State of the Industry: APPS
                            A DM2PRO and Quattro Wireless Collaboration,
                     ...
State of the Industry: APPS


EXECUTIVE SUMMARY

The rise of social applications and multi-function mobile devices have dr...
State of the Industry: APPS

Together, these advertisers/agencies, developers and publishers comprise an ecosystem whose a...
State of the Industry: APPS


Could the personal choice of mobile phone by those in                            WHY BUILD A...
State of the Industry: APPS


might call for a mobile rather than a social app. Mobile
                                   ...
State of the Industry: APPS


IF YOU BUILD IT, WILL THEY COME?                                                            ...
State of the Industry: APPS


As for what makes an app successful for this group,
                                        ...
State of the Industry: APPS


APPLICATION DEVELOPER                                                               MOBILE o...
State of the Industry: APPS


for this platform. A third of respondents never bother                                How do...
State of the Industry: APPS


DEVELOPERS WHO MONETIZE BY SALES OR
ADVERTISING: 25-50% REVENUE GROWTH                      ...
State of the Industry: APPS


                                                                    Revenue, reach and eCPC ...
State of the Industry: APPS


                                                                                      Howeve...
State of the Industry: APPS



            For which environment was this / (were                                         ...
State of the Industry: APPS


More than half of mobile app publishers earning revenue                    As for revenue in...
State of the Industry: APPS


                                                                                   Publisher...
State of the Industry: APPS


ABOUT QUATTRO WIRELESS

Quattro Wireless is the leading global mobile advertising company, e...
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State Of The Industry_Apps

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Groundbreaking application industry research on the future of the ecosystem

