Normally a three hour seminar which seeks to illustrate the main elements in the burgeoining app market - in Plain English - with a view to explaining how someone might begin to plan an app either as a business or a marketing tool

1. Could you market a globally
successful app?
Kieran Hanrahan
October 2012

2. Part 1: Introduction
• Welcome
• What is an App?
• Why build an App?
• What are the most popular Types of App?
• How does this affect me?
• Ideation
• Handsets and Operating Systems
• Q&A

3. What is an App?
• App is short for application
• It’s a clever piece of software that does
something useful or valuable
• You download it onto your smart phone
– Or potentially onto your
computer, tablet, laptop...

4. Why?
• Apps have a global market
– Potential for massive growth
• Low entry level barriers to this market
– Cheap to prototype
– Cheap to develop
– Cheap to deliver
– Cheap to promote… well sometimes!

5. Different Types
• Calculation
• Entertainment
• Games
• News
• Productivity
• Search
• Social Networking
• Sports
• Travel
• Weather
• Education

6. Who do Apps do?
• They solve a problem…
• Games
• Search
• Productivity
• Sports
• Entertainment

7. Do Apps Make Money?
• Most don’t…
• Some do… a bit
• Every so often, one goes viral and
the developer becomes a millionaire

8. Yes, it IS worth billions already and its growing…
Yes, it will transform most industries, especially if you
sell consumer goods or services to the public
Do you need an app?
Perhaps.
It depends on what you want to achieve…
A better question for some people might be…
whose app should I be using?

9. Where do I find an idea for an App?
• Existing Business
• New Business
• Innovation emerges in
– Product or service
– Process
– Business model
• Apps can instantly change EVERYTHING!
EVERYTHING

10. The Market
• Global market
– Segmented by
• Language
• Culture
• Marketing Opportunities
• Smart phones : key factors
– Operating systems
– Market penetration
– Third party control of market places

11. Operating Systems

13. Why are OS so important
• In order to access the whole market, you
need to build apps which work under each
of the operating systems – although it is
enough to build just one and see how it
goes before building it in the others…
• Android, IOS and Microsoft dominate.
• RIM is in trouble, Symbian is now defunct.

14. Part 2: The Market
• Handset Sales Statistics
– Smart phone market penetration
– An introduction to Virality
• Virality Coefficient
• Metcalfe’s Law
– Download statistics and analysis
• The Impact of Language & Culture

15. Mobile Phones Q4 2011

16. Broadband Q4 2011

17. Broadband Access
• In 2012, smart phones
are FIVE TIMES more
popular as a means for
accessing the internet
than typical broadband
i.e. fixed connections.

18. • > 70% of all phones sold in
2012 will be smart phones
• 100% of all phones sold in
2013 will be smart phones
• People change phones in
less than two years which
means smart phones will be
the only platform by 2014.

20. App Downloads 2011
Downloads
(Millions) Android iPhone iPad WP7 TOTAL
English
USA 673.99 378.09 79.46 12.07 1143.61
Great Britain 161.05 70.74 16.5 3.21 251.50
Australia 31.72 32.69 6.94 0.72 72.07
Canada 16.48 883.24 39.99 7.78 0.75 65.00
Korean
Korea 204.03 53.08 4.69 0.15
Japanese
Japan 100.97 107.25 7.86 0.19

21. App Downloads 2011
Downloads
(millions) Android iPhone iPad WP7
Germany German 98.70 46.15 11.33 2.43
Russia Russian 90.92 29.11 13.83 3.21
Spain Spanish 67.29 25.28 6.25 1.65
Taiwan 64.43
France French 56.85 43.79 9.67 1.55
Brazil Portuguese 50.88 19.88 3.98 0.89
Portugal 4.86 55.74 3.63 1.17 0.23
Italy Italian 53.42 39.73 8.39 2.31
China Chinese 25.28 246.37 74.63 3.93
Poland Polish 20.96 4.02 1.34 0.81

22. App Downloads 2012
1 billion per month 1 billion per month
53 per user 83 per user

23. Channels to Market
• Direct
• Marketplaces
– Apple
– Android
– Microsoft
– Other
• Embedded on handsets (pre-sold)

24. An Introduction to Virality
• Metcalfe’s Law
• Virality – different types
– Collaboration
– Utility
– Signature
– Social Network
– Other

25. The Importance of Virality
• Virality reduces your marketing costs.
• Virality encourages users to use your app
and encourage others to use your app…
• Virality is fundamental to the design of the
app and the business model. You can not
have enough Virality in any business!

