September 21, 2018
As a rule, Smart app companies and marketers analyze app market intelligence to identify ‘blue oceans’ of opportunity and make a detour around markets where conditions are not conducive to success. It’s best practice that guides our new mini-series series where we explore the data to debunk myths and demystify strategies that drive international growth. Our host Peggy Anne Salz catches up with Jonathan Kay, founder of mobile app intelligence platform Apptopia, to dissect and discuss the APAC opportunity, revealing that a whopping 57% of Top Apps in APAC are created outside APAC. Which app categories are sure to fly or fail? Listen in and find out!Peggy: Hello, and welcome to "Mobile Growth," the podcast series where frontline growth marketing experts share their insights and experiences so you can become a better mobile marketer. I'm your host, Peggy Anne Salz from MobileGroove where I help my clients further revenues and audience reach through content marketing. And on my watch, this series will introduce you to the people who know how to drive growth either because they are growth marketing ninjas, we have a number of those on the show, or because they are providing the tools for growth and that's the case here because my guest today is Jonathan Kay, CEO of Apptopia, leading provider of mobile intelligence to app publishers worldwide. John, great to have you here.
Jonathan: Pleasure is all mine.
Peggy: Now, you are a mobile app intelligence provider to the app publisher community worldwide. Maybe just sort of give me a high-level view of what that really means and why that's important at this point in time.
Jonathan: So, essentially, we provide downloads, revenue, usage for every mobile app and every publisher in the world as well as insights into who's spending money on advertising, where they're advertising, how much they're advertising, what ad creatives they're using, what's working, etc. And the reason we exist today is because it's very difficult to be good in mobile without understanding what your competitors are doing. They've probably figured out something that you don't know and it's very expensive to try everything to figure out what they've already learned when you can figure out their secrets and capitalize on them. So, this is why we exist.
Peggy: And we talked about it at the start, it's about that intelligence and understanding trends, world trends, brings me to some of your most recent research which is very, very interesting but also very, very eye-opening because it's different than what many might have expected. Certainly, what I didn't expect. But what's the background on this, Jon? What made you dive into APAC in the first place?
Jonathan: Yeah. So, we've been a good partner of Google for probably three years now and they invited me to come speak in their Dublin EMEA headquarters to educate their key customers about what opportunities exist in APAC. And honestly, when they asked me to do the presentation, I thought like, "Oh, shit. Of all the topics in mobile, this is probably the only one that I'm not immediately prepared and ready to speak about." And so I guess you could call it a gift or a curse but the net-net is that we ended up spending probably three dedicated weeks of one of our analyst's time diving into every possible data point that we could find around all the different markets in APAC. And we put together a pretty powerful presentation around where you should be spending your time and money in APAC, what indicators exist from APAC consumers and mobile app users and we learned a lot. So, I was excited when you invited us on the show to share some of those learnings.
Peggy: Well, that's exactly what I wanna do. I'll highlight one of the stats that got my attention because it was like, "Whoa." Outside the APAC, this isn't like a typo. So, my favorite, 57% rather of top apps in APAC are created outside of APAC. So, that tells us that there's probably some good untapped opportunity in there for apps going from outside to APAC itself. But I won't get ahead of you Jon, you did a lot of research here. Tell me why? Perhaps just start at the top. Why is APAC so different? Why is APAC so interesting?
Jonathan: Yeah. So, you nailed that stat.
Peggy: I love that stat, by the way.
Jonathan: I guess what I would just add to that is that 68% of top grossing games, so the real money, 60%, 70% of all the money made for games in APAC are also created outside of APAC. So, it's a huge opportunity. Honestly, the real barrier to entry is like it's obvious. There's a huge paradigm shift in the types of culture and pop culture there. There's a huge language barrier in terms of not using Latin characters. And just in general, the triggers and leverage you have to incentivize and build loyalty and retention in APAC, it's just very different than other markets. I've also learned that in general, APAC users are looking for different things in their mobile app experience than people in the United States and Europe. I guess one of the first things I wanna talk about is just setting the landscape a little bit.
