Quite a few entrepreneurs tend to believe in app factory model. They try several ideas hoping that atleast one will click.
Last year’s BigMobility Conference saw a lot of prominent people from the industry speaking on a variety of topics. Ideophone CEO and Co-founder BalasundaraRaman (Sundar) shared his views on the topic of app development, marketing, distribution and App Factory model.
Only 1 out of every 8 app succeeds as a business. It is a fact that if an app works out well, there is a lot of money that is involved in its business (read : 64% of Android Developers Are Below The ‘App Poverty Line”). But in the present case scenario only a handful of developers make most of the money made from mobile apps. Statistically, 50% of the revenue from apps in the android app market go to 25 developers of which 24 are gaming app developers and the one exception was Pandora Radio App.
Huge chunk of app developers who are under App Poverty Line (APL). APL refers to developers who earn below $500 per month from the app store. Anyone earning below this amount universally is considered to be below app poverty line. Statistically 50% of iOS developers and 64% of Android developers are below the ‘app poverty line”.
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One of the main reasons for failure of most mobile applications is the surplus availability of apps on the app store. Any person with an app development kit can develop a mobile app and put it up on the app store. There are no variable costs involved once the app is on the store. As far as users are concerned, no user has to pay for switching between apps and most new apps on the store are free to download. App stores are a very crowded market and the profits that most developers make from them are very meager.
There are also instances when a developer unexpectedly makes a lot of money from app downloads and in-app purchases. These apps get acquired by a bigger app developer for a huge amount of money. But such instances are very rare and an app cannot be developed with this intention in mind.
One way to earn out of mobile application is to link it with real world fulfillment. Users hardly pay for app downloads but they ready to pay for the real world services that these apps are linked with. Real world fulfillment should not be just an extension of desktop web based services and should be a separate entity that uses all the characters of a mobile device. When this aspect is considered, the full potential of a mobile application can be usurped.
Most Indians use mobile phones as a means to access the internet and Internet based services. Mobile acts as their first platform for connectivity in India. This means that there is a huge potential for mobile based services to be used widely in the country.
Another main reason that causes the downfall of many apps is when other developers imitate the same model of an existing app. This is when the app loses its credibility as well as userbase. What every app developer needs to do is to be defensible by networking, data aggregation, habit formation and ecosystem building. A good example is how Zomato made it through. It was only because of the mentioned parameters that Zomato could survive and make it big in the app store.
Generating revenue through mobile apps is not an easy task. A developer has to make sure that someone somehow pays for the app. NGPay is a good case study in this aspect. When NGPay was available on mobile app stores in an era before the android revolution, the app was used to book railway tickets. Since it was at a much earlier time, the booking for tickets through mobile services were easy and fast due to features like pre-filled forms and saved card details. Such small things matter the most in a mobile application and hence, the app had a lot of downloads. But since IRCTC has certain limits to the premium that could be charged on tickets, NGPay could not make enough money even when the users were ready to pay.
The failure to monetize from Suruk led Ideophone to develop apps that have a real world fulfillment. One such app was SOS. SOS is an ultra-quick and single-click mobile application that helps when someone is in danger. It gets the user’s location and sends the address to their buddy with a marker on the map to locate the user. initially, this app saw a few number of downloads from Europe but did not do well financially. It was then that the team received a call from a security agency from Nigeria who was interested in incorporating this app along with their security features and paid a premium to Ideophone for the service. The app was a very successful model and emphasized the importance of real world fulfillment in monetizing from mobile apps (Ideophone shut down a few days back).
At the end of the day, everyone is free to make mistakes in app development. The trick is to learn from the mistakes and understand the app development scenario so as to not make the same mistakes again.
Mediums like Facebook and Twitter also helps to promote a mobile app. Sundar pointed out that Facebook is an important platform to market mobile applications. Once the app is tied to Facebook with the Facebook open graph, it can help improve user’s engagement with the app and add to download numbers. Adding ‘like’ and ‘share’ buttons in-app can help improve the number of people who talk about the app online. This creates twitter and FB evangelists for your app which is one major way of gaining followers to the app.
ASO is one major way to push the app to its potential users in an app store. App store optimization (ASO) is a process of improving the visibility of a mobile app in an app store. Specifically, app store optimization includes the process of ranking highly in an app store’s search results. To do this, a developer has to constantly encourage the app-users to rate and review the app. The app has to trend on the store to gain maximum visibility and thus greater number of downloads. Sundar also mentioned that to market an app in Indian scenario, traditional media works more than SEO or ASO.
Talking about the revenue generated from in-app advertisements, apps that have greater engagement, like gaming apps, banner ads could make money over time. But for an average app, on which a user prefers to get things done in short time, flashing banner ads makes no relevance and so no revenue at all.
The App factory model has worked out only for large scale app building services who have the choice to experiment on their apps. In an app factory model, along with building applications for clients, the company also owns a portfolio of own brand applications. App factories have multiple applications on the same platform and holds huge collective download figures. In case of small developers, Sundar says, that App Factory model has not worked as they could not pack each app to its fullest potential.