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Today is a good day to market to cheating spouses February 15, 2011

Posted by jeremyliew in apps, Ecommerce, seasonality.
5 comments

Bloomberg Businessweek has an interesting article on the infidelity economy this week, noting that registrations for AshleyMadison, the online dating site aimed at married people, spike the day after Valentine’s Day. But nowhere near as much as they spike the day after Mother’s Day and Father’s Day.

It’s an interesting example of the sometimes ideosyncratic seasonality of web businesses. Knowing the seasonality of your business can help you market to, merchandise for and communicate with your customers most effectively.

Everyone is familiar with the Q4 seasonality of retail businesses, driven by the holidays. But each industry has its own annual seasonality cycles that may be less obvious in foresight, but are always obvious in hindsight. For example, in Shoedazzle’s first year of operation, we missed a few months of the winter boot season. Having the wrong merchandising mix from October to January in 2009/10 definitely dampened sales – women don’t buy as many open toed shoes when there is snow on the ground!

Another example is Mercantila, a company that sells a lot of exercise equipment, rowing machines, elliptical trainers and the like. They see sales spike not in Q4, but in Q1, when people are making their new years resolutions. When many online retailers are easing up on their online marketing and SEM, Mercantila is ramping up what it is willing to spend to reach new potential customers.

Smartphone app developers have learnt that the launch of new iPhones and heavily marketed Android phones is a period when they can rapidly increase installs, as are the days after Christmas, when many new phones are getting unboxed. The first thing a new smartphone owner does, is go to the appstore to get some apps. Being high in the “best-sellers” lists at that time can provide a real boost to your installs. Making sure that your release at that time is bug free, well reviewed and fully featured, is of course important too.

Seasonality is not confined to annual cycles either. As the number of ecommerce businesses relying on email increases, rules of thumb for weekly and daily seasonality are also starting to develop. For example, Mondays and Tuesdays of the first and last week of a month are when people tend to balance their checkbooks,  so are bad days for subscription services to send e-mails. They have a higher probability of getting canceled on those days and don’t want to draw attention to themselves. On the other hand, emails sent Sundays after Church show high open rates for some ecommerce merchants. And for deal sites, open rates are higher when you are above the fold when someone first opens their email, which rewards sending emails in the weekday 5am-7am time slot to work based email addresses.

What seasonality have you seen in your business?

Apple has made no more than $20-45m in revenue from the app store May 13, 2009

Posted by jeremyliew in apps, iphone.
172 comments

About a month ago Apple announced that one billion iphone apps have been downloaded in the first nine months. That’s an amazing number. I wondered how much money Apple was making from the app store.

Although it’s hard to come by the definitive ratio of free to paid paid to free apps, talking to industry participants I got estimates in the 1:15 to 1:40 range. So that suggests that between 25-60m paid apps have been sold.

O’Reilly recent did a survey of iphone apps and noted that the mean price for paid apps is $2.65:

itunes_20090415_4

The weighted average price for paid apps is probably lower than this as the median is $1.99 and there is significant price elasticity for iphone apps, but let’s go with the $2.65.

Multiplying this by 25-50m paid apps, that suggests that the cumulative revenue from iphone apps is around $70-$160m. Apple gets 30% of this so Apple has probably made around $20-45m from the billion iPhone apps downloaded. (Note that if you use an assumption closer to $1.50 for weighted average app price, then this estimate drops to around $12-27m).

Now it’s worth noting that it took 6 months to hit 500m app downloads, and only three months for the next 500m app downloads, so Apple’s revenue run rate is higher than this.

Given that Apple sold 13.7m iPhones in 2008, the app store is not a meaningful direct contributor to their overall revenue. Much like iTunes, Apple is using the App Store to drive demand for their hardware.

The biggest assumption here is the ratio of free to paid apps, so if any readers have better data on this, please comment.

People like to have fun. Who would have thunk it? July 16, 2008

Posted by jeremyliew in apps, facebook, iphone.
1 comment so far

There has been much handwringing about how silly facebook apps are, and how it would be so much better if they were more useful. But Facebook users have voted with their mouse buttons, as the O’Reilly report in May showed:

According to a Medialets survey, it seems that iPhone users have voted in exactly the same way, with almost half iPhone apps being games or entertainment:

Girls (and boys) just want to have fun.