So, one of the first exercises we did is we said, "Okay. Let's just look at the top 30 apps that people spend the most money in in APAC." And the first thing that we wanted to figure out is, what percentage of those apps are universal? So, does everyone play Candy Crush? Is that just the top grossing app everywhere or is it really just in the United States and Europe? And what we learned is that over the top 30 grossing apps in APAC, only eight of them. So, less than 30% of them were also top grossing apps in the United States and Europe. And yes. I know that you are wondering, Peggy, but Candy Crush is not one of those apps. So, Candy Crush is actually not universal. Our obsession with candy and food and donuts does not translate to the APAC market. The types of apps that do translate are things like Netflix, Pokémon Go, Tinder, Bubble Witch, Clash of Clans. These kind of like more universal gaming concepts are the apps that translate there.
Peggy: So, you're talking about the ones that are translating. Is there something about these apps? You looked at a lot of aspects of the apps, their mechanics where people are spending their time, is there something that's cutting across here that maybe will tell our listeners, "Hey, you wanna be a hit in APAC? Then nail these mechanics or nail these features. And you have a very, very good chance."
Jonathan: Yeah. So, I think the whole logic here is is that like if you're fishing, you need to fish in a pond where there's actually fish, otherwise, you could be the best fisher in the world, have the best gear and it just doesn't work. And so our whole analysis, our whole advice for anyone is you just need to figure out what the right ponds are. So, maybe I'll just give you another example. So, over the top 50 games in the United States, the top 50 grossing games in the United States, and we're not looking at just the snapshot of the top charts, we're talking about all-time grossing, 25% of them are casino games. Which is obnoxious. Obnoxious.
And if you look at that same stat in APAC, it's literally 4%. Four percent of the top grossing apps in APAC are casino. So, it's like, "You know what? Stay away from that." But now if you ask me, where's the opportunity in APAC? It's in roleplaying. So, 10% of all revenue for games in APAC comes from roleplaying games. Whereas, if you look at that in the United States, it's 2.3% of revenue. So, even just like understanding what types of games, what types of game mechanics are popular in certain regions is gonna be really essential because you need to fish in the right ponds, just to start.
Peggy: Actually, think about it, Jon. I mean, that's actually really good news because those 2.3% spend on roleplaying games, these are guys who are hungry, right? They have an appetite for growth and they can say to themselves, "Well, look at the data, frame it the right way, and I can see an opportunity that I can go after in APAC because that's where this kind of game is super popular."
Jonathan: Yeah. It became very clear to me that there was no magic trick to be successful in APAC, it was about surveying the landscape. Making the right decision based on what's happening right now. And what we learned is that you need to understand what your goals are. So, your goal can't just be, "Okay. I wanna go build a successful app." Your goal has to be, "Are you trying to build an app that people spend time in? Are you trying to build an app that people spend money in? Are you trying to monetize via in-app purchases, via ad revenue? What is your actual goal?" And honestly, one of my favorite things that we learn is that for ad revenue, if your goal is to monetize via ad revenue, then you need to build the racing game because 22% of all the top 50 apps that make the most money in ad revenue. So, pretty much 22% of the ad revenue in APAC is made in racing games.
So, it's not just about knowing what pontification, it's about understanding, what are your strengths? What type of monetization strategies do you have experience with in relationships in and muscle memory in and then you actually need to research and make a driven decision around what markets you wanna target and what types of game you wanna build based on your publisher, like your company strengths.
Peggy: Great way to get to the ad break here, Jon, I have to say, because you're talking about ad monetization and strategies. And listeners, don't go away because when we get back, we'll be talking about where you need to invest your effort and your money to get returns on your app.
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Peggy: Hello, and we are back to the "Mobile Growth Podcast." My guest today, Jon Kay, CEO of Apptopia, leading provider of mobile intelligence to app publishers worldwide. And Jon, I'm looking over the deck, I am a little bit of a data nerd, and I love stuff that is just not what you would expect outside the usual suspects. And when you put it all together, what I'm seeing here and what you've said already in your presentation, U.S. users, APAC users looking for some things, they're very, very different. Users in APAC looking for games with story, adventure, significant investment. U.S./Europe on the other hand looking for apps to entertain them on the commute to work, was that a surprise for you?