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State Of The Industry_Apps

  1. 1. State of the Industry: APPS A DM2PRO and Quattro Wireless Collaboration, December 2009 Quattro Wireless A groundbreaking study on Corporate Headquarters 100 Fifth Avenue the current strategies and Waltham, MA 02451 781 209 4030 future plans of more than Sales Headquarters 600 major advertisers, 594 Broadway, Suite 206 New York, NY 10012 646 367 2175 agencies, publishers and Additional offices in Chicago, Dallas, social and mobile application Los Angeles and San Francisco. developers
  2. 2. State of the Industry: APPS EXECUTIVE SUMMARY The rise of social applications and multi-function mobile devices have dramatically changed the marketing landscape over the past two years. Marketers have been forced to address new business models and marketplaces, as consumers increasingly shifted their media time from traditional to digital channels. This research study, previewed by DM2PRO.com and Quattro Wireless at the digiday:APPS summit in Los Angeles on December 10, 2009, is the first in-depth look at the entire social and mobile application ecosystem. The full slide deck is available at DM2PRO.com. This report will mainly focus on mobile platforms, as overall the study found that investment in social applications will remain flat, while mobile investment will grow significantly. As the mobile landscape continues to evolve, this data provides an essential window into where the industry stands today and where it is headed: · More than half of the advertisers and agencies surveyed did not develop a mobile or social app in 2009, but 65% plan to develop mobile apps in 2010, with iPhone being the clear winner in terms of intended platform of choice at 91% (followed by Android at 39%, RIM at 33%). For those that do have apps today, Facebook apps lead iPhone apps by about 12%. One-third expect their budgets to increase by more than 75% in 2010 some by greater than 200%. · For the smaller number of publishers who have already developed apps, the inverse of advertisers social- to-mobile app preference is true: iPhone leads Facebook in terms of the platforms they plan to develop for. More than 35% of publishers say that even in today s challenging economic times, they expect their mobile app-related revenues to increase by more than 50% in 2010. · Social-only developers focus mainly on Facebook (74%), but 90% of this group are going mobile in 2010, with 75% working on iPhone apps and 55% on RIM. Considering that more than half the total advertising respondents represent agencies (n = 130), presumably with multiple clients, the number of branded mobile applications entering the market next year should be substantial. METHODOLOGY DM2 Media and Quattro Wireless used their extensive customer lists to conduct an online survey of ad agency, advertiser, media and app developer executives in November and December 2009. DM2Media holds conferences for digital media and marketing pros on a variety of media-transforming technologies, including mobile and social networks and applications, and publishes the digiday:DAILY free e- newsletter and DM2PRO.com paid content resource. More than 30,000 interactive industry professionals read digiday:DAILY, or have attended conferences, a majority of these serving in various executive marketing positions for brands or agencies, with approximately a third in publishing-related media posts. Quattro Wireless serves these markets, along with the application developer community. Some of these developers serve publishers, brands or advertisers, but the majority are independent entrepreneurs. Page 2 www.quattrowireless.com
  3. 3. State of the Industry: APPS Together, these advertisers/agencies, developers and publishers comprise an ecosystem whose attitudes will impact the growth of the apps marketplace in 2010. Each sector was examined for mobile app market direction. Of the more than 600 respondents, 236 were developers, 125 were publishers, 130 were Are you, or is your company, a/an: agencies and 114 were brand or direct marketers. Applications Developer Among developers, the overwhelming portion 245 236 83% were entrepreneurs (developers who build 40% 39% apps as a business), 9.6% work for agencies with Publisher or publisher-related, (not yourself a developer) or multiple clients, 5% worked for publishers, and only 2.2% were advertiser or client-side 126 Agency/ advertiser / marketer developers. 21% (not yourself a developer) Of the 100+ publishers, 88% were content N=605 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless publishers, with around 6% each representing social networks or portals. FINDINGS ADVERTISER/AGENCY IPHONE AND RIM LEAD CURRENT DEVELOPMENT Asked whether they develop mobile or social apps, a small majority of respondents said no. But 65% of Among those who have developed mobile applications, those who haven t yet taken the plunge say they plan to advertisers and agencies rank iPhone at a 95% develop mobile apps in 2010. Of those, 91% plan to preference, but put RIM over Android at 44% vs. 33%. develop for iPhone, 39% for Android and a third for RIM. (There s clearly overlap.) Palm trails in both experienced and aspiring cohorts at 19% and 15% respectively. Have you developed mobile or social apps? For what MOBILE platforms do you develop? Palm 15% Yes 46% RIM / BlackBerry 44% No 54% Android 31% iPhone 95% N=234 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless 0% 20% 40% 60% 80% 100% N=39 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Page 3 www.quattrowireless.com