26. Virality – The Hockey Stick
Cumulative users over time
18,000,000
16,000,000
14,000,000
12,000,000
Total users
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Time period

27. Virality – The Hockey Stick
• Regardless of the number of initial users,
regardless of the time it takes for them to
“infect” others, the path your user uptake
or app download will take will always be in
the shape of a hockey stick.
• Complex maths formulae can now predict
this and are crucial to any business plan.

28. Virality - Case Study
• Mathematical formula
• Key factors
– Cycle time
– Invitations
– Conversion Rate
– Retention

29. Virality Factors
• Cycle Time
• How long it take for someone to download, use,
like and start to recommend the app to others
• Invitations
• How many invitations they deliver to friends and
members of their network (address book)
• Conversion Rate
• How many of the invitations lead to downloads
• Retention
• How many of the people keep and use the app.

30. Viral Co-efficient
• This mathematical formula gives you a
viral co-efficient. A simple number.
• If the number is > 1 you’re in business!
• If the number is < 1, you will go bust.
• It really is that simple…

31. Demand is Infinite?
• As you become more successful, demand is not
infinite and the number of people who can be
invited and converted to users diminishes, but in
the more accurate models this is accounted for
using a term called saturation. This problem is
one of the underlying reasons why Facebook’s
share price was under pressure after its launch.
• If you start running out of potential customers –
consider that a definite sign of success!

32. Language & Culture
• The boundary on the app market is linguistic.
• Not just in the build, but also in the promotional
and marketing effort and after sales support.
English 500 million Mandarin 1,100 million
Spanish 400 million Hindi-Urdu 490 million
Russian 277 million Bengali 215 million
Portuguese 193 million Punjabi 109 million
Japanese 123 million Turkish 50 million
French 120 million
German 90 million
Korean 70 million

33. Part 3: Marketing
1. Review of the Four Factors
1. Cycle Time
2. Invitations
3. Conversion Rates
4. Retention
2. Customer Relationship Marketing

34. Cycle Time
• We can describe cycle time as how long it
take for someone to download, use, like
and start to recommend the app to others
• Make this as SHORT as possible.
• How?
• Look at the Freemium business model

35. The Freemium Model
• Pro • Con
• Shortens cycle time • Slow income growth
• Encourages users to • Too tightly restricted
trial and use the app service requires users
• Builds customer base to cross the “paywall”
• Optimises potential • Cost of free services
for “premium” sales exceeds premiums

36. Variations on Freemium
• Free during beta i.e. initial test period
– Encourages faster cycle time and more invitations
– Offer credits afterwards and/or via successful invitations
• Free trial period, before/after payment
– The more valuable the app becomes to the user over time, the
longer the trial should be, which may mean reducing the trial
period based on Metcalfe’s Law or even removing it altogether.
• If it’s a free service, the users are the product
– How do you monetize them? That’s a whole other seminar!
• Some or all of the above, on a phased basis…

37. Service Restrictions
• Feature
– a lighter or free version of software, such as Skype
• Time limited
– only usable free for thirty days, such as MS Office trial version
• Capacity limited
– can only be used to read one article, e.g. Harvard Business Review
• Seat or licence limited
– only usable on one computer, not across a network
– Only usable free by individuals, not by companies or organisations
• Customer class limited
– only usable by educational users
• Effort Limited
– all or most features are available for free, but require extended
unlocking which can be shortcut for a fee, via software or “key”.

38. Trust
“So you’ve built an app.. And you want me to
download it to my expensive smart phone…
hmm… ok… now just who the hell are you?”

40. Ways to Create Trust 1
1. Trust Signals
1. Certification, Testimonials, Verifications, etc.
2. Transactional Assurances
1. Forms of payment and delivery
2. Data security and privacy
3. Policies and guarantees
4. Secure payment portals /markets
3. Appearance
1. Professional design
2. Sparseness and neatness
3. Organisation, clarity, intuitive user interface

41. Ways to Create Trust 2
4. Illustrate your Authority
1. Reviews and awards
2. Marquee clients
3. Media mentions
4. Trade associations & memberships
4. Illustrate who you are…
1. About Us
2. Blog
3. Social media links
4. Forego third party advertising revenue

42. Ways to Create Trust 3
7. Content & Product information
1. Give them as much as you can…
2. Avoid superlatives and spin, be HONEST!
3. Speak to the individual, don’t broadcast
4. Track users and roll out language versions
7. Engage and Support the Audience
1. Offer every form of support possible
2. Maintain contact with your customer base
3. Go the extra mile or kilometre to solve problems

44. Reducing Cycle Time
• We can describe cycle time as how long it
take for someone to download, use, like
and start to recommend the app to others
• Download speed
• Intuitive user focused design
• No bugs!

