To truly unravel how money moves around the app economy, you’d need a bank of 30 to 60 servers scraping data from the iTunes, Google, and Amazon App Stores for about five hours a day—every genre, every country, every app. As it turns out, this monumental operation exists at Apptopia, which has used its proprietary data-haul to predict just how big holiday sales will be for app developers this year. What's more, Apptopia Founder and CEO Jonathan Kay has extracted lessons for developers in these numbers: 10 strategies that most any developer can reproduce.
But first, how big is the pie?
Download volume will peak on Christmas day, when Apptopia predicts 410 million downloads for iOS and Android combined. During the week of December 25 to December 31, that number will jump to 2 billion downloads. By the end of December the total will reach 6.5 billion, about 4,680 for each available app title. That’s 69% year-over-year growth in overall app downloads, says Kay.
These statistics are what Kay calls a "very, very educated guess" for 2012 growth. His conclusions are based on data drawn from Apptopia’s massive scraping operation, which the company stores with a mix of Postgresql, CouchDB, and Amazon's SimpleDB repositories. This data is then mashed up with financial data from mobile analytics platform Flurry and two major mobile advertising networks, AdMob and MoPub.
"It's like there's a pile of cash and it's a dodgeball," says Kay. "Selling an app, you have between from Halloween to Christmas to get noticed," he says. "Developing at this time of year almost becomes an investment opportunity, like options buying."
Since rankings and buzz are predicated on only the last 60 to 90 days of downloads, entrepreneurs need to start preparing immediately. The ones who bank the most at year’s end usually have these 10 moves to thank.
- Promote like crazy during the iTunes App Store Freeze. In the iTunes App Store, the biggest and most profitable of the major marketplaces, Apple’s entire iTunes App Store team gets Christmas week off (this year it's from Friday, December 21, to Friday, December 28). As a result, all the rankings and approvals for the most vital app-sales period of the year are frozen. The result is a free-for-all where prospective downloaders don’t have real-time information about which apps are most popular today. That rank-blindness makes it possible to do marketing pushes outside the App Store with no distractions. Smart iOS developers take advantage of Apple’s holiday freeze to launch new promotions: Now is the time for discounts, special edition apps, mailing list messages and whatever else you can think of to promote your apps.
- Submit your next build as soon as possible. Since many developers anticipate the delay, there are many more submissions in the weeks before the holidays, which causes a backup longer than Apple’s usual approval period, which is seven to 10 days.
- Triple-check your work. The App Store freeze also means greater time penalties for mistakes. Make sure the builds you submit are absolutely perfect; having to keep re-submitting updates will reset the clock on your turnaround time, which may mean your update misses the holiday week.
- Customize visual design. Half of people who download an app delete it after 30 seconds. Think carefully about your first-time user experience, or FTUE. You’ll need elegant design to engage the first-timer immediately and ideally give them a wow moment shortly after starting up. The app's purpose should already be clear from the design and description, but you can use the FTUE to help people learn how to use the app as well. Visual design should reflect the holiday season, so the user is drawn in by the app’s just-made feeling. Let’s say you have a simple app where a person shoots a cannon; as December approaches, change up the design and replace cannonballs with elves or another festive projectile. Essentially these are themed versions that require little additional code.
- Offer new virtual goods. Customize your virtual goods, too. If you have a snowboard game and you allow people to buy outfits, why not let them buy a Santa hat? If you’re trying to drive up engagement, use holiday-themed badges or virtual goods as rewards in gameplay. The goal here, says Kay, is more than just keeping things fresh. "You’re showing users that the person who made this app is alive, active, and keeping it up to date." That kind of human touch goes a long way.
- Integrate with referral programs. Mobile commerce transactions grow reliably every year as a portion of e-commerce. According to , 48.6% of tablet users made holiday purchases via their device in December 2011, and 14.4% of mobile phone did too. This year, 20% of total online holiday sales this holiday season will come from mobile devices, a big increase from 11% last season. So if your app features music, TV, film, or written media, get hooked up with a referral program through Apple’s iTunes, App Store, or iBookstore partner program, or Amazon’s affiliate program.
- Do keyword optimization and search term research. SEO is an established and proven part of the web, but most app developers don’t take it seriously. "Optimizing for search is underutilized in the app stores today," says Kay. Adding keywords, tags, and sharp descriptive copy to your listing helps, but the holiday window is also a time to start changing up your focus to hit on seasonal keywords, suited to whatever visual enhancements or in-app purchases you’re adding for the occasion.
- Produce residual app products. "This tip is a little obvious, but let me give you an example as it really works," says Kay. "Video game review apps and tutorial and cheat apps get a ton of paid downloads during the holidays. Any video game that a kid could buy, they’ll want to know more about it. They go to their mobile app store to find guides." Kay calls this a residual market: apps that relate to the major product groups which are popular during the holiday shopping rush. Even apps that do something as simple as aggregate product manuals tend to get spikes during Christmas week. Better yet, these kinds of downloads continue well into January, as users use their gifts more and more.
- Acquire apps that did well last year. If you don’t have the time or inclination to develop a holiday app, you can buy one on a secondhand market like Apptopia’s, which lists previous sales records. "You can learn from what that developer did right or wrong, and tweak the app to make it sell better," says Kay.
- Diversify your portfolio. Don’t build one holiday app and expect magic to happen, says Kay. "Capitalizing on the holiday sales season is all about building a portfolio," he explains. Try to have several, and use them to cross promote each other. "If someone is playing your Elf Soccer app, advertise your Penguin Hockey game, or your Hannukah Hang Glider app," says Kay. "Now you have not one but three of your apps downloaded on one user's phone, which means your cost-per-acquisition was the same, but you’re getting three times the return."
So how much money does 2 billion app downloads actually make? It’s hard to know exactly, but we can use Apptopia's data to make some estimates.
First, the ratios. Of the 2 billion app downloads Apptopia projects for holiday 2012, Android is actually getting more downloads at about a 51-49 split. (The gap is widening in Android's favor, but the iTunes App Store is still accounts for 60-65% of the total app revenue year-round.)
According to Apptopia, 31% of iOS app revenue is garnered from paid apps, and the rest from freemium apps. Apptopia says paid apps account for 47.67% of all iOS downloads, where the price for an app is typically at least $1 USD to download (although the minimum price varies internationally, and not always based on exchange rates).
Since iOS accounts for 49% of the 2 billion app downloads during holiday week, or 980,000,000 downloads, that would put the gross revenue for paid iOS downloads at a minimum of $476,700,000 for December 25-31. But remember, that’s only 31% of the gross revenue for this period. Add in freemium iOS app sales, and the gross haul from the iTunes App Store holiday sales balloons to $1.43 billion. Combined with Android app sales, that's about $2.4 billion for the entire app economy in only a single week. To put that into perspective, AdMob estimated in 2009 that Apple's App Store sales for the entire year were $2.4 billion.
[Image: Flickr user Bob West]