  4. 4. State of the Industry: APPS Could the personal choice of mobile phone by those in WHY BUILD APPS? ENGAGEMENT LEADS our survey impact app development? More than half of advertiser or agency respondents 52% use an iPhone, while 38.5% use a RIM device. Only 13% have an Android Which of the following types of apps do phone. Obviously, some have more than one. you employ? Base: Advertisers or Agencies Who Have Used Apps There are marked differences among advertisers, Mobile developers and publishers about the future of Android. 11% The advertiser/agency group was less optimistic about Android s ability to meet or surpass iPhone s market Both Mobile and Social reach. When asked how long this might take, half the 69% Social 20% respondents (of an admittedly small set 42 total) said it either wouldn t happen or would take five years or more. N=95 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless How long do you think it will take for Android to meet or surpass iPhone reach? The vast majority (nearly 70%) of app-savvy respondents in the advertising community develop both mobile and Six months, social apps. Only 10.5% do only mobile apps; 20% do just 2.4% One year, social. Many of these developers overlap, so we can 19.0% determine why they prefer one platform over another: Won't happen, 38.1% If you selected "both," when would you choose a mobile vs. a social application? (For the desired results, which platform would you more likely select? You can choose both mobile and social if you view them as equivalent, or N/A if no experience.) Two years, Click-throughs 21.4% Audience targeting Low cost Five years Three years, or more, 7.1% Social Branding potential 11.9% N=42 ©2009 DM2PRO.com eCommerce M- State of the Industry: APPS in collaboration with Quattro Wireless commerce Engagement That doesn t mean that advertisers won t develop for Sharing potential Android as the platform s popularity increases, so long as Mobile Persistence the user demographic is a good fit for advertisers Reach campaign aims. Creative control 0 10 20 30 40 Time to market While reach was the primary reason cited for developing N=95 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless N/A for both iPhone and RIM, when asked about their target universe for apps ( How many mobile downloads would be minimally acceptable to you in considering whether to Engagement leads as the top reason why either format is develop a mobile application? ), more than half said, A selected, followed by sharing potential in the case of few thousand is fine; we re highly targeted, and another social apps and tied with audience targeting for mobile. 27% said 50K-100K. Both rank high in branding potential, but persistence and creative control stand out as key reasons why a campaign Page 4 www.quattrowireless.com
  5. 5. State of the Industry: APPS might call for a mobile rather than a social app. Mobile In your opinion, what one or two lags social in perceived reach. The only other response circumstances would most positively affect specified: Buzz. your MOBILE apps development budget next year: MOBILE INVESTMENT TO GROW Base: Advertisers or Agencies Who Have Used Apps Increase in mobile use by our The top third of the market (agencies and advertisers target audience 59% who have used mobile apps) expect their mobile apps investment to rise by more than 75% some by more Client demand 46% than 200%. More than three times as many reported More standardization between plans to spend $500,000 or more in 2010 than did for mobile interfaces 44% 2009. Ability to use Flash to create cross-platform apps 24% The most important factors for spend increase are: a Better distribution (i.e. apps bigger bump in the size of the apps market, client networks) 17% demand and greater standardization. More control over the user experience 15% Specifically, next year I expect our total Better tools / easier to build budget for MOBILE apps (development and apps 15% promotion) to increase by: Base: Advertisers or Agencies Who Have Used Apps Better connectivity (true 3G) 10% 5%-10% Better mobile search (improved 10%-20% discoverability) 10% 3%3% 15% 20%-30% 10% 30%-40% N=41 ©2009 DM2PRO.com 0% 50% 100% State of the Industry: APPS in collaboration with Quattro Wireless 40%-50% 10% 15% 50%-75% 75%-100% 8% >100% 5% >200% 15% 10% 5% No change Will more likely N=39 ©2009 DM2PRO.com decrease State of the Industry: APPS in collaboration with Quattro Wireless Page 5 www.quattrowireless.com
