship for

00:04:44   seven thousand five hundred dollars which basically means that you your app

00:04:49   or whatever you're going to do

00:04:51   gets inserted into his feed, I think it's twice in the week, once on the

00:04:55   twitter

00:04:56   early in the week and then in his RSS feed on the page later in the week

00:05:00   something like that

00:05:03   so that's seventy five hundred dollars

00:05:05   so then you kind of look at it so if you

00:05:07   say you make seventy cents a user

00:05:09   in order for that

00:05:10   campaign to break even, you're going to have to have about, was it 10,700 people or so,

00:05:16   or 10,000 people download and install your app as a result of seeing it in that campaign,

00:05:24   which works out to be based on his, he has very vague statistics of about 400,000 readers

00:05:30   on his website, so it's like, okay, so about 2% or 2.5% of people who read his blog need

00:05:37   to install your app. Now, that's entirely possible that sort of 2% of people would do

00:05:44   it and I've never advertised them during Fireball so I couldn't say for sure. But I've, based

00:05:50   on the things that I've seen, that's actually a pretty sort of ambitious thing to have 2.5%

00:05:54   of people who read something on a blog go and sort of A, click on the link or go to

00:06:01   the store and then actually hit buy. Now part of that I think is where people are reading.

00:06:07   People are reading on their, you know, so if they're reading in places where they're

00:06:12   not going to want to buy something. So they're reading on their PC, they don't want to buy

00:06:15   it on iTunes, or they're in a feed reader where they don't want to just leave the feed

00:06:19   reader, go off into the app store and then buy something. But I think honestly a lot

00:06:24   of it is, I think a lot of people just skip the ads. It's kind of like the problem you

00:06:28   you have with a TiVo or anything like that where I think people are just sort of conditioned

00:06:33   to not look at ads and you just kind of get used to that.

00:06:37   And so of the, say, the 400,000 people who subscribe to Daring Fireball, it wouldn't

00:06:44   surprise me if the vast majority of them never even look at the ads.

00:06:47   It has a little, you know, and as soon as they see the word "sponsor" after it, they

00:06:50   just skip it.

00:06:52   It's just not.

00:06:53   In the same way, it's like as soon as a commercial comes on TiVo, they just fast forward.

00:06:58   I'm sure that's not everybody, but it wouldn't surprise me if that was the case.

00:07:02   And you can kind of look through a variety of other places, and they have similar kind

00:07:05   of stats where, you know, say right now to advertise on the Syndicate, which is a group

00:07:10   of blogs, though I think it may not be going away, but you can kind of look at their numbers,

00:07:15   is it was $2,700 to reach 110,000 readers, which is then, in that case, you would need

00:07:25   to have like three and a half percent of them download your app for it to make economic

00:07:29   sense and I doubt you'd ever get there. So I was like, "Okay, so what's some other places?

00:07:35   What about advertising on 5x5?" And that's something I've actually done. I did that,

00:07:39   I think it was about last spring. I sort of did a full run network sponsorship on 5x5.

00:07:45   And I found that I probably made about maybe half of the sponsorship price back. So it

00:07:50   wasn't a horrible thing, but it was still, for me, it became more of a tax-deductible

00:07:57   donation to 5x5 in many ways, because even with a well-devoted, interesting audience,

00:08:04   you still have to, you know, the thousands and thousands of people who have to download

00:08:07   your app in order for it to have made sense for you economically is just very difficult.

00:08:14   And I was curious about this, if that has changed. And so last week, the run of the

00:08:19   network sponsors on the network were Textastic and TapTyping, which are two iOS apps. And

00:08:26   while I have no idea what their sales data is, you can kind of go and look at their rank

00:08:30   data and see how it changed since they did their sponsorships, and just see if there

00:08:35   seems to be an impact. And it looks like on the side of TapTyping, there was a slight

00:08:41   bump in rankings where previously they had, they weren't sort of properly, they weren't

00:08:47   ranked in this, and by that I mean they weren't in the top 100 or barely in the top 200 it

00:08:51   looks like. This is based on the data reported by App Annie. And so, and then lessons are

00:08:58   sort of, since that, since this last weekend, they've gotten into sort of 140 in their category,

00:09:05   150 in their category, which, you know, is certainly an improvement. And then on the

