When Apple released the AppStore and it got swamped with apps quickly I started to wonder about how efficient the AppStore would be as a Channel, especially once there would be thousands or tens of thousands of apps. We clearly surpassed that mark now and I don’t think the AppStore is as good a Marketing channel as it could be.
Here are the 5 structural problems I see with marketing apps today:
- When checking out new AppStore releases I cannot but wonder about the umpteenth iPhone photo editor/your-favorite-category app with, on paper, almost the same feature set as the others in the same price range ($1.99 to $2.99). Why should I spend money on trying it out, if I already have one, two or three photo editors? I don’t, unless there is a financial incentive, a.k.a. a free trial app, which drives up the developer’s cost and eats into their revenues.
- If there is little differentiation, people go with what they know. They either stick with what they have (which is why first-mover advantage is so important for iPhone apps) or they go with major brands, which are not present on the iPhone (why do you think Adobe, Microsoft, Corel or Lightcrafts do not sell any iPhone photo apps at this time?) If you already have 3 apps doing the same thing, why would you buy a fourth, even if it comes recommended by a friend?
- If there’s still little differentiation, people go with the least expensive. That is one reason why in almost all app categories we are seeing a race to the pricing bottom. Right now, it’s done through a temporary “Sale”, but as long as there’s a new app on the block where the developer is happy to build market share by selling it for $0.99, you cannot get out of this rat race. How is Apple addressing this (hint: They don’t)
- Apple provides a great channel through the AppStore, but how do you market yourself within the confines of the AppStore? Effectively, you have to market outside of the AppStore to drive people into the AppStore, thus again increasing your cost, while at the same time your “Sale” is negatively impacting your revenues. Only if you are smart at marketing outside of the AppStore will you be able to charge a small premium. But even that premium will be under pressure – if people are willing to pay an extra dollar for your app, you will have to lower your price, too, when your competition lowers theirs.
- Fragmented markets like most app categories are ripe for consolidation. But given the low cost of developing apps and also the low switching cost for consumers, how do you consolidate such a market? Apple could, but why would they when the current system works pretty well for them?
Right now, Apple is the only real winner in this game, as long as they keep developers happy enough. 50,000 – no, already 65,000 – tomorrow 75,000 apps! This is a powerful marketing argument when selling iPhones to customers. Although not for most of the developers.
As a developer of a new app, how would you market your app today, if you were to release your app to the AppStore where there are 50 similar apps already?
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