  6. 6. State of the Industry: APPS IF YOU BUILD IT, WILL THEY COME? Once your mobile app is developed, what's the most effective method of promoting it? The study shows that competition in the app stores will Base: Advertisers or Agencies Who Have Used Mobile Apps grow significantly in 2010. However, many advertisers Online advertising 2.11 and agencies are limiting their success by not investing in promoting their apps; more than a third spent less than Mobile advertising (network buy) 2.09 5% of their app budget on promotion in 2009. To stand out in 2010, they will need to follow the example of the Mobile advertising (direct buy) 2.06 15% that invest more than 60% of their budget on promotion. PR Agency 1.76 Traditional advertising As a percent of your company's total (Broadcast, Print, Direct Mail) 1.68 spending on mobile apps, how much is spent on promoting them Carrier paid placement 1.57 (vs. development)? Base: Advertisers or Agencies who have used Mobile Apps Rely on the APP Store Index 1.52 4% 0% 3% We don't promote our own apps 0% -- just sponsor others 0.89 10% <5% - 0.50 1.00 1.50 2.00 2.50 5% 5-10% 4% N=40 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless 33% 10-20% 5% 20-30% When choosing a network to help them promote their 5% 30-40% apps, advertisers and agencies care more about targeting 40-50% capability than reach. In order of preference (high 10% 50-60% preference ranked a one ), targeting capability was 7% 60-70% followed by reach, ease of use, ability to re-target and 18% 70-80% transparency (pre- and post-download). 80-90% If you use a network to place ads in mobile 90-99% apps, please rank the following criteria to you in N=40 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless order of importance in choosing that network. 1 =most Important, 5 = least important. Base: Advertisers or Agencies Who Have Used Mobile Apps What is clear is that they re not relying on the different 0 2 4 app stores to do their promotion for them ranking in Targeting capability 1.56 the app store fell above only we don t promote as a Reach 1.61 selection for app pros. In order, their promotions Ease of use 2.04 Ability to re-target 2.19 preferences from most to "least" effective or n/a : Transparency 2.29 online advertising, mobile advertising (network buy), Cost per download 2.36 mobile advertising (direct buy), PR Agency, traditional Ability to optimize in real time 2.41 advertising, carrier-paid placement, rely on the app store Customer service 2.5 Ability to screen out users 3.14 index, and we don t promote our own apps, we only Self service option 3.32 sponsor others. Other promotional means: social media Offer creative services 3.38 and promoting in other apps. N=30 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Page 6 www.quattrowireless.com
  7. 7. State of the Industry: APPS As for what makes an app successful for this group, What is your brand category -- or, if you're engagement, user feedback and the number of times the an agency -- what brands do you primarily app was downloaded or shared rank highest. support with mobile apps? 0.0% 10.0% 20.0% 30.0% How do you measure the effectiveness of a mobile app? Rate the following options in CPG 27.5% their importance to you. Retail 27.5% Base: Advertisers or Agencies Who Have Used Mobile Apps Automotive 25.0% 0.00 0.50 1.00 1.50 2.00 2.50 Entertainment 20.0% Financial 20.0% Engagement (time spent) 1.19 Health/Pharma 17.5% Media 15.0% User feedback 1.31 Technology 12.5% Number of times the app 1.31 B2B 12.5% Beverage 10.0% Monthly average users 1.46 Travel 10.0% Sports/Recreation 10.0% Brand impact 1.49 Education 10.0% Impact on product sales 1.70 Restaurant 7.5% Consumer 5.0% Click-throughs to Web site 1.83 Telecom 2.5% Agricultural 2.5% Traffic to advertiser's Web 1.91 Housing 2.5% Sales of the app itself 1.96 Construction 0.0% Honestly, we DON'T 2.00 N=30 ©2009 DM2PRO.com Ranking in App Store 2.06 State of the Industry: APPS in collaboration with Quattro Wireless List building (opt ins) 2.09 Almost 18% of advertisers and agencies noted that N=40 ©2009 DM2PRO.com mobile apps over delivered or succeeded beyond their State of the Industry: APPS in collaboration with Quattro Wireless wildest expectations, with 73.8% having met expectations. CPG AND RETAIL LEAD FOR INVOLVEMENT IN So, what would induce the reluctant to develop mobile APPS; B2B AND PHARMA LAG apps? There s a list for that. In order of response: Need to wait till the ROI is better quantified, Money s tight; Brands that are most and least engaged in mobile apps sticking with the tried and true, Mobile platform is too were determined by asking advertisers and agencies who fractured, Can t think of any good application, Too didn t yet employ them what brand categories they confusing, don t understand it, Can t find a good represented (these would thus be the least engaged) developer, We ve invested too much money in our and apps pros were asked what categories they regular Website, Eventually the whole Web will be represent. mobile anyway, the communities we target aren t mobile, and afraid of what happens with the consumer takes control plus 33 write-in answers! Predominant among the write-ins was some version of we re going to do it next year. Page 7 www.quattrowireless.com
