Want to Be in the App Store Top 100? It's Gonna Cost You

7 Comments

logo_adwhirlThey say it takes money to make money, but it you want to be in the top 100 apps in the Apple (s aapl) App Store, it’s gonna take you $1,875 per day to buy enough ads, according to a report out today from AdWhirl. The company, which operates an advertising platform for the iPhone (and would love to sell more ads, presumably), looked at how to propel iPhone apps into the upper echelon of popularity without spending too much on advertising. Instead of spending almost $2,000 a day, the study found that releasing a free app seems to help drive usage. That use, in turn, gives developers a target market to which they can advertise a paid app, or capitalize on for viral growth. Other findings include:

  • Untargeted cross-promotions generate conversions at approximately 0.2 percent or less from each impression (20 downloads for every 10,000 ads displayed).
  • Targeted cross-promotions convert at approximately three times or more.
  • Free apps with fewer features that can be upgraded to paid apps can increase sales up to five times, without cannibalizing sales of the paid version.
  • It only takes about 2,500 downloads per day to break into the Top 100 Apps.

7 Comments

and

it’s interesting to me that adwhirl is now copying admob with their linikshare program. in both cases, it sounds like they don’t have enough advertisers, so they’re filling their networks with these linkshare ads that generate no direct revenue for the app developer. they’re trying to pass this off as a service to developers, but in actuality, it’s hurting them.

Patrick

This shouldn’t be surprising to anyone. As more apps come online it becomes harder for developers to cut through the noise. As Apple doesn’t really have any tools to allow developers to promote their apps within the app store they have to turn to outside advertising. As they do this it invariably drives up the price of clicks, impressions or any other medium to reach consumers.

The breakeven isn’t too bad. If it costs $60,000 to break the top 100 then selling an app at $1.99 you would need to do about 43,000 downloads assuming the 70% revenue share. The problem becomes the price. If you price your app at .99$ then you actually have to do 86,000 downloads to ammortize this. This is before tax!

$60,000 isn’t too bad for larger publishers. The issue is a cash flow issue that affects smaller developers. It’s well known that Apple takes time to pay publishers. The blogs are full of stories from developers who are getting paid 90 days + for their apps. This is the key issue. Advertisers like Admob usually take cash up front. Especially from publishers they haven’t worked with before or who have little history. This means the developer has to front this money, hope they get the downloads and then wait for 90 days to get paid. How many can afford to do that?

The other problem here is this is a purely CPM driven model. Developers are paying for clicks or impression to drive traffic to their product page on the App store. This is by no means a guarantee they will get downloads. So consumers have to see the ad, like it, click on it, arrive on the product page and then finally hit download. :( What Apple should really do here is implement their own CPA model to allow developers to bid for some kind of premium visibility on the App Store. The highest bid per category would win but Apple would only charge them for the actual downloads they do. That way Apple could build an advertising business, developers could get cost effective advertising to push stuff directly on the app store and drive more downloads. This is what we do on GetJar and it’s much more economical then selling impressions to developers.

Patrick.

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Ryan

Obviously, a self-serving report by Adwhirl. Still, the download threshold to break into the top 100 is interesting.

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