Jonathan: Yeah. I guess I was surprised by the magnitude of it. I always joke around with our employees here but I see ads on Instagram from main game publishers and the title of the ad is like, "Look, the best app to waste time." And it's so crazy. It's like, "That's who we are here in the United States." It's like we need to just waste time before we fall asleep. And in APAC, it's way different. And so what we did is we started to look at what categories of newly released apps were performing the best and we noticed that categories like art, arcade, and action made up nearly 40% of all the downloads of new apps in the United States and Europe. But when you looked in APAC, RPG, adventure, games with context and story and commitment made up 44% of all the newly downloads of newly released apps. So, I knew that we were lazy here in the United States. I guess I just didn't realize exactly to what extent.
Peggy: What about the markets themselves? We're talking about untapped opportunities. It's really exciting, you're talking about blue oceans and long tail and all that great stuff. But I guess the reality is a little bit different because there is also a level of saturation in APAC as well. What are some green flags and red flags if you really wanna get in there, where the action is?
Jonathan: Yeah. Absolutely. This is super, super important so it's basic supply and demand in economics. And how we look at it at Apptopia is we're trying to figure out what is the long tail? So, let's just take the most extreme category that exists, social networking. The top 10 social networking apps probably make up 80% of all the downloads in social networking. So, do you really wanna build an app there? Because if you can't be a top 10 app, there's not an opportunity there. And so when we talk about saturation, we think about it in terms of what percent does the top 10 and the top 50 apps make up of all the downloads in revenue of that category because what is left represents the green field?
So, what we did when we looked in APAC, we realized, "Okay. Let's look at strategy games just as an example." In the strategy games category in APAC, the top 10 apps make up 55% of all the revenue in the category. And we're talking about a category that has 50,000 to 70,000 apps. When you look at the top 50 apps in strategy, it makes up 80% of all the revenue. So, it means that if you don't think you can be amazing, then you have no chance of being good. There's no long tail there. And we essentially found that arcade and puzzle games in APAC also represented opportunities where well over 60% of all the revenue in that category was made up of the top 10 to 50 apps which might have only been built by 7 or 8 publishers. So, these are kind of big red stay-away flags for me.
Peggy: Wow. They are dominated by these blockbuster apps that they have.
Jonathan: Big time. Now, if I'm a listener, I'm thinking, "Why don't you just get to the point where you tell me where the actual opportunity is?" And I accept that. So, we think that it's three categories in APAC. So, health and fitness, education, and roleplaying. So, when you're looking at health and fitness, essentially, outside of the top 50 apps, 77% of the revenue comes from non-top 50 apps. If you look at education, and we know that education is crucial in APAC, 87% of the revenue comes outside of the top 50 apps. If we talk about roleplaying, and you've heard us say roleplaying so many times at this point, you think it has to be saturated.
Seventy-five point nine percent of the revenue comes from outside the top 50. And the real crazy thing about roleplaying is that if you look at Japan, which is one of the markets within APAC that has the highest average revenue per users, the most saturated amount of money in one place, then really, the top 10 roleplaying games only make up 4% of all in-app purchase revenue in Japan. So, roleplaying represents a huge, huge, huge opportunity in APAC. And just in general, we're suggesting that you really take the time to do the analysis of how long is the long tail before you invest tens of thousands of dollars in development and advertising to enter a new market.
Peggy: And to your point, Japan is not just a great big opportunity, they're also big spenders. So, it really does pay to do your homework here and to figure out where do I need to go, and what do we need to focus on? We're going through some opportunities here that are exciting. Education. U.S. and Western companies, they've got that down. Fitness, another one. What about the apps that are a little bit...I wouldn't say the ones we're not looking at that much, but there's the question of education, is one. What about productivity?