  8. 8. State of the Industry: APPS APPLICATION DEVELOPER MOBILE or MOBILE+ SOCIAL DEVELOPERS Are you Primarily a/an : Developers generally fall into two groups those who work for themselves, and those who work for an advertiser, agency or publisher. Each of these develop Entrepreneur (Develop Apps as a Business) mobile apps, social apps or both. The largest, and most 2.2% 5.1% interesting group within the study, were entrepreneurial 9.6% app developers building apps as a business. This group Agency developer (work was questioned in depth to determine how they for multiple clients) monetize their apps (consumer sale, advertising or both), and how they promote them. Client-side developer / Advertiser (work directly As a group, nearly 75% of developer respondents for an advertiser or brand develop for just mobile platforms, while another 25% client) focus on both mobile and social apps. Only 1% of 83.1% Publisher developer (work developers polled do strictly social apps, making for a destination site) investment comparisons difficult. N=219 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Developers: Mostly Mobile Do you develop apps for: On the whole, more than 83%, would be classified as entrepreneurs ( develop apps as a business ). As with agency/advertiser respondents as a whole, the iPhone Both leads for personal use (51%), but a large number of 25% Androids are also at hand (33%). Social platforms Developers: What mobile phone do you employ 1% for personal use? Mobile Palm platforms BlackBerry 3% 74% RIM 13% N=219 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless iPhone 51% Android- based phone 33% There were only 20 social only developers in our set, for whom Facebook continues to lead, with 74% of respondents saying they produce 75-100% of their apps Page 8 www.quattrowireless.com
  9. 9. State of the Industry: APPS for this platform. A third of respondents never bother How do you measure the effectiveness of a with MySpace, and only 14% of respondents have ever MOBILE app? Rate the following options in their importance to you. developed an app for LinkedIn. Some 90% of these developers say they intend to add mobile to their portfolio in the coming year. Of those, 75% plan to User feedback 1.29 develop for iPhone, 55% for RIM and 30% for Android. Revenue from sales of the app 1.32 Number of times the app was DIRECT SALES + ADVERTISING: MOST USE downloaded or shared 1.33 BOTH Ranking in App Store 1.67 Nearly 150 developers told us they develop apps as a Monthly average users 1.82 business. Of these, the largest number 55% monetize Engagement (time spent) 2.16 within the app their apps either with advertising or through sale. Some 27% only sell apps directly to consumers, and around Traffic to Web site 2.45 18% are only ad supported. Honestly, we DON'T measure 2.67 results Developers: Do you build apps that are: 0 1 2 3 N=26 ©2009 DM2PRO.com Sold to Only State of the Industry: APPS in collaboration with Quattro Wireless consumers supported and/or by supported advertising When looking to 2010, the same number of these by or developers expect sales revenue increases of greater advertising sponsorship 56% 17% than 100% as expect no change; 38% looked for increases of greater than 50%. Their own spending is expected to rise modestly: For 2009 the largest percent (52%) fell into the <$50K spending category, while for Only sold to 2010 that number falls to 44%, and the number of consumers developers looking to invest between $500K and $1MM 27% N=147 ©2009 DM2PRO.com is likely to double. Nearly 54% expect no change in State of the Industry: APPS in collaboration with Quattro Wireless spending. DEVELOPERS WHO ONLY SELL APPS: SALES Surprisingly, for those that monetize apps only through TO INCREASE IN 2010 BY 50+% sales, the majority spend little on promoting them; 69% spend less than 5% of their total budgets on promoting Of those who just sell apps to consumers, 69% are priced their apps to an audience (half of those spend nothing at in the $1-$5 range per download. More than half (54%) all). For those that are spending (and likely driving their say it takes between one week and six weeks to develop apps higher in the rankings), most use a mobile ad a successful app; 46% say longer. network to help them promote their apps. Reach, revenue, and cost-per-download are the top three One of the most interesting responses from this group reasons for selecting a network. was the value they assigned to results. User feedback was deemed as slightly more important than total revenue and number of downloads, which all impact the fourth-most important measure, ranking in the app store. Page 9 www.quattrowireless.com
