There’s been a rush for gold in the mobile app market, but like the California gold rush, there are very few people getting rich. At least, that’s the word from App Promo, a marketing company that helps promote apps (see their nifty infographic below). They recently surveyed app developers working on a variety of mobile platforms, and found that 59% don’t even recover their development costs, and 68% make $5K or less. A full 80% aren’t making enough money to create a standalone business. That’s not much of a gold rush. At least in part, this is due to insufficient money spent on marketing, since 52% of the developers had no money set aside for that purpose (despite the fact that nearly all the developers believed that marketing was important!) The group that App Promo called their “top earners”, who made $50K or more, spent on average $30K on their marketing budget.
Wake Up Call
The lesson App Promo takes from this is, “Developers Who Spend = Succeed”, i.e., it takes money to make money. You may want to take their opinion with a grain of salt, since they are in the business of profiting off your marketing dollars. Nevertheless, their data can’t be completely discounted, since the message is consistent with other sources. It is clearly hard to make money in the app business. The App Promo numbers are certainly sobering, but not necessarily a reason to give up. It just means that one has to take marketing very seriously and plan to spend a substantial amount of time and/or money at that task. The Top Earners spent an average of 14% of their time on marketing; I would guess that a new developer with no name recognition would want to spend at least twice that on promoting their app. The money part will be hard for many developers, given the uncertainties of the app market. How do you know whether it’s worth raising a bunch of money for an app that might not make it? How can you tell whether you will make it or not? And given these uncertainties, how do you convince someone to invest? I guess one lesson is clear from this survey, though: if you don’t spend the time and money on marketing, your app will almost certainly fail.
One caveat: it’s impossible to tell from the survey what percent of the apps were worth spending money on. After all, if the customer isn’t interested in the app, it may not be worth spending $30K on marketing. Like the old saying goes, 90% of everything is crap. Let’s be more generous and say that 80% of everything is crap… that would be about right, since it equals the percentage of apps that didn’t make enough to support a standalone company. You can’t throw an indifferent app into the App Store and expect that people will love it, even with a marketing campaign. The quality has to be there. In addition, an app has to be tested and refined in front of users before release, to see if it will sell. Market research and usability testing are critical to determining success of an app. It’s not a matter of “If I build it, they will come”. More accurate is “The customer is always right”.
If nothing else, this is yet another reminder to me that it takes a great attention to details to get an app that sells. Programming a quality app is wonderful, it’s something to be proud of; but programming alone is not sufficient. I had better re-check my marketing budget…
An aside: Like the original gold rush, there’s probably more money in selling tools than in prospecting. In the gold rush, you sold shovels and pickaxes, in the app market it’s how-to books and programming courses.