For Generating App Revenue, Amazon Shows Google How to Play

The economic boom created by Apple and Google through their iOS and Android platforms has precipitated a renaissance among entrepreneurial developers. With some of the lowest barriers to entry in the history of software development and distribution, apps are getting built and downloaded at breakneck speeds. Earlier this month, Apple crossed a record 25 billion downloads from more than 550,000 available apps. Google announced in December 2011 that it had crossed 10 billion downloads from 400,000 available apps.

As markets mature, rational economic behavior emerges. Even the most passionate, idealistic software start-ups focus increasingly on markets where revenue generation is highest. In this report, Flurry compares the ability for app developers to generate revenue per user across the major app stores. We examine a basket of top-ranked apps that have similar presence across iOS, Amazon and Android. Their primary business models are in-app purchase, which is the revenue type we compare for this analysis. Additionally, earlier research by Flurry found that the in-app purchase revenue model generates the majority of revenue for apps. Combined, these apps average 11 million daily active users (DAUs). We measured their revenue per user over a 45-day period, from mid-January through the end of February 2012.

The chart above compares revenue generated per user across iOS, Amazon and Android app stores. We start by taking the revenue generated per user in the iTunes App Store and setting it to 100%. We then compare the relative revenue generated per active user from Amazon and Google to the amount of revenue per active user generated by the iTunes App Store. Doing so, we find that Amazon Appstore revenue per active user is 89% of iTunes App Store revenue, and Google Play revenue per active is 23% of iTunes App Store revenue. Another way to interpret the results is that, for the same number of users per platform, every $1.00 generated in the iTunes App Store, will also fetch $0.89 in the Amazon Appstore and $0.23 in Google Play. These results mirror those of a similar analysis conducted by Flurry last December, where we found for every $1.00 generated per user in the iTunes App Store, developers generated $0.24 per user in the Android Market.

Amazon’s bet to fork Android in order to put consumers into their own shopping experience on Kindle Fire appears to be paying off. Showing its commerce strength, Amazon already delivers more than three times the revenue per user in its app store compared to what Google generates for developers.

For some possible insight, let’s consider the DNA of each company. Apple runs the highest revenue-per-square foot generating retail store on the planet as well as the successful iTunes store. Amazon, who invented the one-click purchase, perfected online shopping with data, efficiency and customer service. Google’s strength is in scalable online search engine and advertising technology. Running a store, retail or digital, has not been Google’s traditional core competency.

As developers make decisions to support different platforms, the ability to generate revenue per user will always be a key factor. Based on revenue potential, we expect to see an increasing number of developers support Amazon. We also believe that companies such as Samsung, the leading Android-supporting OEM, could also consider emulating Amazon’s move to fork Android. Google, who recently saw the departure of Eric Chu, the most public-facing proponent of Android Market improvement, will need to reduce commerce friction to maintain strong developer support. From an ecoystem perspective, the emergence of Amazon as an additional distribution channel appears to be a boon for developers..

Prepare For The Second Wave Of Apps

In July 2012, app stores — first popularized by Apple — will be four years old. There is still a lot of room to improve the discoverability and sharing of apps. For example, locally relevant content and monetization options are often missing. Adding social discovery, personalization, and recommendation features are key to improving the user experience.

However, app stores have already had a dramatic impact on the distribution of games and are starting to offer new forms of engagement between brands and consumers. Consumer usage of the most popular mobile apps has exploded in the past two years. A third of European online consumers ages 18+ who own a smartphone are using apps daily or more frequently. Seventeen percent are using apps several times a day. Stickiness and frequency of usage vary tremendously from one app category to the other. Among European online consumers ages 18+ with installed apps on their smartphones, 57% use social networking and 48% use news apps at least daily, while 69% use finance and banking apps at least weekly.

First-generation apps — aside from gaming apps — rarely made the most of the unique attributes of the mobile platform and were rarely integrated with back-end systems. We believe the market is poised for a second wave of consumer apps that are more personalized and contextual. Here’s what to expect:

  • “Big data” will enable more contextual experiences on mobile apps.
  • We’ll see smarter, connected apps.
  • There will be a shift from native to hybrid and web apps.
  • Multiplatform apps will reign supreme.

A successful app strategy requires a mobile product road map with the constant iteration of new features and services that directly address the evolving needs of consumers. Here are a few basic principles on how to approach apps as products and define their life cycles:

  • Market apps in the stores and among core target audiences.
  • Progressively add new features and services.
  • Invest in mobile analytics and surveys.
  • Introduce new business models.
  • Localize your mobile app approach
  • Use push notifications to drive engagement.

