How Mobile is Changing Everything

In 2011, Marc Andreessen released an essay in the Wall Street Journal proclaiming “Software is eating the world“.

The “internet bubble” had occurred 10 years prior and Andreessen was trying point out that the market hadn’t recovered emotionally as many tech stocks were widely undervalued.

Andreessen is one of only 6 people in the World Wide Web Hall of Fame, the creator of the first widely used web browser (Mosaic), Netscape, Opsware (sold to HP for $1.6b) and co-founder of VC firm Andreessen-Horowitz (a16z).  He also sits on the boards of Facebook, eBay and HP among others.

Enter Benedict Evans – avid Tweeter, and an a16z analyst since early 2014.

Benedict follows mobile and consumer trends, and shares truly unique insights with the audiences of his blog, newsletter and a16z principals and investors.

Before landing at a16z, Benedict was giving a presentation titled “Mobile is Eating the World”.

Not only borrowing, but one-upping his future boss’ most famous line.

The latest update to his “Mobile is Eating the World” presentation is available here and is just full of interesting and amazing nuggets.

I really encourage you to review the deck yourself – but here are some highlights:

  • 4 billion people buying phones every 2 years instead of 1.6 billion buying PCs every 5 years
  • Mobile ads make up 68% of Facebook’s revenue – $7.8bn in 2014
  • Global SMS = 20bn messages/daily, Whatsapp = 30bn daily (one of several messaging apps)
  • TV only makes up 24% of video player install base

The stats alone are worth the read – but starting on slide 41, looking at tech historically (railroads were tech 150 years ago) creates some fascinating looks at what (and who) are the winners in the coming years.

Where trucks and highways were the tech that enabled McDonalds and Walmart – we would never think of either as tech companies.

Yet we absolutely think of Amazon as a tech company, despite being a retailer enabled by the internet.

The implied challenge is – how is this different?

Are we not far from the “tech” of today (mobile and software) being so ubiquitous that it disappears?

When Amazon is just a retailer, no different than Sears and Walmart.

And of course, when mobile answers the question of “who’s next?”.

mobile ad spend

The Coming Mobile Ad Spend Tsunami

When we see mobile ad spend charts like this from the annual Internet Trends report from Kleiner-Perkins:

Screen Shot 2015-06-05 at 10.29.18 AM

The data is clear – digital consumption has caught up with traditional media.

Mobile and “internet” or desktop are about even with 24% of the consumption share – adding up to 48% of media share.

And while the desktop internet advertising spend almost matches what would be expected based on usage, print is way over represented and mobile is extremely underrepresented.

Why aren’t more ad budgets being allocated to mobile?

Well, mobile ad spend in 2015 doubled from last year – and is still not keeping pace with mobile usage.

Check out last year’s Internet Trends report.

Screen Shot 2015-06-24 at 10.41.27 AMDigital media consumption grew overall from 2013, from 45% share to 48%, but mobile actually took share from desktop internet.

In 2013, mobile ad spend was around $7 billion, or 4% of total ad spend.

In 2014, mobile ad spend doubled to $13 billion, or 8% of total ad spend, while mobile accounted for 4% more share of media consumption.

The ad spend doubles and still can’t keep up with the demand.

Part of the gap between ad spend and where audiences are spending their time can be explained by how fast this is happening.

Here is facebook’s revenues by source:

Screen Shot 2015-06-24 at 12.09.08 PM

3 years ago, almost no revenue came from mobile.

Now 68% of Facebook’s revenue comes from mobile ads.  Virtually all of its growth is investment in mobile.

Which bring us to forecasts.

We recognize and understand the opportunity – mobile ad spend is extremely under-represented compared to mobile usage.

eMarketer predicts $100 billion in ad spend in 2016.

mobile_internet_ad_spending_worldwide_emarketer_copy

Note the predictions for % of total media ad spend.

