iPhone AppStore Dynamics Revealed

I don't know how many of you distribute applications over Apple's iPhone AppStore, but many of you may be purchasers or, frankly, just interested in how the economics and application popularity work. You may wonder whether you should play at all if you were thinking of the AppStore as a distribution mechanism, but not solely focused on revenues. PinchMedia is a mobile application analytics firm that supplies code that is embedded into your application and allows them to aggregate anonymous usage data over time. This gives the application supplier essential data about reach and engagement with mobile applications. This kind of information can help you to test features, launch timing, pricing levels, demographic targets and more. The free slideshow below is a summary of what PinchMedia is seeing across the "few hundred" iPhone applications that they track today. If you are considering getting involved with the Apple AppStore, even just for free exposure and awareness building, this may be a presentation worth watching. Below the PinchMedia video, I share information from StromCode.com that seeks to provide further clarity regarding pipedreams of being a millionaire from AppStore sales. The net of all this is that for most apps, charging for your application (with or without ad sales) is likely to be more profitable than using simply an advertising model. Only a few applications sustain enough engagement with a rich enough target market to generate significant revenues. Finally, having an application that is unique and targets something that is "hot" and does it in a highly "sneezable" way (viral) certainly helps. Doesn't it always? This should not dishearten those who wish to use the AppStore simply as as a distribution mechanism. Even if you can't get in the Top 25 lists, you can harvest interest with links to your application's AppStore listing in other places that you "live", such as your website or in an email blast. From there, get your believers to promote it and build your movement.

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Traditional Marketing Vs. New Marketing

Recently, Guy Kawasaki tweeted about a study that was posted on Social Media Today called "Social Media case study: Broadcast vs. Engagement in forums". The idea is that the traditional marketing concept of broadcasting a message at a market is less effective today than building an engaging, interactive campaign that seeks the active involvement of the target audience. The study is young, but seems to indicate a strong increase in views and especially in comments (participation) occurs when a promotional campaign making claims is changed to one that asks questions. Guy's conclusion is - Why not do both? I agree.

I recently had a conversation about "traditional marketing" versus what was labeled "tech marketing". I had never really separated the two concepts. After all, no matter what your product is you need to make the case that you serve a need (and sometimes establish what that need is) better than something else and create strong desire that you associate with your brand. When you are thirsty, you will want a "Gatorade G" to quench that thirst. We often layer on other attributes to make the stickiness of our message more powerful, such as associating the act of drinking Gatorade "G" to being "cool" and being desired yourself. You get that message out in numerous ways - print, TV, online - and in contexts - sporting events, concerts - that might match the desire with a purchase moment. This is a thumbnail summary of "traditional marketing" (I'm avoiding getting into the "4 Ps", or as my grad school said "5Ps"). In marketing technologies, the same principles apply. The iPhone is sleek, stylish and powerful enough to stay in touch with people and things that you care about. The iPhone user is therefore considered stylish, well connected and possibly more appealing than the non-iPhone user. There are ads for the iPhone on TV, in print, online and at retail. This really shouldn't be surprising because the core marketing ideas have not changed. What has changed is the range of tools available to the marketer and the ability to interact live and truly engage with your market on a large scale.

So what is the difference in traditional marketing and, so-called tech marketing campaigns? I think that the key difference is that due to the fact that tech purchasers are assumed to be more tech-savvy, tech companies appear to have been quicker to leverage interactive marketing online. HOWEVER, is this really true? Yes and no. Some proactive consumer goods companies were quick to realize that they could gain huge leverage by figuring out the online engagement formula to maintain and grow a relationship with their audiences AND to gain powerful feedback from them to tune their messaging. What both tech and traditional marketers learned is that online promotions could truly be targeted better, generate better feedback on  campaign effectiveness and the results could be viral. Your audience not only responds to the message and buys the product/service and recommends it, they also fine-tune your campaign by forwarding the promotions on to friends that they think are in the target as well. With interactive marketing the marketer can know how many saw the campaign (reach), how many reacted to it (engagement) and connect with the viral users. Dave Tacoda, founder and chairman of Tacoda, Inc. calls engaging your target audience "activating" them. You turn them into brand warriors for your campaign.

There are serious challenges with the new realities of interactive online marketing. An excellent study called "Digital Darwinism" by Christopher Vollmer, a partner at Booz & Company, makes some solid points about the inevitability of it and challenges (emphasis added by me).

"88 percent of marketers expect to spend more on digital ads, and 82 percent believe insights into consumers’ digital behavior and related targeting tools will only become more important."

However,

"Thirteen years into the online era, only about one-quarter of marketers regard themselves as digi­tally savvy, and half claim they lack the support at senior levels to sub­stantially increase the marketing dollars allocated to digital media."

and finally

"What we’re describing here is more than just a change in the marketing mix or media buy. The marketing function, equipped to broadcast brand messages to consumers, has now become a cen­ter for dialogue, geared to gleaning what consumers want, and when and where they want it. Advertising has evolved from an interruption—grabbing attention for a product or brand—into an experience, an application, a service that the consumer actually wants. This new marketing model doesn’t shout; it listens and learns. And relevance, interactivity, and accountability are its essential ingredients."

I couldn't have said it better.

So the question really is not whether a company should be in online interactive marketing, it is are they ready for it? Do they have the talent to know what to do and what works in the conversation economy? It is a new, essential part of the marketing mix and requires new talents that the basic, traditional marketer may not understand yet. Said another way, engagement marketing is essential to most new campaigns in order to compete for "eyeballs" and voices, even while traditional broadcast marketing remains in the mix. The payoff is better understanding of your market behaviors and "activated" brand warriors fighting for what you are offering.

As I said in a tweet recently:

Reach > Engagement > ROI = # u touch > # u hug > # that hug u back. Let's group hug. :)

Give me a break, I only had 140 characters in which to say it.