  10. 10. State of the Industry: APPS DEVELOPERS WHO MONETIZE BY SALES OR ADVERTISING: 25-50% REVENUE GROWTH How do you measure the effectiveness of a MOBILE app? Rate the following options in their importance to you. Among those who include advertising as a revenue strategy, iPhone is the preferred platform for 76.4%, but Number of times the app Android makes a strong second-place showing at 57%. was downloaded or shared 1.32 This group says that just shy of a quarter of their apps are Sales of the app itself 1.35 free/ad-supported (24.3%), while nearly 50% are sold (48.6%.) Like those developers who only sell apps, the Monthly average users 1.41 majority of these are priced at between $1 and $5. Engagement (time spent) within the app 1.42 Nearly 64% say the average time spent making an app is User feedback 1.54 between a month and six weeks. Ranking in App Store 1.57 For what MOBILE platforms do you develop? Impact on product sales 1.98 Base: Developers Who Sell Apps &/or Ads Click-throughs on ads in the app 2.01 iPhone 76.4% Brand impact 2.03 Android 56.9% Honestly, we DON'T measure results 2.25 RIM / BlackBerry 22.2% Opt ins for List Building 2.51 Traffic to Web site 2.52 Palm 8.3% 0.00 1.00 2.00 3.00 0.0% 25.0% 50.0% 75.0% 100.0% N=72 ©2009 DM2PRO.com State of the Industry: APPS N=72 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless in collaboration with Quattro Wireless Ad-savvy apps developers favor the iPhone for their Developers have higher expectations for distribution of a personal phone (76%). But 57% say they own an Android successful app than advertisers, with the largest group phone. More than a third (36.5%) say Android could pull (39.4%) setting a goal of between 50K and 100K even or ahead of the iPhone in overall market popularity downloads for mobile apps. in two years. Both app sales and app ad revenue are expected to grow In measuring effectiveness, the need for reach in order to in 2010. More than 18% of respondents expect an better monetize via ad sales pushes distribution even increase of more than 100% in revenue from each with sales, followed by monthly average users and category. The largest number of respondents expects an engagement, with user feedback and app store ranking increase in ad revenue of between 25 and 50%. close behind. Page 10 www.quattrowireless.com
  11. 11. State of the Industry: APPS Revenue, reach and eCPC lead as reasons to select a By what percent do you anticipate each revenue category to grow in 2010? network to place advertising in ad-supported apps. While double the number of developers will have 100% budgets of between $200K and $500K and between 90% 18.3% 18.6% $500K and $1MM respectively on apps development and 80% 8.5% promotion, the largest number of developers still have 8.6% 70% 8.5% 8.6% budgets of less than $50K. Some 24% of individual 60% 15.5% 20.0% developers predict no change in budgets for 2010, but 50% the top third (30%) will see their budgets rise by more 40% 15.5% 5.7% than 50%. 30% 18.6% 15.5% 20% 9.9% 10.0% 10% 1.4% 0.0% For this year and next, estimate your total 7.0% 10.0% 0% apps budget (development and promotion) App Sales App Ad Revenue Don't expect an increase <1% 100% 0% 3% 0% 3% 1-5% 5-10% 3% 4% 8% 10-25% >25% but less than 50% 90% 7% 8% >50% but less than 75% 100% 80% 8% 4% >100% 7% 70% N=71 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless 60% 50% 52% 46% 40% Networks and intermediaries are both key players for the sales of the ad space within apps. Nearly 55% employ a 30% mediator like AdWhirl or MobClix to sell their advertising. 20% Nearly one third (32%) use a network. Only 8% have their 23% 23% 10% own internal ad sales force; 6% use an outside sales agent. 0% 2009 2010 If your apps are ad supported, how do Don't know <$50K you sell the advertising? $50K-$100K $101K-$200K Internal $201K-$500K $500K-$1MM Other sales force mediation >$1MM, <$5MM >$5MM 8% company Outside N=72 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless (i.e. sales AdWhirl, agent MobClix) 6% 55% An even faster ramp up in audience, client demand and better distribution through apps networks are all seen as more important than standardization, search, tools or Network 32% connectivity/bandwidth as market growth agents. Page 11 www.quattrowireless.com
  12. 12. State of the Industry: APPS However, there is not much effort put forth to impact In your opinion, what one or two that ranking: 57% of apps developers who support their circumstances would most positively affect apps by sales or advertising spend less than 5% of their your total MOBILE APPS budget next year: budgets on promotion. The highest spending level cited was 30-40%. Less than half use a network to promote Increase in mobile use by our their apps; more than half of those use only one. Reach, 61% target audience at 71%, was the single most important factor cited in Client demand 46% selecting a network to help promote app sales or Better distribution (i.e. apps distribution. 