Growing from roughly 4% and 8% (similar data in the above KPCB report), to 12% and almost a quarter of total ad spend by 2018.

That’s $120 billion in advertising spending that is expected to shift from print, radio, TV and even desktop internet to mobile.

These trends make it clear the need for an increased investment in:

  • app store optimization and organic user acquisition
  • monetization using ad networks with a large advertiser base (Facebook’s Audience Network for example)
  • mobile app marketing, engagement and retention
Apple Analytics

Apple Analytics – New Features Review

At WWDC 2014, Apple announced Apple Analytics was coming.

Mobile app publishers and marketers anxiously awaited this new analytics module, expecting a release to coincide with the iPhone 6 release.

Not only did Apple not release their mobile app analytics module with the new OS and devices (iOS 8 and the 6 & 6 Plus at the time), it took until April of 2015 to be released in beta.

For a host of reasons, not to mention Facebook announcing expanded mobile app analytics a month earlier at f8, the Apple Analytics module fell short of expectations.

The question is – what did Apple provide visibility to that was not already available from existing, free services (Flurry, Google Analytics, Facebook) that was new, and actionable?

The beta release of Apple Analytics provided some data that only Apple has, but had not released before.

  • App Store Views (how many visitors to an app’s app store listing)
  • Sources – where the traffic to the app listing came from

Both pretty cool in theory.

If we know installs (what Apple is calling “units” in analytics), then we can calculate a conversion rate:

Units/App Store Views

Wow!  We can see if people viewing an app store listing ultimately install the app.

Low conversion rate?

  • Maybe our screenshots are not highlighting the most desired features
  • The first few lines of the description are not compelling
  • The app title is a turn-off

All information that only Apple can provide its developer community to build better apps and ultimately a better experience for Apple device users.

Except that there are other ways to install an app.

One being directly from search results.

Another is via a deeplink/app link.

So – to really understand conversion, so marketers and publishers can make better apps, we need to know installs (units) from an app view vs direct from search results (or direct link).

I assume Apple knows this, and I assume they understand units/app store views when units can come from various sources means there is no conversion rate to be measured.  No insight = no action.

If data isn’t actionable – you are doing it wrong.

So far – this data isn’t actionable.

That didn’t stop Apple from adding a new “feature” they are referring to as ratios.

mobile app analytics

As we know, if units can occur without an app store view, the ratio of units to app store views is meaningless.

For example, you are looking for the hotels.com app.  You search “hotels” in the app store, and the first result is the Hotels.com app.  Do you click to see the app’s store listing?  Or just download from the search results?

Hotels in Search

It would not be surprising if apps with popular brands had conversion rates exceeding 100%.

More units than app store views.

What about attribution?

The “sources” section of the Apple Analytics module provides some insights that could be hacked together before, but is now in 1 place.

Where is most of the traffic to an app’s store listing coming from?

Publishers did not have this insight before.

We could create custom links and track marketing efforts to an install and beyond, but not to the app store.

Before:

Custom Link > Install > Sessions/Revenue/Etc..

Now:

Source/Custom Link > App Store Listing > Install > Sessions/Revenue/Etc..

There is some value in this, but mostly for determining where a spike in traffic came from.

Marketers running campaigns, from ads to social media posts, generally create custom links for tracking.  Ultimately being able to attribute in-app actions to campaigns is what is valuable.

What’s Coming?

Expectations among marketers have been established somewhat by the web.  Google Analytics provides data on source, campaign, search terms used etc.. for web properties for years.

But apps are different, and Apple owns the more valuable user base and app ecosystem.

This is Apple getting its feet wet in providing analytics to its partners.

Expect more data on search terms used to find apps, which apps drove traffic via applinks and hopefully some adjustments to units and views to help publishers build better experiences for Apple users.

Indie Dev and ASO – App Marketing Starts Here

As an indie app developer – the main focus is often building a great  mobile game, but the ultimate goal of serious game developers and publishers is to build a game that is played, and generates enough revenue for continued development.

