Summary:

TapJoy has put a cap on how many times an application from one of its customers can be downloaded through its so-called “offerwall” marketin…

Mihir Shah TapJoy CEO

TapJoy has put a cap on how many times an application from one of its customers can be downloaded through its so-called “offerwall” marketing programs in the wake of an Apple (NSDQ: AAPL) crackdown on apps it believes are manipulating the App Store rankings list, its CEO said Monday at the VentureBeat Mobile Summit. MIhir Shah said the cap was rolled out last Thursday or Friday but he didn’t specify exactly where the new line lies, or how that might affect developers trying to boost their apps.

One big side problem of the land rush into mobile computing and application development has been discovery: there are hundreds of thousands of apps on Apple’s App Store and finding exactly what you want can be difficult. As a result, Apple’s lists of top applications are highly coveted spots for app developers looking to get users and revenue, and many have taken to paying offerwall companies like TapJoy for inclusion in a marketing program that places ads for their apps in other applications that encourage users to download the advertised application in exchange for virtual credits within that game or app. The result is a huge boost in downloads if you can get a link to your app in a popular game, and while it can be a fleeting boost it can prompt Apple’s App Store rankings to interpret the surge in downloads as a surge in interest in your app, vaulting it into the rankings list and encouraging downloads from more desirable users.

Apple does not appear to be crazy about this. Last week it started rejecting updates to applications that used this type of marketing program citing a clause in its developer agreement prohibiting manipulation of its rankings. As a result, TapJoy rolled out the change to its program in hopes of allowing its clients to be relisted in the App Store by ensuring that no single application can cause another application to appear in Apple’s rankings, Mihir said without elaborating on exactly how that was implemented.

It’s another example of how Apple can wield its tight control over the App Store to the frustration of iOS developers, who have no choice but to be on Apple’s platform should they want to build a mobile business. The real problem is that Apple’s ranking algorithms need to be tweaked in order to focus more on aspects like application quality–through user reviews, for example–as opposed to pure downloads, which create incentives to game downloads through services almost akin to click fraud, said Sam Altman, CEO of Loopt, who appeared with Shah onstage to discuss the issues. It seems Apple has already started to do this.

Still, app developers should have some flexibility to market their applications within other applications, Shah said. “There has got to be a number of very creative long-term ideas that impresses a balance between marketing spend and organic rankings,” he said.

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