40% networks) Better mobile search (improved discoverability) 27% Conversely, the largest number of developers who More standardization between 27% support their apps through advertising alone (40%) say mobile interfaces they spend 5-10% of their total apps budgets on Better tools / easier to build 21% promotion. apps Better connectivity (true 3G) 16% While more than half of these developers put their total More control over the user experience 13% 2009 and 2010 budgets at less than $50,000, nearly 36% Ability to use Flash to create of this group looks for app ad revenues to increase more 9% cross-platform apps than 100%. All but one respondent put revenue increases 0% 10%20%30%40%50%60%70% at greater than 10% in 2010. N=67 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless The majority of developers were satisfied with their mobile ad-supported apps: only 23.5% weren t satisfied. When promoting their apps, the most effective tool is judged to be placement in the index: PUBLISHERS Once you've created your MOBILE app, what's the most effective way to PROMOTE More than 100 publishers participated in the study. Of it? Please rate the following from most to least effective. these 64% have developed mobile and/or social apps (78) and about half have developed mobile apps (53). Placement in APP Store Index iPhone leads even Facebook as the platform for which Our own Web site/social channels most publishers have developed apps (87%); close to half Online advertising of these have also developed for RIM or Android. Mobile advertising (network buy) . Mobile advertising (direct buy) Traditional advertising (Broadcast, Print, Direct Mail) PR Agency We don't promote Carrier network paid placement 0.00 0.50 1.00 1.50 2.00 2.50 N=71 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Page 12 www.quattrowireless.com
  13. 13. State of the Industry: APPS For which environment was this / (were How do you monetize these) application(s) designed your mobile apps? (check all that apply): 60% Base: Publishers Who Have Developed APPS 52% 50% iPhone 87% 39% 40% Facebook 48% 30% 25% 21% RIM 44% 20% Android 39% 10% Our own community platform 0% 28% Fee or Benefit Both Advertiser Other discrete community 9% subscription derives advertiser supported supported elsewhere and fee PALM 9% (i.e. links supported back to a MySpace 7% Web site) N=52 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless 0% 20% 40% 60% 80% 100% N=54 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Overall, mobile app ad revenues are just a tiny portion of total revenues for publishers, whose main revenue Publishers who ve developed both associate social apps sources include print media, online and mobile sites; 75% with sharing potential and audience targeting. They say they represent less than 5% of total revenue. Still, a choose mobile primarily for branding potential, small number of publishers make more than half their persistence and click-through (which ranked higher on total revenues off mobile app advertising. mobile than social). They have high expectations for their social applications, with the largest group (34.6%) What percent of your current-year expecting 100K-500K in reach, nearly 29% looking for revenues this year will be attributable to 50K-100K users, and more than 20% expecting more than mobile app sponsorships/advertising? one million. To develop mobile apps, most (60%%) rely on outside <1% 6% 4% 0% developers, with a little over a third (37%) having in- 6% house developer resources. 1-5% More than half (52%) say their apps are ad supported 9% 5-10% and an additional 39% derive revenue from both 52% advertising and app sales. Just over 21% of publisher 23% 10-25% apps are sold. One quarter of them are used to drive traffic to another platform that is monetized. >25% but less than 50% N=52 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Page 13 www.quattrowireless.com
  14. 14. State of the Industry: APPS More than half of mobile app publishers earning revenue As for revenue increases in 2010, an equal number of from advertising sell the ads with their own internal sales publisher respondents expect no increase as expect force; 27% employ a network, and 10% each use either revenues to more than double. The largest group (20.4%) an outside sales agent or other intermediary like AdWhirl pegs their increase at between 5% and 10%. More than or MobClix. About 20% each employ 1, 2 or more than 72% of participating publishers said they expect their three networks. investment in mobile apps to increase as a result of their experience so far; only 5.6% expected a budget decrease. Revenue leads as the main reason for selecting a network, followed by reach. Publishers care more than By what percent do you anticipate your any other group examined so far about both targeting mobile app advertising revenues will and the types of advertisers associated with a particular increase next year? network. Don't expect an increase Please RATE the following criteria to <1% you in choosing a mobile ad network to 16.7% 16.7% help you monetize your apps 1-5% (1 = Most Important and 5 = Least Important) 0.0% 5-10% 9.3% 7.4% 0 1 2 3 10-25% Revenue 1.35 9.3% >25% but less 20.4% than 50% Reach 1.77 >50% but less 13.0% than 75% Targeting 7.4% 1.97 100% capability Types of >100% 2.10 advertisers N=54 ©2009 DM2PRO.com State of the Industry: APPS Ease of use 2.10 in collaboration with Quattro Wireless eCPC 2.25 Because most mobile publishers monetize through Customer advertising, they mirror the concerns of advertisers and 2.33 service agencies in rating the value of success criteria: Types of ad 2.54 engagement tops the list, followed by monthly average units Self-service users and brand impact. ( Time to market was the only 2.75 write-in metric.) Unlike developers who rely on sales, option Creative user feedback was a lagging value. 2.83 services N=49 ©2009 DM2PRO.com State of the Industry: APPS in collaboration with Quattro Wireless Page 14 www.quattrowireless.com
