Apple’s iAds may be showing an overall better performance than the general mobile ad and they may be showing higher click rates, but they are apparently not performing well enough to sell applications.
iPhone 4
If you depend on a monetary return from ads and you do not have the leverage of a pure perception campaign, creating and placing ads is a tough business with little wiggle room. Based on the price of your product, you can calculate click rates and conversion rates to make sure that your ad delivers a return of your investment.
Apple’s iAds have been praised lately with high click rates that are, for example, above Android (about 30% higher), Palm (almost 100% higher) and RIM (more than 200% higher). However, there are more voices that claim that the click and conversion rates are not high enough to enable app developers to advertise their products, which sell for an average of less than $3.
For example, Cross Forward tested advertising its Audiobooks Premium app that’s ells for 99 cents. A campaign that cost more than $1200 over a period of four days generated 84 downloads and resulted in an acquisition cost of $15 per customer. The company concluded that these economics simply do not work. On one specific day, Cross Forward received 400,991 impressions and 1020 clicks (with a cost of 25 cents per click).
Only 19 apps were downloaded resulted in an acquisition cost of $13.42 per sale on that day. For a 99 cent app, it may reasonable to assume a cost-per-click of 25 cents, if you believe that 75% of the clicks result in an actual sale. However, in Cross Forward’s case, only 1.8% of clicks brought in a sale – which means that their break even may be in the area of about 1.5 cents per click – and also means that iAds simply won’t work for advertisers and content that carries advertising.
A few days ago, talked to Ortwin Gentz of Future Tap, who also raised concerns that iAds or any tupe of mobile advertising can really work. Gentz offers the successful Where To app, which has brought in more than half a million dollars of revenue since its launch. However, Gentz also said that they tried to advertise their application with a high advertising budget and saw a “catastrophic” result. Click and conversion rates are not in the favor of app developers at this time.
Gentz noted that prices for app-related keywords have exploded and paying $2 to $5 for a keyword placement does not make any sense, if you are selling an app for just $3. That, however, is not just a problem of iAd or any other advertising network. It simply means that iAds are not the definite recipe for marketing and sales success and app developers need to find different, more economic ways to market their apps.
You can leave a response, or trackback from your own site.