What are the most successful and innovative apps you’ve come across? Feel free to comment below..

The Costs Of Not Optimizing For Mobile

According to a recent study sponsored by Google, mobile users want speed and simplicity when browsing on their smartphones, and they’re quick to abandon businesses that don’t provide an enjoyable mobile experience.

The key statistic, in our opinion, was this: 61% of people said that if they don’t find what they want “right away,” they’ll move on to another site. This means that your business’s mobile site, if poorly designed, can become your competitor’s advantage. A well-designed mobile site, on the other hand, is something that 67% of respondents said would make them more likely to buy from the business that published the website.

The good news is that what mobile users want is easy to provide: simplicity. They want large buttons, minimal content, easy-to-find search bars, a reduced need to scroll or adjust screen size, forms with only a few fields, and similar features. They also generally want basic information such as your phone number, location, email address, and basic products right up front, as well as a link to your main site.

While a majority would like to see the above-described features, less than half want to wind up at your social site or see video content, so avoid these unless there is a compelling reason to include them.

The costs of not optimizing your mobile site to create a simple and speedy experience are the following: a) 52% of respondents said they would be less likely to use a business if they have a bad mobile experience, and b) 48% think a bad mobile experience means that a business doesn’t care about them.

The bottom line is this: it isn’t expensive or complex to develop a user-friendly mobile site, but it can be quite costly to neglect the project. The sooner your business has an optimized mobile website, the sooner you start gaining business from mobile users instead of losing it..

7 Tips For Startups Selling To Small Businesses

There are currently 500 million small businesses around the world, and new ones are being born every second with the bulk including: restaurants, cafés, professional firms, real estate companies, health and fitness centers, and more.

If you can reliably sell to small businesses, your enterprise has unlimited potential. The tips below will help you figure out how to do it.

1. Get Feedback from Day One

Get feedback from small business prospects early and often. If you’re a developer, you probably haven’t run a brick-and-mortar local business. Your armchair ideas, while they may be visionary, need the influence and grounding of concrete feedback from actual buyers.

You have to go out to the businesses and strike up conversations. A lot of them. If they seem interested before you finish your pitch, you’re on the right track.

For example, if you’re building a mobile app for restaurants, go by some actual restaurants and see what type of phones the owners use. Don’t simply assume that all restaurant owners have the newest iPhone 5 and all the latest apps.

2. Solve a very specific problem

You need to find something well defined that is a huge pain to small business owners, and then solve it. Put yourself in their shoes. If you can do one thing very well, you’re way ahead of competitors that do many things “sort of adequately.”

3. Be willing to hand-hold

The average small business owner is notoriously tech-illiterate. Your solutions have to be simple, and you have to be ready to do things automatically, or provide clear, brief, step-by-step instructions.

Small business owners want you to do things for them.

4. Deliver real value

If you can’t show, with the utmost clarity, how money that your customers give to you comes back to them with a nice return, you don’t belong in business. Small business owners don’t have money to blow, and they need to stretch every dollar as far as it can go.

Your product should have a nice, demonstrable ROI, or it should be changed until it gets one.

5. Nail down your marketing message

This ties into the last point. Your message to the market should be clear about how the product saves the customer time, money, or both. Whatever your key benefits are, find a way to communicate them that is immediately understood by your target audience, and that also resonates with them emotionally, if appropriate.

For many small business owners, a big concern is having enough business. If you can tie into a way to boost their business, you’ve likely got their attention.

6. Don’t be afraid to cold call

Get comfortable with rejection – you’re going to experience a lot of it. The upside, however, is that your pitch will get well honed and you will have a new, cost-effective way to increase your sales. Not every industry is ripe for cold calling, but many small business owners live offline, and this is a great way to reach them.

If you have a compelling pitch, the time-honored tradition of cold calling can be your startup’s bread and butter.

7. Keep it simple

Confusing a small business owner with your convoluted pitch is the fastest way to lose their interest, as well as any chance of winning them over as a client. You’re probably very passionate about your product, but make sure that this passion doesn’t lead to nonsensical meth-fueled rants to prospects about the glory of your offerings.

This applies to product design as well. Focus your product on a few core features and keep it simple. Don’t overthink things, and emphasize ease-of-use and setup speed.

Keep your attention on helping others first, and the rest will take care of itself.

Conclusion

Selling to small businesses is challenging, but very rewarding if you can develop a reliable, repeatable method for success.

If you only remember one thing from this post, remember to give the product to actual customers and get feedback as often as possible. They know the secret to your small business becoming a large business – you just have to get it out of them..