GigaOM » app-marketing

Flurry rides the mobile boom, raises $25M with an eye toward IPO

Ryan Kim — Fri, 02 Nov 2012 13:00:25 +0000

App analytics and advertising firm Flurry enjoyed a big year in 2012, getting cashflow positive for the first time and doubling the number of applications that use its tools to 250,000. But 2013 could be even bigger, with an IPO potentially in the works.

That’s why the San Francisco firm is now raising a hefty $25 million Series D round led by new investor Crosslink Capital, a crossover fund that has helped companies like Pandora and Ancestry.com go public. Crosslink mixes venture investing and hedge investing after a company goes public.

The new round, which brings Flurry’s total to $51.6 million, includes participation from existing investors Menlo Ventures, Draper Fisher Jurvetson, InterWest Partners, Union Square Ventures, First Round Capital and Draper Richards.

Simon Khalaf, Flurry’s president and CEO, told me the money will help the company expand internationally into markets like South Korea, Japan and Latin America next year. And it will help the company boost its newest products including Flurry AppSpot, an advertising platform for publishers, and Flurry Ad Analytics, which helps advertisers measure the effectiveness of their ads. Flurry has also gotten into the business of helping developer build apps with its purchase of Trestle in July. And if all goes well, Flurry could be looking at a public offering by the second half of 2013, he said.

Khalaf said Flurry, which still has $9 million from its previous round, is now on an annual revenue run rate of $80-100 million a year and became cash-flow positive in March. The company now tracks 32 billion data points a day on 250 million devices and boast 80,000 customers.

Khalaf said, unlike social, mobile is proving to be a real market. And Flurry is 100 percent mobile, unlike companies such as Zynga or Facebook, which have struggled since going public.

“Social is a feature but mobile is a market,” said Khalaf. “Mobile is growing so fast, disrupting industries. You have computing, content and broadband revolutions meeting and the total addressable market is in the hundreds of millions to billions.”

While mobile continues to experience a monetization gap compared to online advertising, Khalaf expects that will narrow over time as advertisers chase users to mobile devices, just like they did with the desktop internet. Flurry, he believes, can help with the monetization push by developers and publishers with its AppCircle ad network, which has grown by 300 percent this year compared to last year. With Flurry’s vault of big data, the company could also be sitting on even more lucrative businesses in the future, said Khalaf.

If Flurry goes the IPO route, it will follow in the footsteps of Millennial Media, which went public at $13 a share in March and doubled before settling back down around its original price. And it may show that investors are ready to start valuing mobile companies and are optimistic about the opportunities in mobile advertising and monetization. But mobile advertising continues to ramp up slowly and if the monetization gap persists, it could slow down Flurry’s prospects.

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TapSense offers complete app downloads from mobile ads

Ryan Kim — Fri, 05 Oct 2012 21:42:26 +0000

TapSense, a mobile app marketer, is rolling out new ad units that let people initiate and complete an iOS app from a mobile ad. That’s in contrast to similar ad units that take a user out to Apple’s App Store to complete the download. TapSense said its ad units are the first to take advantage of new capabilities in iOS 6. And they offer the potential for better conversions for advertisers, who want to get better distribution and downloads for their apps.

When a user sees a TapSense interstitial ad and chooses to download an app, they call up a page that recreates an App Store page with details, reviews, ratings and images. One more tap on an “install” button and the app begins an automatic download. The user, who has never left their original app, can then continue on where they left off. Another version of the new ads also allow users to share the promoted app on Facebook, and via text message and email.

The App Store ads specifically call the “SKStoreProductViewVontroller” in iOS 6, which allows developers to recreate the App Store environment. Previously, this functionality was limited to Apple’s iAd ads, which also had higher conversion rates because of its integrated App Store, said George Kennedy, ~~co-founder~~ chief evangelist of San Francisco-based TapSense.

Kennedy said the App Store ads are in beta and will take a while to roll out fully as more consumers upgrade their devices to iOS 6. But he said early results show they are converting at a rate three to five times better than normal ads.

“The less friction there is between seeing what you want and getting it, results in more conversions,” said Kennedy.

Apple recently appeared to be clamping down on some app recommendation apps that promoted other apps in a manner that could be confused with the Apple’s App Store. Kennedy said the new language in clause 2.25 in the developer guidelines applies to apps that mimic the App Store, not apps or ads that use iOS 6 to officially recreate the App Store experience.

