Category Archives: marketing

WTF Google Ads?

Google Ads has emailed me to tell me that one of my ads has been disapproved for ‘shocking content’.

Yep, an ad for seating planning software that has been running continuously since 2011. You can see the full text of the ad above. I am at a loss to know what is shocking about it.

The following are covered under Google’s shocking content policy:

  • Promotions containing violent language, gruesome or disgusting imagery, or graphic images or accounts of physical trauma
  • Promotions containing gratuitous portrayals of bodily fluids or waste
  • Promotions containing obscene or profane language
  • Promotions that are likely to shock or scare

Er, no idea how any of those apply to my software. I don’t even see how it can even be falling foul of the Scunthorpe problem. Perhaps they are shocked how cheap it is?

This is far from my first brush with this sort of thing from Google Ads. Back in 2015 I was told that hyperlinking from my domain to any another domain was a breach of Adwords policy. Since 2005 I have paid Google tens of thousands of pounds to run ads on their system. In return they have wasted loads of my time with endless changes to the platform and arbitary and erroneous enforcement of their own policies. They feel less like a partner and more like an enemy.

I’m not too bothered about one ad being dissaproved. Especially during COVID, where almost no face-to-face events are happening anywhere in the world. But experience shows they will probably start disapproving many more over the next few weeks. I have clicked the link to appeal the disapproval. Hopefully, sometime in the next few weeks some under-paid, under-trained contractor, who might not speak great English, will re-approve the ad. But maybe not. Who can say in this opaque, Kafkaeaque, ‘computer says no’, outsourced world that we have collectively built for ourselves.

** Update 04-May-21 **

I appealed the dissaproval and the appeal failed. No reason given for why it is shocking. A second ad has been dissaproved for ‘shocking content’. I suspect many more will follow.

Creating a forum for your product

I started selling software online 16 years ago. Until this year I never had a forum for any of my products. I handled customer support for PerfectTablePlan and Hyper Plan by email and kept customers up-to-date with an opt-in email newsletter. But I rethought this position with my latest product, Easy Data Transform and started a forum at forum.easydatatransform.com in December 2020.

My ISP offered various forum software packages, but I really wanted Discourse, as I consider it head and shoulders above all the other forum software I have interacted with as a user (even if I find the badge system a bit patronising). I didn’t want the hassle of setting up and patching a Discourse server, so created the forum through www.communiteq.com (previously discoursehosting.com). It was suprisingly easy to set-up. And it gives the option to export everything, in case I want to part ways with them. The sheer number of options in Discourse are quite daunting, but I stuck with the defaults for the most part.

Some people use Facebook Groups for their product forums. Ugh. You have almost no control of such a forum. Facebook could even be showing ads for your competitors on your forums. Or they could just decide to shut you down and delete all the content. That is before we get on to the fact that Facebook make their money monetising hatred and abusing our privacy at an industrial scale. No thanks.

The advantages of a forum are:

  • Letting customers talk to each other, and post content helps to create a community around the product. Which, in turn, can add a lot of value to your product.
  • Customers can help each other with support questions. Sometimes they will answer before you are able to or will give a different perspective. Or even give a better answer.
  • If a customer asks a question that has already been asked, you can send them a link to the appropriate forum page.
  • It is a quick and easy channel to communicate with customers. I can post a link to a new snapshot release in a few minutes. This is much quicker than sending out an email newsletter. It is also more interactive as customers can respond on the forum and see each other’s responses.
  • A lively forum is ‘social proof’ that your product is worth buying.
  • A forum with lots of content should have a large SEO footprint.

The disadvantages of a forum are:

  • The time to maintain it. A forum that is broken or full of spam and unanswered questions is worse than no forum.
  • Disgruntled customers potentially airing their grievances in public.
  • The cost of the forum.
  • An empty forum looks bad.
  • Bad actors can be a pain. For example, people posting links to spam or competing products.

It probably only takes me 1-2 hours per week to post on the forum at present. Some of that is time I would have spent answering support emails. If that rises substantially then I may have to delegate it.

I try very hard to provide a good product, with good support and haven’t had any issues with negativity, so far. But I know from my experiences moderating Joel Spolsky’s Business of Software forum that moderating a busy forum can be tricky, time-consuming and emotionally draining.

The cost of the forum is currently around $20 per month, so pretty low. That may climb, but hopefully sales will be climbing as well.

I was a bit worried about whether the forum was going to look empty. I warned customers that the forum was an experiment and would be closed if there wasn’t enough activity, to manage their expectations. I also created a ‘sock puppet’ account and ‘seeded’ the forum with a few support questions that I had been previously asked by email (with the permission of those that asked) and then posted answers. But I only did this a handful of times and then the forum started to take off.

