When, in 2009, an online marketing industry forerunner by the name of HasOffers created what was the first mobile tracking software to attribute customer clicks and downloads to sales commissions and cash, the flame that would ignite an explosion in mobile app marketing was just a flicker.
The Google Play store was still three years away from launch and Apple’s fledgling App Store offered more prescience than products. The world had not yet seen or heard of a device that would come to be known as the phablet, or even the iPad.
The perfect storm that was about to break around “mobile analytics” was a convergence zone where founders Lee and Lucas Brown and CMO, now CEO, Peter Hamilton, were well prepared.
The deluge of mobile devices and the interactive apps that animate them drove two of the most innovative and well-respected products in digital marketing and advertising — the TUNE Marketing Console, a complete mobile marketing technology stack used by top marketers, and the successor to HasOffers’ attribution tracking, performance marketing software that is part of the TUNE Connect partner ecosystem.
“Engagement is acquisition,” is one of TUNE’s core maxims. Therein lies the challenge. Only a small percentage of device users who are inclined to download a handful of the millions of apps available actually press them into service with a tap of their finger.
It is up to app marketers, more than users, to push consumers’ buttons for the myriad of mobile apps in a way that will activate installs, engage usage and motivate in-app purchases. Therefore, another mission for Team TUNE is C.O.D.E., for Collaborate, Optimize, Deliver and Evolve together.
TUNE has climbed the Inc. 5000 list of fastest growing companies at a record pace. Beyond its Seattle HQ, the company has opened offices in TelAviv, Berlin, Seoul, Tokyo, London, New York and San Francisco.
To get in tune with the current state of mobile marketing, we caught up with John Koetsier who holds the position of Mobile Economist with TUNE, an apt title for someone who has been researching, analyzing, modeling and forecasting mobile industry trends since founding a platform to manage and disseminate trending mobile information for VentureBeat.
Here’s our weather report:
Seattle24x7: With the opening of the App Store for paid search advertising, Apple is adopting a part of the Google playbook. What can you tell us about App Store Optimization in a new Paid Search environment?
Koetsier: App store optimization hasn’t changed, but Search is an exciting, new way to find users on iOS. Apple’s new paid search ads actually make it even more important for your apps to be well-optimized, since ads for well-optimized apps get tapped on more frequently, and that results in less expensive taps.
Koetsier: App developers only pay for a result: an app install.
Seattle24x7: What is the average price of apps for sale in the App store or Google Play store, and, at that price and “order margin” or “profit margin,” how does an app maker budget a reasonable marketing cost? In other words, if an app costs $3 bucks and taking into account the salaries of those who developed it and support it, what is left for the marketing budget and how do you recommend it be spent?
Koetsier: Very few apps are paid apps anymore. Most are ad-supported, or monetized via in-app purchases. At TUNE, we see marketing costs for app installs averaging around $3 for Android and $5 for iOS, and we see first-month revenue of between $1.25 for Android and $2.50 for iOS. Those are just averages, of course, across all app categories. But it’s clear that app publishers, to make a positive return on their investment, have to focus on engaging people and providing enough value that they continue to use the app.
Seattle24x7: Speaking of Tech Support, does the low price of apps preclude the presence of LIVE tech support vs. automated support, or no support at all? Could this be a future “Chatbot” function in terms of AI?
Koetsier: Generally, yes, but there are different types of apps. An appliance manufacturer might decide to offer in-app live support — perhaps even with streaming video — and consider that a perfectly acceptable cost due to the high value of the customer.
Seattle24x7: Is the low price of apps today “realistic” or “too cheap? Has any research been done on an ‘inflection’ or ‘deflection’ point where people will pay no more?
Koetsier: For most app users, any price is too expensive. That’s why something like 95% of all app installs are free apps.
Seattle24x7: Are Seattle-based companies like Apptentive that specialize in boosting user engagement with features like contextual prompts for Reviews/Ratings and In-App surveys and messaging a “requirement” for any app developer these days?
Without the ability to understand users deeply, optimize experiences for them, and communicate with them, app publishers simply can’t learn and adapt as quickly as they need to in order to be competitive in the app economy.
Seattle24x7: A critical marketing difference with app marketing in general is that the “stores” do not release the names of buyers/customers to app makers? Does this compel the app brand to seek another way of connecting with the user or obtaining the user name?
Koetsier: It varies between different types of apps. For a single-person mobile game, there may not be a huge incentive for a user to sign up or register. For a multi-player game, it’s a virtual necessity. But for apps from non-mobile-first companies like Staples, for instance, getting users to register connects them with the company’s customer records which then could give customers access to prior purchases, service and support, and ordering incentives.
Since the app stores don’t release personal data, it’s up to the app developers to craft a compelling enough reason for their users to sign up and register.
Seattle24x7: What are the major challenges intrinsic to app marketing today?
Koetsier: The app economy is the fastest-moving, most competitive ecosystem we’ve ever seen, which makes it challenging to compete in it. The biggest problem is a massive amount of supply (5.5 million apps across the major app stores) and limited demand (most users might have between 50 and 150 apps on their phones). So marketers’ first challenge is to differentiate their product, and their second is to target the right people who might actually want it.
Seattle24x7: Thinking in a completely utopian, “business model” sense, is there another model or method on the horizon for app distribution other than Apple and Google? Is this “duopoly” a help or hindrance?
But in China, Android is king of the smartphones, and there are hundreds if not over a thousand app stores…with all the problems that you’d expect in terms of dangerous or malicious apps. India is interesting as well — since bandwidth is limited and expensive, many apps are transferred from phone to phone as Android packages.
Seattle24x7: How does TUNE serve customers in your market space, and how are your fees structured?
Koetsier: TUNE is an interesting anomaly in the mobile space, since we provide solutions for both the demand side — brands that want to buy mobile advertising — and the supply side — ad networks, publishers, and other partners who provide inventory of ads.
Primarily, we help marketers connect and engage with people who want their services. We help marketers manage mobile marketing campaigns, we help them find the best ad partners for their specific needs, and we help them engage deeply with people who install their apps.
Our fees are structured around our clients’ success: if they are more successful in engaging people in their apps (in other words, increasing daily average users, or DAU), we also do well. [24×7]