In the Californian gold rush in the mid-nineteenth century it was the businesses that made shovels that made the most money. There are parallels with the ecosystem of services that support the app economy, particularly those that provide business intelligence on how the market is taking shape. Data on an app’s performance, gives a vital window for publishers, developers, investors and more and it is these services that are fast becoming the backbone of the mobile industry.
Perhaps it’s no surprise then that App data intelligence platform, App Annie has recently secured $55m in series D funding and launched Usage Intelligence, to provide publishers with beyond-the-download user engagement metrics to complement its existing tracking and ranking tools. Here Bertrand Schmitt, CEO at App Annie chats with MEF Minute on what the investment means for the company and what’s next for the mobile data analytics market.
Q: The new investment round is substantial. Which areas of the business will it help you grow?
In many cases we end up only investing two years in advance of when we launch new products – it takes around two years to bring a product to market. Not because we are slow, but because we follow a tried and tested process. First, we provide some services for free, and then after we have gathered a lot of data and analysed it, we eventually launch a paid-for service. Through this process there is value in being able to keep investing all the time in product development. This round of investment will help us accelerate the launch and deployment of our new product, Usage Intelligence, across more countries and help us build new products in parallel. It will also help us to increase our existing community of 350,000 users and to do more for them by improving our existing services. It also allows us to look at more acquisitions.
Q: Please explain the genesis of Usage Intelligence in terms of App Annie’s product roadmap.
We’ve been working on this for a very long time. The initial idea began four years ago and the work began approximately two years ago.
The idea is to help publishers build a cock-pit to understand the app market. Initially, App Annie was focussed on specific market data – rankings, ratings, downloads and revenues. We then moved on to provide tools for publishers to track their own advertising spend and revenue. However, providing more data on usage metrics is something we’ve had on our radar for some time. We ultimately want to provide our customers with a 360 degree view of their app business.
The launch of Usage Intelligence differentiates App Annie from our peers and it’s why we consider ourselves first and foremost a decision-making platform. We’re not just focussed on providing insight into a publisher’s own app but also what is going on outside of their app business. For us, it was a natural progression to expand our product line to address these new and crucial data metrics.
Q: How does Usage Intelligence help different stakeholders in the app economy?
Our core focus is always the publishers. We believe that they are the centre of the ecosystem. After this, we are happy to work collaboratively with others in the ecosystem, including app stores, social networks, investors – VCs, hedge funds, asset managers, and ad-networks. Anyone that has an interest in the app economy will naturally be keen to learn more about what is actually happening. There are many different use-cases beyond the publisher – investment, M&A, partnerships.
Q: How is beyond-the-download user data collected?
We collate data from multiple sources. We have some apps that we own and publish ourselves. Some of these apps, like VPN Defender [an app launched last year by App Annie subsidiary SmartSense that allows encrypted and secure access to a user’s favourite sites and apps even when they are blocked in a specific country] allow us to track a user’s app behaviour through the app itself. We do this by anonymising and aggregating the data that we gather. We are very careful to never share any user-confidential data. We combine that with our own market surveys and with the data that we get from our other products – Store Intelligence and Audience Intelligence – and apply a lot of data science to come up with accurate estimates about what is actually happening. It’s a complex process.
Q: How can the industry balance data capture with the need to foster consumer trust and privacy?
We are very transparent with publishers about what App Annie is doing. In terms of our own apps we clearly explain that we offer a fully free app with no in app purchases or advertising in exchange for users giving us the right to collect their activity data. However, we only track the activity in a way that is respectful of the user’s privacy. It’s a value-exchange between consenting parties – with App Annie being very open on how we do it, why do it and why we are careful. It’s ultra safe.
Q: The app economy is largely supported by the freemium model. Is that sustainable?
It’s not because you’ve opened a lemonade stand that everyone will buy lemonade. Unfortunately, the same is true of apps. You need to create a strategy that covers a lot of ground. In terms of marketing it’s a lot of work and requires some luck – being at the right time at the right place and judging the best time to go to market.
If you look at Uber and other similar apps, it’s interesting to see that they all appeared and became successful once smartphones became commonplace – when GPS was convenient to use and installed easily within an app. Five years ago these types of businesses wouldn’t have done so well. There weren’t enough smartphones with all the right capabilities. It’s only at a specific point in time that these businesses could take off. Some companies take years and years to achieve success, but the years that they spend building and learning step-by-step is the secret to their success.
Freemium is still a much better business model than paid. Paid apps have a very limited appeal. Having to buy something before you have tried it out is a barrier. Even apps based on subscription models like Spotify allow you to try the service first. What’s interesting is that publishers of subscription services were reluctant to take payment through the app stores, since that meant sacrificing a significant chunk of revenue. Now that has changed. The volume of new users for the right app outweighs the revenue kept by the app store.
Q: How do App Annie’s tools help the market to understand other business models and trends?
By combining all the data that track we can now provide visibility on new, intricate trends. For example when you can see the revenue an app is generating and the level of engagement like Daily Active Users and Monthly Active Users, you can really understand what the average revenue per active user is. This wasn’t possible before but is extremely useful insight for the publisher. The way to assess the success of a particular business model requires the analysis and correlation of multiple data-sets. For example, if an app is making a lot of money with a large or even small number of engaged users this should influence the user acquisition strategy.