iPhone App Store Secrets

Our portfolio company Pinch Media posted this presentation they made at the New York iPhone Developers Meetup. There’s some great data in here and every iPhone app developer should take a second and go through the deck. The data on free vs paid and when advertising works and when it doesn’t is particularly interesting.

#VC & Technology

Comments (Archived):

  1. BmoreWire

    hmm, the javascript on slideshare isn’t loading….is this happening for anyone else?

    1. fredwilson

      DamnWhat browser are you using?

      1. BmoreWire

        i was on Firefox 3 and tried it on ie7. It’s working now they must have had a problem with wherever they store their javascript libraries. seems to be working now.

        1. fredwilson


  2. OurielOhayon

    Very interesting presentation. I precisely wrote a post today of the lack of visibility and marketing tools Apple is not providing to make the Appstore a real efficient marketplace and i mentionned Pinch Media is one of the tool that app creators should use. But there is so much more that is missing and that only apple can provide (merchandising services, in store analytics, couponing system for app creators,…) there is more here http://ouriel.typepad.com

    1. fredwilson

      Great post OurielI left you a comment

  3. Carrie

    Wow, This is a great piece of information! I’ve just sent in my first iPhone app for release (currently in review), and now I think I might Hold off and see about sending data to Pinch. It is great to read the comments in the link you provided. There is goes into how the data is gathered etc..

  4. BmoreWire

    ok, so slide 24……where on earth are they getting those CPM’s? Are they using web based cpm’s? Take a look at this article by the CEO of Millennial Media. $8.75 cpm is totally reasonable. http://www.mediapost.com/pu

    1. Greg Yardley

      Polling a wide range of iPhone developers using a variety of ad networks on their ad rates and then multiplying by fill rates. Some are doing well – many others, not so well. And too much inventory is currently going unsold – those $10.00 CPM campaigns might be out there, but they tend to be tightly targeted and frequency capped.Mobile ad networks have a very bad habit of talking up their rate card CPMs, which is just PR fluffery and an initial negotiating point. Or they turn around and publicize wildly successful but absolutely miniscule case studies, throwing expectations out of whack. The only things that can tell you how an ad network’s really doing is a check in your pocket and a traffic report.

      1. BmoreWire

        I wouldn’t call that a bad habit and making that accusation is a slippery slope. Networks derive their cpm’s based on the value that their advertisers get out of the media. True, ratecards are often discounted and normalize, however, once they resemble the real value they provide based on relevancy to the consumer, it’s a matter of having a savy sales force to get those cpm’s and then this value is passed on to the publisher in real dollars that keep them in business. Mobile advertising is still in it’s infancy and supply is greater than demand right now so yes, the higher frequency stuff will water down the overall rates. That said demand isn’t there because people are unaware of the power of mobile advertising and HOW to do it effectively. The web was like that when I started in Network advertising and now publishers make hundreds of millions of dollars to support their publishing activity and validate the value that they provide to consumers. To say “hell no” to having an ad supported app is short sighted. Many of the iPhone apps right now are flash in the pan apps that have only initial curiosity. Once you see more value driven apps out there, you will also see ad revenue and CPM’s go up i.e. boxee iphone app.Back to my original point……Palmieri is merely illustrating the results of mobile advertising. If you are 1 click to an 800 number call or an app installation that delivers immediate value [i.e. an app to order takeout food] your higher CPM’s are worthwhile because you shorten the consumer purchase funnel as compared to a web banner ad.Also, I think your data is incredibly relevant and inspiring as a snap-shot of the iPhone app market today but to advise people not to rely on ad-supported apps, I personally think is short sighted.