TapSense currently works with advertisers including Trulia, HotelTonight, Poshmark, Pocketgems, and Tiny Co. TapSense focuses on placing ads in top 40 apps and optimizes campaigns in real time to target loyal users, who will return to an app after downloading it. TapSense competes against Google AdWord and AdMob.

TapSense was founded last year by ~~Kennedy, a former InMobi global marketing director;~~ Ashwani Kumar, head of smartphones at InMobi; and Amit Manjhi, a former software engineer at Google. The company came out of stealth mode several months ago and has received seed funding from early AdMob investors.

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U.S. iPhone app downloads fall after big holiday season

Kevin Fitchard — Fri, 27 Apr 2012 17:28:36 +0000

It looks like the brand-new shininess of millions of new iPhones has lost a little luster since the holidays. After months of steadily increasing activity in the iTunes App Store, post-iPhone 4S launch, the number of daily app downloads in the U.S. took a big nosedive in March, falling 30 percent from February, according to mobile app marketing firm Fiksu.

Fiksu tracks the daily U.S. traffic of the top 200 free apps in the App Store, and found that starting with the iPhone 4S smartphone’s launch last fall, download activity ramped up from 3.8 million daily downloads in September to peak at 6.79 million downloads in January, driven by the holiday boom in iPhone sales. Downloads fell slightly in February to 6.35 million and then plummeted by nearly 2 million to 4.45 million total downloads in March.

“With the novelty factor of the iPhone 4S launch and the holidays well behind us, and no other events in March to spark discovery, March’s download dip was expected,” Fiksu CEO Micah Adler said in a statement. “An unexpected contributing factor could be the decline in the use of robotic install tactics by app marketers responding to Apple’s new policy.”

It’s also worth noting that Fisku only tracks U.S. numbers, so international downloads could still be high. While Verizon Wireless and AT&T saw their iPhone sales dip in the first quarter, Apple more than made up for it with strong international smartphone sales.

Though U.S. iPhone owners may be downloading fewer apps, that doesn’t mean they’re using their phones less. Fiksu also tracks a metric it calls the Cost per Loyal User Index, which measures the marketing costs developers spend to secure a loyal customer – one who opens their apps at least three times a month. In December, that cost reached $1.81 per user, but it dipped down to $1.14 in January and held steady at about $1.30 in the previous two months. So while iPhone customers may not be downloading as many new apps today, they look to be spending more time with the apps they already have.

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What’s a loyal mobile app user & how much do they cost?

Ryan Kim — Thu, 28 Jul 2011 12:00:23 +0000

The mobile app landscape has been changing for developers and publishers, away from a simple pursuit of pure downloads to a search for engaged and loyal users. It’s increasingly about building up a following of users who come back to an app. But what is a loyal app user and how much do they cost to get?

That’s a question that Fiksu, a Boston-based mobile user acquisition service is trying to get at. The company is announcing the start of two new indexes that it hopes will become accepted metrics for publishers looking to understand the cost of engaged user acquisition.

Cost Per Loyal User Index

One of the indexes, a Cost Per Loyal User Index, will look at how much it costs to acquire a user who opens an app three times. Three times is the threshold at which a user is generally engaged with an app, said Fiksu CEO Micah Adler. He said the definition of a loyal user is usually determined by publishers, who have different ways of measuring engagement. But he said for the purpose of a broad index, three is a good dividing line, showing where real loyalty begins for an app.

And when you start to look at how much it costs through advertising, incentivized offers and real-time bidding and other tools, you can begin to see what it takes to achieve that level of engagement. In June, for example, it costs about $1.27 to acquire a loyal user, up from 94 cents in March.

App Store Competitiveness Index

Fiksu also has the App Store Competitiveness Index that looks at how many downloads are racked up by the top 200 free iPhone apps collectively per day. That can be useful in understanding how competitive it is to break into the top ranks. It can also help marketers understand how they compare to the rest of the industry, why an app is doing well or not and how the cost of acquiring a user changes. In June, the top 200 apps are generating about 4.5 million downloads per day.