Jonathan: So, productivity definitely represents a huge opportunity for a couple reasons. One, the long tail is huge. So, 70% of downloads and 85% of revenue comes outside of the top 50 apps. But I think the most important thing is that it not only represents the huge long tail, but productivity is also heavily represented in the top charts. So, 14 of the top 100 most downloaded apps in APAC are productivity apps. And yet, there's still that much of a long tail, which means that there's consumer demand for these apps, but the supply is not necessarily matching that demand. So, there's an opportunity there. At least until somebody capitalizes on it.
Peggy: To be fair, APAC isn't just like one big chunk the same way that here in Europe where I'm based, you can't really talk about Europe where you're talking about so many different cultures, so many different languages. And that, I know, from all the conferences I go to, speak at, app developers I connect with, that can be daunting. It's like, "Oh, oh." Language, sensitivity. Everything even down to the color. You have to get it right to make it big. What is some...maybe what you've learned from the data where you're seeing some tips or some actionable to-do items if you really want to get your app ready for these regions?
Jonathan: Yep. So, there's a lot of talk about localization and I just wanna be clear that we're talking about 2018 at this point. And so your ability to just change the text in the app to be localized for that language, that's no longer just localization. That's like par for the course. You have to do that to even be in the conversation. When we talk about localizing your app, we're talking about the actual elements in the app. So, we've seen a bunch of examples where really popular apps, they have like "Sign in to Facebook" as the initial barrier to entry to using the app. Which in the United States, maybe in Europe, it's not a huge deal.
So, we've seen apps where they port over to APAC, they translate all the text, but the main call to action is still to sign in with Facebook which just doesn't work because it's not the major social network in APAC. People are using WeChat, Weibo, QQ. And so when we're talking about localizing the app, we're not just talking about the text, we're talking about making sure that the connections, the social features, and the actual dynamics of the app make sense for the tools and networks and communication platforms that those users in those countries are using.
Peggy: What are some others? I talked about color. I remember being at an event where we spent a lot of time talking about…basically, the upshot of it was if it's red, orange, or yellow, it's gonna make it in APAC or at least in China. Again, can't talk about in generalizations. What are some of maybe the more cultural nuances that you noticed when you were going through the data?
Jonathan: Yeah. So, it might sound juvenile and ridiculous, but I think if we boil down the opportunity in APAC, it all sums up to adventures of cute animals in fantasy worlds. We need to just call it what it is and the bottom line is that in all seriousness, if you look at apps built in the United States, food is an unbelievable...like a shocking central point. And in Eastern cultures, it's just not the case. It's really, really focused on animals and adventure and fantasy and lands and these like make-believe huge worlds. And if you take...we talked before about Candy Crush. Candy Crush is not popular, but the app it is is like matching little cute bears and chickens and Pokémons and animals. And the game is exactly the same, it's just the elements that you're interacting with that are different.
Peggy: So, bottom line, adventures of cute animals in fancy world is something we can take note of. In the meantime, Jon, we want to take note of this presentation. Much more coming from Apptopia. How do we keep up to date with everything that you're producing? What's the best way to keep up to date with that, of course, and also in touch with you?
Jonathan: Yep. So, I'd say blog, but apptopia.com is your real strategy. We've started to aggregate all of our content there in a weekly newsletter. So, lots of interesting stuff you can get there. Me, personally, I'm super accessible, so just firstname.lastname@example.org. I'm happy to answer any questions, introduce you to anyone that you need. Obviously, you and I share a love of data and we're both a little geeky, so anything I can do to help, just let me know.
Peggy: Absolutely. And we'll have you back for more of that. And also, I have to say over at Mobile Growth, we also have our geeky stat of the week that we include in our newsletter that we're getting from your data. So, there's lots to dive into, lots of mileage in it. And listeners, thanks for listening to this episode of the "Mobile Growth Podcast." A quick reminder, of course, to go visit mobilegrowthsummit.com for a complete list of our upcoming events. And don't forget to use the very special promo code, "MGSPODCAST30" for 30% off of your offer. We hope to see you there and we hope to encourage you to check out this and every other episode in our series posted on mobilegrowthsummit.com and available on SoundCloud. So, until next time, take care. We'll see you soon.
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