In a recent conversation with a prospective client, the topic of marketing iPhone/iPad apps was being discussed. I find these conversations to be quite interesting since many of the companies I speak with have already successfully marketed other products and services to their clients. Everyone recognizes that the iPhone and iPad have made a significant impact on virtually every industry and market, AND everyone is aware that native iOS applications are sold through a non-traditional vehicle, the Apple App store. So, what is it that is so different about marketing these apps?
A quick search for “How to Market iPhone Apps” in Google returns over 385,000,000 results. Many of the top results are “specialized” marketing companies that claim to have unique, inside knowledge of how to market apps. I have been in sales/marketing/strategy roles for products and services for well over 20 years. While there are unique differences due to the Apple App store, many of the fundamentals of marketing from the past 20 years STILL APPLY today when marketing apps. As with marketing any other product or service, there is no magic formula or hidden secrets. Since there is so much confusion in this area, I thought I would put together some fundamental marketing basics and then provide a high-level set of steps to consider when marketing your app.
The first concept to consider is marketing itself. For many, including everyone from individual developers to major corporations, they think that marketing is something you do AFTER you have built your product in order to promote sales. In reality, marketing must begin at the very BEGINNING of the definition of your product. Often companies producing a product will actually do quite a bit of marketing upfront, they just don’t know they are doing “marketing”. Let’s begin with our high level marketing concepts to get you started:
- What is the goal you have for the product? This must be quantifiable. If you can’t measure it, how will you know if it is successful? A goal can be revenue $’s, profitability or even something like a specific number of units. You may want to consider things like the costs to research, design and manufacture your product. In the case of an app, you will want to think about research and development costs and be sure to factor in the 30% that goes to Apple. This is at least a minimum starting point.
- How big is the market for this product? It isn’t enough to just say that no one else has produced such a product, you need to make sure there is enough demand in the market to justify your investment. Furthermore, you need this information to properly price the product and to insure you are actually making a profit. This is a great time to also consider any latent markets, those people who could also use the product, but aren’t the primary market you were targeting. I have seen many apps built without understanding the size of their market. They end up confused because they have a product that is underpriced and the target market is so small, they can’t possibly make a profit. They think they have a problem with placement in the app store and go looking for the magic pill to increase their rankings in the app store. Putting them at the top of the list would be a very expensive way to gain visibility, and if the target market is too small, there may not be enough potential buyers to ever make a profit. If the target market is extremely small, don’t give up, you may be able to charge more for the product due to the specialization.
- What is Out There? Who Are Your Competitors? Before you begin writing any code, you should have a clear understanding of your competitors. Who are they? How big are they? What are the specific and unique features in their product? How are they pricing their product? This is one of the most important steps as you need to use this information to determine your STRATEGY. Don’t be afraid because one of your competitors is very large, has lots of resources and lots of features. You could potentially build an app that is more streamlined, is simple to use and meets 80% of the needs of the consumers. On the flip side, you may find that there are lots of competitors out there with great apps. The results of analyzing your competition will allow you to accurately determine the functionality you must have, and the pricing you must compete with to bring your product to market.
- How Much Can I Charge? Using much of the information you obtained through the first few steps, you can now determine the price for your app. There are many things to consider. You should consider all of your options with respect to pricing models: fixed unit price, volume discounted pricing, in-app purchases to build upon base price and of course the freemium model ($0 for base product, and either in-app or subscription pricing for more functionality). Just because your competitors are charging $1.99 doesn’t mean you have to. Be sure to factor in your goal, market size and competition. Let’s walk through an example. The company has stated that they have invested $85,000 in the research and development of the app and that they must see a 30% profit during the first year. That means the app must produce roughly $110,500 in gross profits. Research has shown that there are several strong competitors, but none really have huge marketshare. The market is sized to be 4 million users. If I can conservatively capture 2.5% of the available market that is 100,000 units. So $110,500 / 100,000 = approx $1.10 per unit minimum. Now you need to consider your overall strategy. If your competitors are all selling for $1.99 you have some key decisions to make. If your strategy is to offer a slimmer, easier to use product, you may decide to price it at $.99 and bank on overachieving against your unit volumes. If this is a brand new market and people aren’t exactly sure what this new app may provide, you could consider a FREE base product with enough functionality to reflect the value of using an app, then charge for the additional functionality as an in-app purchase. You would go back to your goals and market size to determine how much to charge for the in-app purchase. For example, if my market size is 4 million users, a FREE app may attract 5% of the customers for a trial and maybe a conversion of 30%. That would be 60,000 users, so your minimum break even price would be roughly $1.99 in app purchase resulting in $119,400 in gross revenues. These are very over-simplified examples, but you get the idea.
These are just a few of the major marketing concepts you should consider EARLY in the development process. In the opening of this article, I committed to provide a high-level picture of how to market an iPhone or iPad app to help take away some of the potential mystery. Here is the big picture. I am happy to go through details on any of these steps, just shoot me an email or leave it in the comments.
- Identify goals or key internal metrics – revenue, units, expectations, etc
- Research target market and latent market – need quantifiable size in units or market spend
- Conduct competitive analysis – gain a deep understanding of your competitors, their features, marketshare, pricing and futures
- Identify any gaps in your identified product features required to meet needs of the target market or to adapt to capture latent market
- Identify and quantify your key differentiating features – critical to your overall marketing strategy
- Evaluate branding – product name, logo, primary differentiated features. All should reflect the key value/functionality to the customer.
- Integrate automatic notices to post app store reviews after X launches
- Integrate forwarding to email, twitter and Facebook as app permits
- Evaluate pricing models based upon features, market size, company goals and competition – free, freemium, fix price, variable in-app purchases, external subscription – don’t forget Apple’s 30% on fixed and in-app purchases
- Construct marketing creative brief – This is a simple internal document outlining all aspects of the product including name, price, assumptions, competitors, key differentiators, etc. It is valuable in constructing press releases, website, apple app store details, etc. as well as internal communications.
- Conduct alpha/beta testing to validate no only product features, but functionality and all marketing assumptions
- Identify key customers to target with either early release or promotional evaluations
- Identify key industry consultants and bloggers for early release or promotional evaluation
- Build out website (or product specific landing page) from creative brief including support page/instructions and/or blog
- Build Twitter account and Facebook product pages
- Submit app to app store using key words and unique product attributes from creative brief
- Launch approved app, post announcement on website, blog, twitter, Facebook, etc.
- Submit press release for initial product launch based on key differentiators and value propositions from creative brief
That is it for the initial launch list. As you can see there isn’t anything particularly mysterious or too different from traditional product or service marketing activities. In future posts I will cover more details regarding some of the pre-launch preparation above as well as post launch marketing activities including analytics!