Top Friends still missing after 5 days; marks change in Facebook’s approach to app developers July 1, 2008

Posted by jeremyliew in apps, facebook.
1 comment so far

Inside Facebook has an interesting post about Facebook’s evolving approach to platform management. Justin notes that Slide’s Top Friends app has now been suspended for the platform for 5 days, the most serious punishment for any app so far. He notes that while initially Facebook tried to control app developer behavior with rules, it is now singling out ‘bad actors’ for direct punishment, as much to be a symbol to other developers as to punish the infringing app.

Earlier in the year, Facebook responded to abuse by outlawing the tool being abused (for example, in the case of forced invites). This would be akin to outlawing something like assault rifles that almost everyone agrees are harmful to society. However, in more complex cases, outlawing the tool at hand is not necessarily what’s best for the system. For example, removing APIs that access profile data from the Platform altogether because of one application’s privacy concerns would hurt the overall Platform economy significantly: many developers and users would be negatively impacted. This would be somewhat like outlawing kitchen knives because they were once used in a crime. Instead of removing knives from society, the better solution would be to hire a district attorney and set up a court system and bill of rights: news of verdicts and sentences would deter many future cases. Of course, that’s a very expensive proposition, and sufficient accountability must be enforced for stakeholders to have faith in the system.

As he summarizes:

Facebook’s approach to platform governance is becoming decreasingly dependent on algorithms and increasingly based on policy-enforcement.

This is the same approach that Myspace has followed since inception. This change in approach is an important sea change for app developers as it makes direct relationships with Facebook more important than previously. This will likely benefit the larger app developers over the smaller ones so ong as they are acting in a way that Facebook likes.

Rock You CEO on social network platforms March 15, 2008

Posted by jeremyliew in apps, facebook, myspace, social networks.
1 comment so far

Lance Tokuda, CEO of Rockyou (a Lightspeed portfolio company) is interviewed over at paidContent.org about apps on social network platforms. Read the whole thing.

Faux Facebook fatigue March 3, 2008

Posted by jeremyliew in apps, communications, facebook, social networks.
6 comments

Michael Parekh points to the Youtube video below and calls it further evidence of Facebook fatigue.

I disagree. I’m not a diehard Facebook fanboy, but I’ve done enough consumer internet product management to know that you can’t ask users what they think, you have to watch what they do.

There is certainly a growing chorus from the digerati about how Facebook apps are for toddlers, and this is echoed in the video embedded above. Interestingly though, Compete’s stats suggest that app usage is holding steady.

FB apps penetration

The feed, one of Facebook’s core innovations, had similar problems when it first launched. Early on, Facebook users condemned the feed. Today they can’t live without it.

Many of the lightweight Facebook apps live fleeting lives; they grow quickly and fade away just as quickly. That much is true. But their viral growth speaks to them meeting a core need for users of social networks, lightweight communications across increasingly expanded friendship networks:

These lightweight communications are native to social networks. Whether they be exchanging pokes on Facebook or pasting a glittering “thanks for the add” .jpg into a Myspace comment, “content free” communications abound. The meta message is clear though “I’m thinking of you”, and that is often enough of a ping to keep the connection open. Many of the Facebook and Bebo apps fulfill exactly this lightweight communication function, including Hug Me, Zombies and Scrabulous.

The digerati, with their Outlook address books and social network friends lists in the 1000s, bloated by people they met at conferences several years ago, are edge use cases. Their experience is atypical. Normal users of social networks use Facebook apps in the same way that middle America forwards emails to one another. A healthy percentage of the emails that I get from my mother in laws are these forwarded emails (whether remarkable pictures, funny videos, or uplifting stories) and they’ve all been forwarded many times before they get to her. Facebook apps are just another instance of this lightweight communication behavior that we’ve seen online for many years.

More recently we’ve seen more of the app developers turn their attention to increasing engagement and building richer experiences for app users beyond the lightweight communication. But even the lightweight apps are fulfilling a need for users.

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