In Mobile Apps & Games

With apps rapidly becoming the de-facto way for people to use digital services and content, a holistic view of the app ecosystem is vitally important to anyone operating in this exciting marketplace.

App stores and downloads have grown quickly, supported by widespread (and growing) ownership of smartphones and tablets. Consumers have adopted apps as a way to spend time online with mobile devices, and in 2015, forecasts predict that consumers will download apps 100 billion times. Not surprisingly, the revenues generated through app downloads, mobile advertising, and in-app/in-game purchases are worth billions of dollars every year.

In recent years, the research world has focused on the number of app downloads as a measure of success. While important, the sheer number of downloads doesn’t tell the whole story. Only a small share of downloaded apps are used more than once, and with publishers monetizing through advertising and in-app purchases, we must be more sophisticated than to simply count downloads.

A recent study by Verto Analytic’s Eric Malmi examines the relationship between the early use and popularity of apps as measured by app store rankings (which are mainly driven by downloads). As the paper demonstrates, popular apps are used differently in their first week of ownership, which gives first-week usage predictive value: Consumers’ first-week usage can predict app popularity with 70% accuracy for the highest-ranked apps.

Obviously, app popularity is affected by more than consumer’s engagement with the app. Advertising, word-of-mouth, and pricing strategy all play a role. However, if usage can predict app popularity then the obverse is also true: app popularity can be used to estimate usage, though the stability of such estimations needs to take into account app categories, seasonality, demographic biases, and app penetration across device platforms.

Another key finding from the paper is that while there is a correlation between one app and the popularity of other apps from the same publisher, it is surprisingly small. This means that having other popular apps might help a publisher make it to the top 400, but it is not enough if the publisher wants to reach the best ranking position. Apps need to stand on their individual appeal regardless of their creator.

With a deeper understanding of the usage and users of apps, in addition to the number of downloads, it is possible to gain a more complete picture of what drives the revenues of the ecosystem as well as what makes a successful app: one that users want to engage with.

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