I have heard stories of people getting 1000+ spam posts a day on their forum. But I haven’t had any issues with bad actors, so far. I’m not sure how much of that is down to Discourse and how much of it is down to luck. But, no doubt issues will occur at some point.

I still have my product newsletter, which I send out every few weeks when there is a new production release.

Overall I am pretty happy with how the forum is going. Should you have a forum for your product? As always, it depends. I think you should consider it if:

  • Your customer base isn’t tiny.
  • You want to interact with your customers and get feedback. This might be less the case with mature products.
  • You have the time and energy to police and maintain it.
  • Your product is relatively open ended or complex. For example, if your product just checks whether website are up or down, there is probably a very limited amount you can discuss.

Stalking website visitors with Microsoft Clarity

Microsoft Clarity is a new service that allows you to see, in detail, how visitors are interacting with your website. It includes:

  • heat maps, showing where visitors are clicking or touching or how far they are scrolling
  • recordings of visitor sessions, including mouse movement, clicks, touches and scrolling

You just need to get a Javascript snippet from clarity.microsoft.com (for which you need a Microsoft login) and paste it into the header of each page. You can then login to clarity.microsoft.com at a later time to see your results. The service is free.

I tried it on my www.easydatatransform.com website. Here you can see a click heatmap for the buy page:

People are clicking all over non-hyperlinked text. Hmm. Perhaps they somehow couldn’t the see the effing enormous blue button next to it? Notice that numbers are starred out to avoid personal information, such as credit card numbers.

You can also see how far visitors scroll down the page with scroll heatmaps:

So I can see that the buy button is appearing well above the fold.

You can also watch recodings of people interacting with the website, showing their mouse movements, clicks, touches and scrolling. This is where things start to feel a bit stalkerish. You don’t get any identifiable information on the visitor beyond their country, browser and their operating system and I’m ok with people watching me interact with their websites like this. But it still feels a bit voyeuristic. The results are also a bit strange. Some people just click all over the place and highlight random text (touches are tracked separately from clicks). There is a distinct danger that you could watch hours of sessions and come away without much actionable information.

You can filter the information in various ways, including by country or referring website. You can even filter to see sessions with ‘Rage clicks’ (where the user has clicked or tapped repeatedly in the same area).

Watching a few sessions with ‘rage clicks’ I could see that some people indeed seem completely unable to see the effing enormous blue ‘buy now’ button on the buy page. So I have also added a text hyperlink where most people are clicking in the text and will probably try changing the button colour. Perhaps to shocking pink!

Running Pingdom Website Speed Test on the Easy Data Transform home page, both with and without Clarity a few minutes apart, I can see that it had some effect on speed, but not too much.

Without Clarity script: 175.2kb of scripts, 7 script requests.

With Clarity script: 194.3kb of scripts, 9 script requests.

The load time was actually 0.1s faster with Clarity. That is probably just an anomaly.

I have disabled Clarity for now. But may reenable it after I have made some changes to the website, to see the effect of the changes. Overall I was quite impressed with the service and it was surprisingly easy to set-up. But the cynic in me does wonder what exactly Microsoft is getting out of it.

Google Ads can charge you anything they like for a click on their partner network

I have been using Google Ads (previously Adwords) since 2005. A lot has changed in that in time. But it still remains basically an auction. You bid how much you are prepared to pay for a click when someone types a particular phrase into Google. Google then decides which ads to show based on bids and a variety of factors. It has always been a basic article of faith that (if you choose manual bidding) you are never charged more than the maximum cost per click you set. But this is no longer true. Check out this recent Google Ads report for my data transformation software, Easy Data Transform.

adwords-cpc

How can the average cost per click be 3x more than the maximum cost per click? I am using manual bidding, am not using ‘enhanced CPC’, have no positive bid adjustments and I haven’t recently changed these bids. I emailed Google technical support. This is the reply I got:

Post reviewing the search campaign : Easy Data Transform, I can see that  you have applied Bidding strategy as Manual CPC, also you have included Google search partners due to which system has charged extra amount. As in Google search partners maximum capping would not work.

For example the keywords: [keyword redacted] in this the maximum cpc is set as while as you have included Google search partners due to which system has avg cpc charged £0.45.

‘Google search partners’ are “hundreds of non-Google websites, as well as YouTube and other Google sites”. New Adwords campaigns are opted in to search partners by default.

So I emailed back:

So when did this policy change?

Is there a limit what you can change for Search partners clicks? If I bid a Max CPC of £0.10 CPC can Adwords charge me £100.00, if it feels like it?