Investing to make a game better is hard if there is no ROI in sight.

Revenue comes from engaged users.

It takes time to optimize a game for engagement, but a great game solves the “engaged” part.

Wait – where do the users come from?

How do mobile apps get discovered?

The answer is “mostly from app store search“.

Which means the answer is also “marketing”.

Specifically app store optimization, the art and science of positioning an app for maximum exposure and conversion for relevant app store searches and installs.

But – most developers I know really just don’t like marketing.

It is more than “uninterested”.

dilbert-sales-3

The impression is that marketing represents a huge distraction from making a great game.

It’s confusing and can be expensive with uncertain ROI.

And maybe just feels a little inauthentic.

Marketing and selling are kinda gross

8259_13261961444

You are trying to convince people you don’t know to try your game.

Worse – you have to explain to them why it is so cool.

They should just “get it”…. and maybe they will….

But marketing is more than selling your mobile game.

They need to know it exists.

In fact – any mobile app marketing effort should start with positioning your game for discovery.

Discovery by people who may be actively searching for games just like yours.

Until the LTV (life time value) of a user exceeds the CPI (cost per install), investing in advertising can be an expensive way to acquire users.

Insanely expensive.

But positioning your mobile game so that people searching the app store for your app, or apps like yours, find your app – means acquiring organic downloads from an ultra-relevant audience.

ASO starts to make sense as the essential marketing investment for an indie game.

“If you build it, they will not come” is the oft-repeated, but perfect way to capture this idea that permeates developer circles.

If You Build it They Will Come... Just Kidding...

Build it, and help them find what you built.

That’s ASO.

And it should be part of every indie developer’s plan.

Check out our guide to ASO, and other help tips here.

To check out how our software can help your game be discovered, request a demo here.

Apple Passes 63 Billion Mobile App Downloads From Store Search

The Moscone Center in San Francisco has been busy, and one of the key takeaways from WWDC 2015 is the importance of ASO.
apple-wwdc-2015-banners
After playing host to Google’s annual developer conference “Google I/O“, Apple held their Worldwide Developers Conference (WWDC) this week.
While missing some of the splash of previous WWDCs, the 2015 version still delivered.
From Apple’s perspective – announcing Apple Music was the big reveal.
Some of the loudest applause came in an unexpected place, when Craig Federighi mentioned in (almost) passing that Swift would be opened-sourced.

100 billion apps downloaded in 7 years

When Apple CEO Tim Cook hits the stage, he is generally sharing macro-data and macro-strategies, and then letting others come up and dig into specific details of new products, services and releases.

While on stage – Cook shared a simply amazing statistic:

Apple has passed 100 billion apps downloaded

That’s 100 billion downloads from Apple’s app store in 7 years, with 1.5 million apps now in the store.

As recently as May 16th, 2013 Apple announced 50 billion downloads.

That means an additional 50 billion apps have been downloaded in just over 24 months, or 70 million apps per day.

According to a Nielsen report, and supported by other studies, app store search is the biggest driver of app downloads by a large margin – 63%.  This is a huge sign of ASO importance.

63% of apps found via search

Studies show a range of 50-65% of apps downloaded from app store search.

Using Nielsen’s 63% means every day almost 44 million apps are downloaded by users searching in the app store.

Increasing App Visibility in App Store Search Results

Identifying and connecting to your audience in the app stores has never been more important.

Cost per install (CPI) continues to rise across geographies.

Competition is expected to increase for mobile ad inventory as brands allocate more of their advertising budgets to mobile, driving mobile ad costs up even higher.

Organic app installs driven by app store search optimization is still the most effective long-term strategy for mobile app growth and adoption.

Learn more about how Gummicube helps our clients gain market share with a complete app store optimization strategy here.


For more on Apple’s WWDC 2015 – see our wrap up post here.