Cracking the App store ranking algorithm

How to successfully market your iPhone Application? #appstudy Paris, January 2010

Introduction This study originated from observations made on the lifecycle of “RATP Lite” and “RATP Premium”, two applications we designed to provide Parisians with public transportation official information We decided to go further in the analysis by running mathematical programs Today we make a step further by sharing the results with you through this creative commons presentation We hope your challenge and contributions to the study will favor the emergence of best practices for iPhone apps marketing ..……. January 2010 • Marketing your iPhone application #appstudy • 2

Summary 1 - Presentation of the App Store 2 - Case study: RATP apps 3 - The App Store 4Ps 4 - Conclusion ..……. January 2010 • Marketing your iPhone application #appstudy • 3

..……. January 2010 • Marketing your iPhone application #appstudy • 4

App Store: applications entrypoint App Store is the unique marketplace to get iPhone and iPod Touch applications ..……. January 2010 • Marketing your iPhone application #appstudy • 5

App Store: Figures 34 million 24 million iPhone iPod Touch 58 million App Store users 3 billion applications have been downloaded Each user spends an average 4,37$ a month on apps* Generating over $250 million in revenue per month Apple has locked a huge market *Source: GigaOM.com ..……. http://gigaom.com/2010/01/12/the-apple-app-store-economy January 2010 • Marketing your iPhone application #appstudy • 6

Browsing the App Store (desktop) Search bar Apple Categories editorial content Banners 3 Rankings “New and Paid apps noteworthy” “What’s hot” Free apps “Staff favourites” Grossing apps ..……. January 2010 • Marketing your iPhone application #appstudy • 7

Browsing the App Store (mobile) Apple editorial Category Rankings content browsing ..……. January 2010 • Marketing your iPhone application #appstudy • 8

The big challenge! There is no opportunity for advertising within the App Store Getting the right marketing mix is more important than ever ..……. January 2010 • Marketing your iPhone application #appstudy • 9

Case study: RATP apps faberNovel designed two applications for RATP users: RATP Lite RATP Premium • Live on May 13th 2009 • Live on May 3rd 2009 • Free • Paid: 1,59€ then 0,79€ • Ad-funded • 350 000 downloads • 105 000 downloads • 126 000 active users • 80 000 active users ..……. January 2010 • Marketing your iPhone application #appstudy • 11

Case study: sales and downloads evolution Downloads Lite Downloads Downloads Premium Time Price cut V 2.0 ..……. January 2010 • Marketing your iPhone application #appstudy • 12

Case study: pricing evolution on RATP Premium The initial pricing was 2,99 € according to the business plan, but that never happened 0 day!!! We realized that it was too high compared to the market. We set a premium price of 1,59 €, capitalizing on the RATP brand 2 months That wasn’t enough to win significant market share, so we shifted to a volume strategy with a 0,79€ price ..……. January 2010 • Marketing your iPhone application #appstudy • 13

Case study: week-end sales peak Sales breakdown by weekday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Sales peak during the weekend (+20% on Sunday) It might be even bigger for games…. ..……. January 2010 • Marketing your iPhone application #appstudy • 14

Case study: sales vs advertising Advertising revenues from the Lite version brings recurrent revenues to compensate sales relative stability in Premium Monthly Profits First ad campaign SalesAdvertising Lite Premium Advertising Lite Sales Premium 63% 55% 45% 37% May June July August September October November December ..……. January 2010 • Marketing your iPhone application #appstudy • 15

Case study: RATP apps Those results encouraged us to go further in the analysis With 8 months of data… … we ran statistical analysis… 0 … to identify the the App Store 4Ps ..……. January 2010 • Marketing your iPhone application #appstudy • 16

PRODUCT PROMOTION PRICE PLACE ..……. January 2010 • Marketing your iPhone application #appstudy • 17

Product: great upsell opportunity We monitored the percentage of RATP Premium owners that downloaded RATP Lite first 80% of users try Lite before buying 50% of users try Lite before buying Premium Premium A good free version is crucial to push users towards the paid one …especially if the price is high ..……. January 2010 • Marketing your iPhone application #appstudy • 18