This is all designed to highlight the importance of acquiring loyal users. That’s how Fiksu sells its business, by emphasizing that with its intelligent platform that finds the most efficient and cost effective way to acquire a user, it can drive more loyal consumers, who are more valuable than random downloaders. So the company has something to gain by touting a new pair of indexes. It’s also a little unclear how accurate the indexes will be. Fiksu pulls its data from apps that use its service. Fiksu has some big clients like Barnes & Noble, Gilt, Groupon, Hearst Magazines, VH1, WHERE but it’s only got a few dozen customers overall.

Why Fiksu Makes Sense

I think the company raises an interesting point and is right to try and get at this question. For developers, the real challenge is to acquire users that come back. These are the people that can be monetized through advertisements and will buy in-app purchases. These are the people that can keep an game like Tap Zoo at the head of the top grossing charts list for the better part of a year.

It used to be easy and cheap to buy downloads using incentivized install campaigns, but now that Apple has banned them from new and updated apps, developers have been scrambling for ways to get their apps noticed and downloaded. You can see that in the rising cost of acquiring a loyal user. It’s gone up 35 percent since March, likely due to the ban on incentivized installs.

That’s the reality for developers: it’s getting more expensive to get engaged users, but that’s the name of the game. Now we’re getting a better sense of just how expensive.

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Mobile app distribution evolves in the wake of Apple’s incentivized install ban

Ryan Kim — Fri, 08 Jul 2011 14:15:18 +0000

Apple’s ban on incentivized installs of mobile apps, once a growing model for app distribution, has killed off one tool for iOS app marketing, but the need to get apps noticed and distributed hasn’t gone away. In fact, with the App Store closing in on half a million apps, it’s only become more imperative.

That reality is pushing app distribution and monetization companies to continue to evolve around Apple’s ban. W3i, once a leader in incentivized installs, has come up with a new alternative app discovery service that it hopes will aid game developers to push downloads while staying within Apple’s rules. The new product, called Mobile App Ad Network, allows game developers to offer their apps for free for a 24-hour period in customizable banner ads that appear in other gaming apps. The new “free app of the day” ads are going into beta today.

Advertisers and publishers have a number of options as to when and where they run the ad so that it is most effective. Instead of just a persistent banner, an advertiser can have the offer run when the app is launched, when the user hits a milestone or in exchange for an achievement. This targeted use of the ad means it works more within the flow of an app and is less intrusive. And because it only advertises free games for one day in other games, it is more likely to be downloaded because it is more relevant to the target audience. W3i said this model can boost conversions to 48 percent, though we will have to see if that bears out over time.

W3i believes the new ad product won’t run afoul of Apple’s ban on incentivized installs because it is basically a banner ad for an app that is on sale. Incentivized installs, which allowed a user to download an app in exchange for virtual currency or goods, was targeted by Apple for apparently gaming the App Store rankings, boosting apps that paid for those ad campaigns.

“It’s difficult to predict Apple’s behavior but they have no problem with recommending apps and they have no issues with publishers putting their apps up for sale,” said W3i product manager Melissa Johnson.

Johnson said that incentivized installs also enticed people to download unrelated apps they may not have been interested in to gain virtual goods. By offering games that may have appealed to a gamer, they increased the chances that the user would continue to engage with the app, making the investment more worthwhile for advertisers.

W3i’s product illustrates how the mobile app distribution market is shifting in response to Apple. Tapjoy, another leader in incentivized installs, said it has had to move away from pay-per-install campaigns on iOS, and it now targets other platforms and runs more cost-per-action ads, which allow users to gain currency in exchange for watching a video. It is also doing more-traditional banner ads for apps, Tapjoy’s CEO Mihir Shah recently told me.

This new campaign by W3i shows that mobile advertising is also becoming more contextual, something I’ve noted with products like Kiip and Tap Me, which use very targeted moments in apps to offer up real rewards or sponsored in-game power-ups. There is more creativity happening now in mobile advertising, some of it by necessity in the case of W3i. With a booming market for mobile apps, the marketing of those apps is a big opportunity that can’t be ignored, and marketing will always find a way.

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Tapjoy raises $30 million to meet app marketing challenge

Ryan Kim — Tue, 05 Jul 2011 22:34:43 +0000

As the mobile app market grows, it’s creating new opportunities for application marketing companies like Tapjoy, which has raised $30 million even after running into an Apple ban on one of its products. The new money, which follows on a $21 million investment last year, highlights the growing market Tapjoy is playing in and shows that despite problems with Apple, Tapjoy and others can find success as the app boom extends to multiple platforms.