46. Invitations
• Invitation is many invitations users deliver
to friends and people in their network(s)
• What role does reciprocity play?
• Do you use incentives? What type?
• Do you restrict them to create scarcity?
• How valuable is your app?
• Do you offer one-to-one or one-to-many?

47. Roger’s Bell Curve

48. Invitations
• Link your invitation strategy to promotion
and marketing, including all possible PR
and similar opportunities, on and off-line.
• Who is your target audience?
• How can you communicate with them?
• Will peer-to-peer invitations work?
• How do you avoid spam-like issues?

50. Conversion Rate
• What do the new users think and feel?
• Consider using split tests for different offers
• Does this data change your business strategy?
• Would variations on freemium be a better option?
• Use third party paying customer reviews
• What feedback are you getting on your app?
• Compare converted versus non-users
• Can you track them across your website?
• How does their behaviour differ and what does this tell you?

52. Retention
• Does the app serve a useful long term
purpose or will it be just a fad?
• Currently it is estimated that 26% of all
downloaded apps are discarded.
Yes, the background image is of a net!

53. Retention
• Situational Intelligence
• www.flurry.com
• basic version is free
• Utility
• Upgrades
• Additional Functionality
• Customer Relationship Marketing

54. CRM
• Customer Relationship Marketing
• Online
– Email
– SMS
– VMS
– IM
• Multiple Languages
• Multiple Time Zones

55. Part 4: Funding Your App
• Why A Funding Plan & Stream is Key
– Proof of Concept
– Proof of Model
– Growth: Cost v Revenue
– Source of Funds / Standard “Plays”
• Cost Structures
• Revenue Streams & Monetization

56. Market Entry
• Whilst building an app is relatively cheap
and getting up on the main markets is a
relatively simple process, you will then be
competing for attention with one gazillion
other apps. More than 90% of your funds
will inevitably be spent on promotion, in all
its many forms, both online and traditional.
Getting in is easy.
Getting noticed isn’t.

57. Proof of Concept
• We all start with an idea.
• The first task is to prove it can
be done but its not a case of
“build it and they will come”.
• What is needed next is a proof
of concept relating NOT to the
app but to the business
model.

58. Proof of Model
• Aside from the mechanics of just how viral
your app is and how rapidly you can grow
the user base, the key is revenue streams.
• How many streams have you got?
• How much will they deliver?
• How has performance mapped against
your initial targets and assumptions?

59. Proof of Model
• How are you projecting growth?
• When do you reach breakeven?
• Bear in mind that these can be displayed in terms
of user numbers rather than a specific timeline.
• When do you start to make a profit?
• What is the cost of acquisition per user?
• What is the revenue per user?

60. Avoiding Bootstrapping
• Bootstrapping: “a self-sustaining process
that proceeds without external help.”
• App developers often fall into the trap of
seeking to bootstrap.
• It fails because you can
not grow fast enough…

61. Avoid Bootstrapping
• Lack of sufficient funds is the
most critical problem faced by
early stage businesses…
• Have a clear strategy for the
app’s release and promotion
• Anticipate third party funding –
start on the business plan now.

62. Revenue Streams
• Purchase
• Higher risk of piracy and copying of your app
• Lower user growth rate
• Donation:
• It builds the love but… love don’t buy you money!
• Freemium
• The basic Apps is free but people pay for the extras.
• Advertising Supported
• Dominated by gaming / entertainment apps
• eCPM, CTR and Global Fill Rate (GFR)
• Generalised or Specialist Niche promotion

63. Funding Pathways
• 1st round
– Personal & Sweat Equity
– Family / Friends / Co-Developers
• 2nd round
– Business Angel
– R&TD or similar Grant Aid
• 3rd round
– Venture Capital / Acquisition

64. And finally…
180 million reasons why you might look
at developing just one little app…

65. • OMGPOP built an App
called Draw Something.
• It’s adoption was simply
spectacular with 1 million
downloads in the first 9
days from launch. This
peaked at 35 million within
a matter of months and
prompted Zynga to pay
USD 180 million for the
company, not much more
than two years after a few
guys thought of the idea…

66. The End
• Solve a problem and you have a business.
• Solve a common problem and you have a
potentially far bigger business.
• Only five billion phones out there…
• Imagine if everyone wanted your app!

67. • Kieran Hanrahan
• kieran@tknlgy.eu
• @TKNLGY
• + 353 (0)87 2212 369 GMT