AdWords and iPhone apps: lessons learned
We built Gratuitous in order to learn about developing and selling iPhone applications. We’re always looking for ways to improve our visibility in the App Store. Recently, though, we’ve been looking for ways to increase our visibility from outside the App Store into the App Store.
AdWords to the rescue! Right? Maybe not. AdWords didn’t work out for Gratuitous, so we quickly changed course and moved on. But I’d like to share our findings with you
Keyword Pricing
We didn’t know anything about AdWords when we started, so we kicked it off with default settings. We typed up our ad title and body, and hit “go.” The default setting in AdWords is to optimize for impressions (how many times an ad is displayed) by automatically bidding on clicks. For our keywords (iphone tip calculator), the bid went to $2-3 per click. While that may not be bad for a lot of products, it doesn’t make sense for an iPhone app that sells for $1-2. Even if you were able to get the cost per click down to $0.50 – $1, remember that an ad click doesn’t guarantee a purchase – far from it.
So, we switched over to manual pricing. We figured if we could get some clicks for $0.10 – $0.15, then they might be worth it. At that price, we didn’t see enough ad impressions to be worth our time. When bidding high we saw 3 clicks for 10,000 impressions. At 10 cents, the impressions went down to just a few per day. There is no way we’re going to see enough clicks to make that worth our while. If you’re selling a $10 app, then AdWords might be worth looking at.
Copyright and “Limited” Distribution
When we first submitted our ad, it went into review by the AdWords team because it included the word “iPhone.” It’s kind of hard to sell an iPhone app without saying “iPhone,” so we trusted that Google would see that our use of the term “iPhone” was an instance of fair use. After a few days, our ad was approved, but was marked as “Approved (limited).” Limited, to Google, means US-only. That was good enough for us, so we left it as is. If you need ad distribution outside the U.S. you can email Apple and ask them to approve your use in AdWords. Email lwidup@apple.com with your AdWords account number and a nice, friendly note.
Moving on
It’s pretty obvious that AdWords isn’t going to work out for Gratuitous, but apps are only part of our business. “Apps for your life. Consulting for your business.” Instead of advertising Gratuitous, we’re now trying AdWords as a way to generate leads for our consulting service. This is agile business. We tried something, quickly evaluated the results, and adjusted strategy decisively.
I resisted the temptation to spend a bunch of time becoming an expert in AdWords and going in 100%. There may be a way to make AdWords increase Gratuitous sales a bit, but it’s not worth our time. It’s clear that AdWords will not sell thousands of dollars worth of Gratuitous, so the experiment is concluded and we move on and adjust strategy. As a small business owner, I knew I needed to be quick and just test the waters. You’re going to do a lot of new things as a small business owner. Having a good sense for what to spend time on and what to do “just good enough” will be very valuable.
Thanks I went through similar experience marketing my app Kooleido. Http://www.kooleido.com
I have given up on adwords etc too
Sarang
20 Aug 09 at 10:24 pm
As you point out, there’s not a whole lot of room to advertise an application that costs less than $9.99. With more targeted keywords, and with Google’s banner ads, my average cost per click for AdWords is a more reasonable $0.40. With an approximate 7-10% conversion rate from these clicks, I come out slightly ahead with my $10 application. Anything cheaper loses money on that deal, which is one of the reasons I believe the sub $5 market may not be sustainable in the long run.
It’s not just AdWords. For the various monthly banner ads I’ve tried on targeted sites, small and large, the amortized cost per click ends up ranging from $0.11-$0.55. Most of those seem to drive lower conversion rates than AdWords, although a couple have been much better.
However, if you can make advertising work so that putting in $10 gets you $12, you keep feeding in the money.
Brad Larson
21 Aug 09 at 10:12 am
@BradLarson
How are you measuring the conversation rate? Is based on the percentage of people who decide to click through to iTunes from your ad-directed webpage? Just curious since we don’t have any sort of analytics information from Apple other than basic sales numbers.
Thanks for sharing your insight/experience with advertising. Its really great to hear how other developers are faring.
kevin
22 Aug 09 at 10:35 am
That’s a good question. At the end of the day, the only metric you have from Apple is the number of sales (and the number of free Lite version downloads, in my case).
Before I started actively advertising the application, I noticed that the number of sales for each day seemed to scale linearly with the website traffic to my product’s page. For every 10 visits to the product page, 1 person would buy a copy of the application, so that’s what I’m calling my conversion rate (10%). This is a poor metric, given how many channels people can go through to get the application (App Store in iTunes, on iPhone, direct links elsewhere, etc.), but it’s the best I have.
I drive all my ads through this page, because I’ve found that my product video is one of my best sales tools, far better than the static images on the App Store (this is what I believe leads to the 6-10% conversion I have seen, far higher than the industry-standard 1%). This aids a little in the analysis of ad performance. For example, I know exactly how many people clicked through my iLounge ad when it started running, so I could figure how many more sales it added on average, compared to the traffic it drove, and determine a conversion rate from that source.
Things got a little more complex when I started running multiple ad campaigns, but again I can track the number of visitors they drive and try to correlate traffic spikes from certain sources with increases in sales.
I also use Google Analytics to tag my iTunes links so I can see who clicks through the pages to go to the App Store for the product. I figure that if they’ve seen the video, browsed the screenshots, and see the price right under the link, that’s most likely a sale. Interestingly, very few people who buy the product do so by first clicking on the iTunes link. They must read the page and go to iTunes or the iPhone App Store manually.
I’m pulling together a more rigorous analysis of these numbers, but I need a little more data.
Brad Larson
22 Aug 09 at 11:23 am
Thanks for the great info, Brad! I recently stumbled across the iTunes Affiliate program which may be a way of seeing actual conversions in the app store, but I need to do a lot more research.
rick
22 Aug 09 at 1:05 pm
@BradLarson:
Your comment around directing the ads to your website (with video demo) vs straight to iTunes is something Rick & I debated when we started our adwords campaign.
We both really like our video demo of Gratuitous as we feel it illustrates the functionality and ease-of-use of the app more than the static screenshots in iTunes. In the end, we decided to point the ads directly to iTunes for a couple of reasons.
First, we thought that users might be more inclined to click on the ad if they saw the URL was going to Apple’s iTunes store. Second, we thought it that we might get a better response (eg, conversation rate) if we sent people directly to the iTunes page where they could immediately buy the app.
If our ad campaign for Gratuitous went better (eg, the per click rate was much, much lower) then we were going to run two campaigns: one ad directing to our website (with video) and the other straight into iTunes, and see which obtains a better result.
Thanks again for sharing what you’ve learned. If anyone else has dealt with this, please comment and let us know.
kevin
22 Aug 09 at 2:49 pm
[...] Our experience with AdWords [...]
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AdWords and iPhone apps: lessons learned |
3 Mar 10 at 10:47 pm
Thanks so much for sharing, this is great info. I got my $100 adwords voucher and wanted to test it out. My app WinesToDo is $1.99 so I don’t think I’ll make it back, but might as well spend Google’s money and try. I’ll try and post back my results.
mike
30 Jun 10 at 9:27 am