00:09:09   textastic side, they were sort of consistently, from a grossing perspective, around 30 before

00:09:16   the campaign started and since then they've been right around 20. So they got a bump of

00:09:22   about 10 places in their category of productivity in the App Store, which is probably, you know,

00:09:31   it certainly means they made money on that campaign, assuming that all of that bump was

00:09:37   based on their ranking, or based on their campaign, excuse me. But I'd be very surprised

00:09:46   if they've actually recouped the $7,000 that the campaign cost in doing that, just based

00:09:53   on generally what I see in the app store and the amount of money that those kind of rankings

00:10:00   tend to indicate.

00:10:02   So advertising on these places is certainly something that makes sense to some people,

00:10:09   and you can see that because there are certain groups of people who advertise on and on and

00:10:14   on. So either they're unable to do the math or they're doing it for different reasons.

00:10:21   So you'll often see there's these brand and web service companies who are doing it, and

00:10:27   I think a lot of that is just awareness. And then on the web service companies, I think

00:10:33   more over them is their goal is they're trying to create you, suck you into a subscription

00:10:39   where they'll make money from you for a long time.

00:10:43   Their return is much higher per user than any typical app would have.

00:10:49   Where if they can sign you up for a $9 a month subscription, or if they can sign you up

00:10:53   like Audible.com, which advertises everywhere,

00:10:56   and they're trying to sign you up for $20 or $30 a month

00:11:00   subscription for audio books,

00:11:03   they can pay quite a lot to acquire a user because that user's value is

00:11:07   much longer to them.

00:11:09   those economics just don't work for an app store app.

00:11:11   So that's kind of just sort of where I am and

00:11:15   it's a tricky problem. I mean, I wish there was a way to...

00:11:19   What you want is to put your app in front of people. You want people to

00:11:22   discover it and that you spend a lot of time and effort working on.

00:11:25   You think it's awesome. You want other people to find it.

00:11:28   And at the end of the day, sort of you end up with kind of the like the not really helpful

00:11:33   sort of conclusion of

00:11:34   really the only way to do it

00:11:36   is to execute well in your app

00:11:38   and trust that

00:11:42   other people are going to talk about it and share it.

00:11:44   In my recipe book app, the impression we get from a lot of the

00:11:49   feedback

00:11:50   is most of the people who use the app

00:11:52   are using it because someone they know recommended it to them.

00:11:56   That they're over at a friend's house,

00:11:58   she's cooking, she pulls out her iPad, she's like "Oh, what's that? Oh, it's the nap I have

00:12:02   for organizing my recipes. It's called my recipe book."

00:12:05   and then that's a sale right there.

00:12:07   That person has advertising for me in a way that I didn't pay for,

00:12:13   but it's incredibly much more effective than anything you'd ever

00:12:17   get in paid advertising.

00:12:20   And honestly, in some ways, it's kind of like that going back

00:12:23   to some like clearing fireball where that 2% or 2 and 1/2%

00:12:30   I was talking about may be difficult.

00:12:32   If for those blog posts where John says, "Hey, I found this app and I think it's awesome,

00:12:38   you should go get it."

00:12:39   In a non-sponsored way, my guess is he gets a much, much higher, even than 2.5%, of people

00:12:45   going and doing it.

00:12:46   It's probably a win-surprising if it's like 5 or 10%, because it's a personal recommendation.

00:12:50   It doesn't have kind of the weight of just, "Oh, well he's just got paid to say it, so

00:12:57   what does that mean?"

00:12:58   So anyway, hopefully that's helpful.

00:13:00   It's a bit of a sad note to end on, but I think it's just ultimately, it's not a place

00:13:05   that you can really promote your app in a certain economic way.

00:13:11   So you just kind of move on and don't worry about it.

00:13:13   Don't waste your money trying all these different things instead.

00:13:16   Just make an awesome app and trust that the meritocracy will work for you.

00:13:21   So that's today's show.

00:13:23   I hope you liked it.

00:13:24   As always, if you have any questions, comments, concerns, hit me up on Twitter.

00:13:27   I'm @_davidsmith, and otherwise, if you have a good week, happy coding, and I'll talk to

00:13:33   you later.

00:13:34   Bye.

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