Tapjoy’s investment was led by JP Morgan, which joins existing investors Rho Ventures, InterWest Partners, North Bridge Venture Partners and D. E. Shaw Ventures in this Series D round. To date, Tapjoy, formerly known as Offerpal, has raised $70 million. Mihir Shah, Tapjoy’s CEO, said the money will go toward acquisitions and building out the engineering and sales teams. The company expects to double its 70 employees in the next couple of quarters.

Shah said San Francisco-based Tapjoy is reaching up to 30 million users a day with its campaigns. That’s even after Apple closed the door this spring on so-called incentivized app installs, in which a user can gain virtual currency or goods in exchange for downloading another app. Apple didn’t say why it banned new and updated apps with incentivized installs but indicated that it was because the downloads were affecting the App Store rankings. Tapjoy was the leader in this field of pay-per-install app monetization but has now shifted its efforts on iOS to more traditional banner ads or cost per action campaigns, in which users gain currency in exchange for watching a video or completing some other task.

Shah said Tapjoy, which became profitable in the fourth quarter last year, has not missed a beat with the loss of incentivized installs on iOS. He said the growth of Android, which is doubling month over month, as well as a new opportunity on Windows Phone 7, have helped Tapjoy maintain its momentum. Tapjoy last month started a $5 million Android fund to help developers port their apps to Android, which doesn’t ban incentivized installs, and also recently started supporting Windows Phone 7.

“Regardless of what Apple did with respect to incentivized app installs, the mobile app market we power is booming,” said Shah. “It’s booming on Apple and a variety of platforms.”

Even though Tapjoy has moved on from the incentivized app install situation with Apple, it wasn’t without a fight. The company floated a couple of ideas by Apple including not having app downloads count toward the App Store rankings. But Shah said Apple has not responded at all.

Shah said it’s disappointing because he believes pay-per-install can be a legitimate tool when limits are applied. Without it, developers are having to pay more for other app marketing. Incentivized installs were also a significant way for developers to monetize their apps beyond traditional advertising or in-app purchases. But ultimately, the standoff has forced Tapjoy to diversify and it seems to be doing well because of it. The reality is, in a market that’s expected to hit $37 billion by 2015, many mobile apps will increasingly need help to be noticed and downloaded and serving this market is just getting more lucrative.

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The Average iOS App Publisher Isn’t Making Much Money

Geoffrey Goetz — Thu, 21 Apr 2011 19:05:15 +0000

In the latest earnings call, Apple COO Tim Cook reiterated that the Mac-maker has paid out over $2 billion to developers. These transactions were the financial result of over 10 billion downloads of the more than 350,000 apps available in the App Store. While iTunes electronic sales have been steadily increasing, the logical assumption that it’s the app sales and not the music, movies, television and books being sold driving success. So how much of that app revenue is actually making its way to the average developer?

According to 148Apps.biz, there are approximately 370,000 iOS apps from 78,000 publishers with an average price of just $2.52 U.S. per app. While there may have been over 10 billion app downloads, that number spreads the $2 billion that Apple has paid to publishers over its three-year lifespan very thin. These numbers translate into an economy where there is just over $8,500 per publisher per year to go around. Keep in mind that a publisher may be just a single developer, or a whole team of analysts, developers, testers and managers.

Looking at the numbers in a slightly different manner, consider the recently published AdMob survey that indicates most smartphone and tablet owners are using their devices to play games. This breakdown is supported by the fact that 43 of the top 100 paid apps in the App Store are games. Assuming an exponential distribution of downloads, where the cheaper apps are being downloaded more often than the expensive ones, we can extrapolate how many downloads it would take to account for the $2 billion in payments to publishers.

By breaking out games from the rest of the apps in a 60/40 split of revenue (40 percent going to games), you can see why games in particular are more lucrative than other types of apps. What this analysis doesn’t take into consideration are the runaway success stories that would only skew the data even more. This analysis assumes an even distribution across all apps based solely on the textbook supply vs demand premise that cheaper apps sell larger volumes.

While the latest research from comScore may show how people are spending their money on new smartphones, it doesn’t show how people are spending their money on apps. According to this data, if the app market is to continue to thrive, alternate funding models that aren’t based on the sale of apps in the App Store will need to take shape.

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