Product: 4 reasons for a differentiated product line Upsell opportunity Brand visibility Better segmentation Clearer product definition ..……. January 2010 • Marketing your iPhone application #appstudy • 19

Price: a price-sensitive market 2 1,59€ 0,79€ A 50% price cut led to 3x more sales 3 Sales ..……. January 2010 • Marketing your iPhone application #appstudy • 20

Promotion: web campaign ROI was not so great We booked 500 000 impressions* on a major website… …generating 4 sales!!! With an average CPM** of 6€ in France That’s 750€ of advertising for one client … to make a 2€ revenue! *Impression = display of an advertising banner ..……. **CPM = cost of 1000 impressions January 2010 • Marketing your iPhone application #appstudy • 21

Promotion: cross-marketing increases click-through rate Cross-application advertising seems a better solution Click-through rate 8 0,07%* 0,59%* Web advertising Cross-application advertising * Source: appfigures for RATP Lite ..……. January 2010 • Marketing your iPhone application #appstudy • 22

Place: availability on the device is key An app has to be lighter than 10Mo to be available in 3G (on the iPhone) When we launched RATP Premium, it was way too big (27Mo) SALES x3,5 RATP Premium available in 3G, on the iPhone  biggest sales peak ever ..……. January 2010 • Marketing your iPhone application #appstudy • 23

Place: the App Store ranking algorithm Macro observations led to 2 likely hypothesis*: Ranking is based on sales of the previous 1 week The formula is a 7 days weighted 2 average We ran a program to identify the best combination of weighted coefficients… … and here is what we found * See http://tii.libsyn.com/index.php?post_id=522655 for precisions ..……. January 2010 • Marketing your iPhone application #appstudy • 24

Place: the App Store ranking algorithm The ranking only takes account the last 4 days of sales Sales of the current day are determinant ..……. January 2010 • Marketing your iPhone application #appstudy • 25

Key learning: advertising campaign timing WIN FAIL Focused campaign on Advertising on a specific day 4 consecutive days and repeating over the weeks Self-perpetuating good position Advertising effort will be diluted in the rankings Ranking will not be maintained Higher Good sales ranking ..……. January 2010 • Marketing your iPhone application #appstudy • 26

One more thing… in progress We can forecast future sales based on previous sales with a precision of 10% 450 400 350 Real Sales 300 Our forecast Nombre de vente 250 Sales 200 150 This algorithm is based on an ARMA model : 100 Autoregressive Moving Average Model 50 0 0 10 20 30 40 50 60 70 jour étudié Time ..……. January 2010 • Marketing your iPhone application #appstudy • 27

What’s your take on this? • These results are based exclusively on our Apps study • The algorithm can’t be proved, as the rankings are relative to other applications sales • To extend the reach of this presentation, we will wait your contribution: Try the algorithm on your application Challenge our case study Bring constructive feedback on iPhone Apps marketing On twitter: #appstudy ..……. January 2010 • Marketing your iPhone application #appstudy • 29

Study written by: Marie-Caroline Lanfranchi @mariecaroline Baptiste Benezet @Ba_B Romain Perrier @RomPerrier Acknowledgements: Yves, Martin, Clément L., Virginie, Patrick, Estelle, Pierre-Yves, Cyril, Matthieu, Sabrina, Stéphane, Ouriel and La Cantine Contacts Project - Baptiste Benezet baptiste.benezet@fabernovel.com Press - Sabrina Distinguin Sabrina.distinguin@fabernovel.com 17, rue du faubourg du Temple 75010 Paris Tél. : +33 1 42 72 20 04 Fax. : +33 1 42 72 20 03 www.fabernovel.com ..……. January 2010 • Marketing your iPhone application #appstudy • 30

Our Apps are available on the iPhone App Store http://getap.ps/RATPpremium/appstudy http://getap.ps/RATPlite/appstudy ..……. January 2010 • Marketing your iPhone application #appstudy • 31

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Cracking the App store ranking algorithm

by Romain PERRIER on Feb 19, 2010

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