It has now been over 6 years since the launch of the App Store. In that time, over 75 billion app downloads have occurred, and there are now 1.3 million apps available to consumers. However, as it is now widely known, discoverability has become and increasingly difficult challenge as the App Store has scaled.

Apple 75 Billion

In this post, I am going to look at the biggest contributing factors to the discoverability problem that so many developers face, with particular focus on how mobile advertising is at the core of the situation.

Challenge Number 1: Apple

Nobody will doubt that the growth of the App Store has been nothing short of phenomenal. However, as the discoverability issue has grown in size over recent years, developers have quite rightly begun to accuse Apple of making life harder than it needs to be.

iOS 5 vs iOS 8

As you can see above, the design has undergone significant changes over recent years, and since iOS 6, app screenshots have appeared within search results. For users, the positive of this is that they are getting more information on the design and functionality of an app without having to view its actual sales page. For developers, if you are lucky enough to be one of the top ranked apps for your keywords, then you are likely to have a pretty decent conversion rate providing your screenshots and app quality are high enough.

However, for developers outside of the top 4 to 5 results, the updated design has proven to be a real problem and has been subject to a lot of online debate. Ever since this move by Apple, there has been more emphasis placed on the importance of ASO and appearing in a high position for your keywords.

The problem here is that the mechanics of Apple’s search algorithm is completely hidden to the developer community. Through their own research and assumptions, ASO professionals do have a fairly good grasp of what dictates your final search ranking, but due to the lack of transparency from Apple, indie developers simply can’t rely on ASO to bring them significant traffic.

Challenge Number 2: Increased Competition

As I wrote in the intro for this post, the App Store is now at a colossal size. Whilst the average number of app downloads per app is increasing, the distribution of these downloads is becoming more and more concentrated.

Source: Wikipedia

Source: Wikipedia

Of course, as with any industry, the success of the developers on the App Store is dictated by supply and demand. Over recent years, you can clearly see that demand for apps has outgrown the supply of new products onto the App Store, with the average downloads per increasing by 89.7% in just over 3 years.

However, the rich are getting richer and poor are getting poorer. The global success of companies like King and Supercell has meant that movement at the top of the app download charts, where the vast majority of downloads occur, has become much less frequent. In fact, 50% of developers on iOS now sit below the app poverty line, and earn less than $500 per month.

If the above stat doesn’t drill home how extreme App Store polarisation has become, then check this out. In the 8 months prior to Distimo being acquired by App Annie in May 2014, only 4 different developers had featured in the top 5 grossing ranking on the App Store. These companies were:

  • com Limited
  • Supercell
  • GungHo Online Entertainment
  • Machine Zone Inc.

One of the biggest reasons that the above companies are able to monopolise the App Store charts is due to mobile advertising.

Challenge Number 3: Mobile Advertising is Broken

Potentially the biggest issue in the discoverability challenge lies with mobile ad networks. At Tapdaq, we recently conducted a community survey in a bid to better understand exactly how indie developers use mobile ad networks.

Of the 60 independent developers we spoke to, 94% said that they only used ad networks to monetise their applications. When asked about why they didn’t promote their applications on ad networks, all 60 developers gave the same answer: “I can’t afford to”.

Let’s take a deeper look at how ad networks work, and why they are having a negative effect on App Store discoverability.

The Race to the Top Culture

The majority of the world’s largest mobile ad networks operate on a real time bidding system (RTB). What this means is, advertisers sign up and bid the cash amount that they are able to pay for an install.

Now this presents a big issue to the vast majority of app developers. In July this year, Developer Economics published that 1.6% of developers were making more money than the other 98.4% combined. When it comes to bidding for installs, this means that vast majority of installs are being bought up by a very small percentage of developers.

For these cash rich developers, they can afford to optimise their applications to the point where their average user LTV is far superior to that of all other applications on the App Store. These developers then bid against each other, pushing the average cost per install higher and higher. The result is that these developers can easily maintain their position of domination on the App Store, as no indie developers can afford to compete with the astronomical costs of user acquisition.

On one of the largest mobile ad networks in the world, Chartboost, the average CPI on iPhone in 2014 has already risen from $1.66 to $2.69. That’s an increase of 62%.This is a direct result of the huge bidding wars on the network, and it is completely alienating the advertisers and publishers on the platform.

What’s Bad For Indie Advertisers is Great For Indie Publishers

Whilst, 94% of independent developers can’t afford to acquire users through mobile advertising, the developers who are monetising their apps by publishing adverts are making more money than ever before.

Due to the huge amount of money that is now being offered for an install, we have seen the emergence of new business models on the App Store. One of these models is app reskinning. Whilst many argue app reskinning is having a negative effect on the App Store, there are now many examples of developers building very profitable app networks off the back of this business model, a model that relies on monetising through ad publishing.

What’s going to solve App Store discoverability?

Cost per install figures are showing absolutely no signs of declining any time soon. As long as the large developers continue to refine the ways in which their apps monetise, they will continue to be able to bid more and more for installs.

On top of this, Apple are very unlikely to become more transparent about how their search ranking works. With App Store search being a major form of app discoverability, things won’t be getting any easier or clearer for developers any time soon.

Ultimately, one of the biggest parts of the problem here is that it often takes huge investment to iterate your application to the point where it’s LTV allows you to compete in the CPI environment. Large developers can buy data, research, and ultimately installs, at a price that is out of the reach of indie developers.

In order for discoverability to become less of a challenge, the data and tools that give the larger developers the insight and tools to optimise their apps to such a high degree need to be   commoditised. When this happens indie developers will have a much fairer of generating exposure on the App Store.

About the Author

Dom Bracher is co-founder and CMO at Tapdaq, a transparent transparent marketplace where indie developers can trade installs, for no cost.

 

 

 

 

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