        1. Greg Yardley

          It looks like an absolutely terrible habit, if ad networks want to sign up and retain publishers. I’ve met a lot of irritated developers who have had expectations incorrectly set. And the analogy between web and the AppStore fails because the web lacks a strong alternate payment mechanism – which Apple’s AppStore has. It’s not in my slides, but there’s a reason why the percentage of paid applications and the ratio of all forms of usage (unique users, sessions, and time spent) of paid applications to free applications is steadily shifting in favor of paid applications – on the AppStore, the easy iTunes payment mechanism leads people to buy things in large quantities.As for saying ‘hell no’ to ad-supported applications – strong words, but it’s very important to understand whether you’ve got an application that can monetize successfully via advertising *before* going down the ad-supported path, since a free release immediately destroys your potential for a large paid audience. And I stand by our data – right now, only a tiny minority of applications will do better with advertising than through paid sales. Intelligent developers should measure their application’s paid usage characteristics and understand the probable impact of the switchover before making their decision. That’s one of the things Pinch Media’s analytics product is for.Over time the mobile advertising market may change and mature, and when I do see it perform better for a much broader portion of paid apps, I will happily advise developers differently. But personally, I think the jury is still out when it comes to the mobile application ecosystem, on the iPhone and elsewhere. A couple years from now, in-application advertising might be the predominant model – but that’s certainly not in line with current trends. At this point I think we’re just as likely to see a mix of paid applications, free games supported by virtual goods, and bespoke branded applications created by ad agencies.

          1. BmoreWire

            It just seems to me that if the top websites of today tried to charge for access to their site they would never have grown at the rate that they did and would not bring in the billions in ad revenue that they do today. And to say there isn’t a good pay mechanism for websites is just incorrect. Paypal, shopping carts, logins, accounts….I’m not really in the mobile space but I’ve been looking at the data for the number of mobile users which says that worldwide, this thing could easily scale bigger than the web. i.e. more likely to get a blackberry in the hands of a user in a 3rd world country than a laptop. So to presume that as this scales people will continue to pay for software seems out of wack to me.I personally think your products are great but I think the long game is advertising and with advertising, analytics is imperative. Imagine if google charged you for access to their directory. So my thoughts (which aren’t based on data because the data doesn’t yet exist) are that you should charge for your iphone app if you want to make $100k today but build a useful sustainable app and work on lifting that tail of engagement, offer it for free, and you will make $1B (or pesos) in 5 years.

  5. Scott Gatz

    I found this preso last week after we launched our iPhone app. It’s truly a treasure and great of Pinch Media to share. After reading it my first thought: we’ve got to use Pinch Media. I’m sure that’s what they planned and it’s well done.We’re currently doing quite well in daily downloads and made the Top 20 travel apps list (which I’m thrilled about), but it’s clear that there is wide disparity in download counts in the various categories. I really do wish there was more transparency out there. After reaching out to my whole network, there are only a few case studies of downloads out there and almost nothing on daily usage.I also appreciate highly their advice about ad supported vs. for pay. We chose to launch a free, non-ad based app to drum up interest and usage but always planned to add in ads. I never felt that our app would do well with display ads — we hoped to focus on our own sponsored listings model (we are a local/travel guide). My $.02 is that the ads just don’t fit the current experience – they might work in the NYT app, but it would be hard in almost any other case. Looking at this, we are much more likely to stay away from display ads until we have a better sense of usage and see if we can really amp up a more organic and targeted ad product on the iPhone.

    1. Carrie

      Your point about ads not really fitting into the user experience is excellent. As a user I have only used two ad supported apps (Pandora and a game) and the game in particular caused annoyance, because to use it I had to be on 3G and I usually play games in the subway. I decided I didn’t really like the game anyways and just uninstalled it. Pandora I really like, and even find the advertising kind of cute. I wish there was a way to change what you are being advertised though, it always shows me beer ands and car ads, two things I am not interested in. I wish I could tell it to show me fashion ads instead.

  6. Pierre Henri Clouin

    This presentation by pinchmedia on the iPhone Appstore is fantastic and a must-read for anyone currently working in the space.The Apple Appstore’s shortcomings on app discovery and the overall shopping experience appear blatantly throughout the presentation. I blogged on this topic a couple of months ago and highlighted a few low-hanging fruits to unlock the Appstore’s untapped potential.More importantly, the presentation shows that the current limited options to monetize apps are hurting the iPhone apps’ ecosystem. By expanding the range of options to monetize apps, from one-off purchases and/or ads to multiple options like subscriptions or virtual gifts (which are now commonplace in gaming environments for instance), Apple could dramatically boost the appeal of its app ecosystem.

  7. dave rad

    wow. super insightful. thanks for publishing this!!

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