  15. 15. State of the Industry: APPS Publishers who haven t developed apps are waiting for Please rate these mobile application the ROI to be better quantified (40%) and say money is results in their importance to you tight (37%). Increase in mobile apps use by their target Engagement (time spent) audience, more standardization among platforms, better within the app 1.19 tools to build apps and better distribution all lead the list Monthly average users 1.21 of reasons impeding their mobile development. Brand impact 1.34 Yet, with all these challenges, nearly 65% say they intend Number of times the app was to create an app in 2010. Of these, 91% will develop for downloaded or shared 1.35 the iPhone, 39% for Android and 33% for RIM. They don t Ad revenue 1.62 advertise in mobile applications (72%), saying it s not Ranking in App Store their target market, and also cite insufficient reach or 1.74 lack of knowing where to start. More than half of the 44 User feedback 1.77 publishers who do advertise in apps (55%) do so by means of an ad network, typically just one. Their highest Sales of the app itself 1.86 ranked criterion for selecting such a network is targeting Traffic to our Web site 2.00 capability (38%). Click-throughs to a Web site 2.04 Opt ins for List Building 2.25 Honestly, we DON'T measure results 2.88 N=54 ©2009 DM2PRO.com 0 1 2 3 4 State of the Industry: APPS in collaboration with Quattro Wireless Finally, nearly 75% of publishers rated their experience with mobile apps as satisfactory or better. CONCLUSIONS: IN A CROWDED APP MARKET, PROMOTION BECOMES ESSENTIAL As successful as mobile apps have been for top-tier developers, advertisers and publishers, they re about to experience even more explosive growth. More than half of every non-participating cohort in the study will invest in mobile apps in 2010, with the overwhelming majority of these for the iPhone. For those developing ad-supported apps which depend on reach, many are turning to mobile ad networks and intermediaries, like Quattro Wireless, who have the expertise and scale to convert their impressions into dollars. The keys to success for all players whether the goal is turning impressions into revenue or building a brand through engagement are to drive downloads in a crowded marketplace and provide an experience that leads to repeat usage and positive user feedback. With the majority of those offering apps spending less than $1 out of every $5 on promotion, there is a huge opportunity for those who do invest to get discovered. Mobile advertising through an ad network media buy was noted as one of the most effective methods of promotion. Page 15 www.quattrowireless.com
  16. 16. State of the Industry: APPS ABOUT QUATTRO WIRELESS Quattro Wireless is the leading global mobile advertising company, empowering advertisers and publishers to reach and engage their target audiences across mobile web, application and video platforms with unrivaled precision, transparency and ROI. Employing Q ElevationTM dynamic targeting technology to optimize every impression, the company s ad serving, tracking and analytics platform and global network of sites and applications (many exclusive) deliver superior results. Leading companies including P&G, Ford, NetFlix, Time Inc., Visa, Disney and the NFL partner with Quattro Wireless because the company has turned the art of engaging and converting mobile audiences into a repeatable science. You can learn more at www.quattrowireless.com, and follow us on twitter @intheq. ABOUT DM2PRO.COM Parent DM2Media produces a range of niche conferences on cutting-edge topics for digital media and marketing professionals. We focus on the areas where technology and innovative services are infusing rapid change. Apps are one such area, and DM2Events.com initiated a focus on Apps in August with its first digiday:APPS conference. This was followed by a second event Dec. 10 in Los Angeles where these survey results were previewed. A video of Lynn Tornabene, CMO of Quattro Wireless, presenting the results is available, along with the full slide deck at DM2PRO.com. The member site, repository to this and several other state of the industry surveys, plus case studies, awards and interviews, and more than 100 videos from the digiday conferences, is $20/month to join. Page 16 www.quattrowireless.com

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