And the reply was:

Andy, I would like to inform you that there is no recent changes made in this policy. However, I would not be able to provide the exact date of change made in this policy. If you have applied the  Max CPC of £0.10, system may charge you £100 if the search partner is enabled at your campaign level.

WHAT? They can ignore my maximum bid and charge me £100 per click (if I am using manual bidding, tracking conversions and opted in to search partners)! I don’t trust Google’s algorithms to bid for me based on prior experience. Presumably they can’t charge more than my daily budget, but they can use this whole budget in a single click, if they choose.

Running a report you can see that the average cost per click of the partner network (red) has shot up recently for my Easy Data Transform campaign:

adwords-network

Digging a bit more I found this.

smart-bidding

So it looks like they quietly introduced this new policy in October 2018. I don’t remember being told about this. It doesn’t mention this policy if you hover over max CPC:

adwords-tip

It is only if you click ‘Learn more’ and read to the bottom of that page that they tell you about the exception for network partners.

I checked with my goto Google Ads expert, Aaron of softwarepromotions.com. He knows Google Ads inside out, but he hadn’t heard of this policy either.

Google Ads have a long history of quietly introducing major changes and not telling their customers, let alone asking them to opt-in. For example with in-app ads.

This change is particularly galling given that clicks from the partner network are generally lower quality and convert significantly worse than clicks from Google itsself.

So far the costs to me of this change don’t appear to be significant. But they could be very significant to people with larger accounts. I did a quick surf and I found this on webmasterworld.com, dated March 2019:

Don’t have all the numbers yet but it looks like so far this month about 60% of our spend this month has been on these inflated clicks. And when I say inflated, on the extreme end we have a keyword set to $0.27 CPC and the average CPC has been $4.67, and almost all clicks for the keyword have been from the search partner network.

I have turned off the Google partner network on all my campaigns. You might want to do the same.

disable

The Hacker News effect – wide but not deep

I posted a “Show HN” link to Hacker News on Saturday about my new product, Easy Data Transform. For some hours, nothing happened. No upvotes, no comments. One of the moderators emailed me suggesting I add my own comment. I did that and it started to get some upvotes and other comments. On Sunday I made it onto the front page of Hacker News and stayed there most of the day. The traffic to my new easydatatransform.com website jumped from negligible to around 300 page views per hour. Cool!

hacker-news-effect1

In total I got 4,400 unique page views and the discussion generated some 59 comments (including replies by me). Among the predictable ‘why isn’t a web app?’ and ‘why isn’t it on Linux’ questions, there was some useful feedback. But I was quite surprised how little most visitors engaged beyond that:

Visits to the home page: 3,289

Visits to the download page: 192

Installs of the free beta: 20

Signups to the mailing list: 0

I was also surprised that over 70% of the hits were from mobile devices and tablets. I guess that might partly account for the low download rate (Easy Data Transform is only available on Windows and Mac).

hackernews-os

But the session duration histogram tells it’s own story.

hackernew-analytics.png

0-10 seconds. Ouch.

 

 

 

Easy Data Transform

I have been furiously coding a new product. Easy Data Transform. It is a Windows and Mac tool for transforming table and list data from one form to another. Joining, splitting, reformatting, filtering, sorting etc.

easydatatransform

I have been thinking about this product idea for years. In fact I threw together a janky prototype back in 2008. It allows you to perform various operations on a pair of lists.

list-weaver

I used this prototype for jobs such as creating a list of emails of people who had bought Perfect Table Plan v5, but hadn’t upgraded to v6 yet. It worked. But it wasn’t very good. The biggest annoyance was that each operation obliterated everything that came before. Which made it very easy to lose track of where you had got to. And there was no repeatability. It was also limited to lists and it became clear that I really needed something that could also handle tabular data. I never released it.

But the idea has been running as a background process in my brain for 11 years since. And I think I have come up with a much better design in that time. Finally I had mature, stable versions of my Perfect Table Plan and Hyper Plan products out, so I decided to go for it. I am really pleased with how it has turned out so far.

If you aren’t embarrassed by v1.0 you didn’t release it early enough. And so I have cut lots of corners to get this first public version out. The documentation is only part written. I created the application icon myself  in 10 minutes. There is no licensing. The GUI is lacking polish. The website would make a designer cry. But the software seems fairly robust. My 13 year old son wasn’t able to crash it after 10 minutes of trying, despite financial incentives to do so.

I did some market research and spoke to some people who knew a bit about this market. But I deliberately didn’t look closely at any competing products, as I didn’t want to be mentally restricted by what others have done. For better or worse, I want to blaze my own trail. Copying other people’s stuff is a zero-sum game with no net benefit to society.

Most of the things that Easy Data Transform you can do, you can also do in Excel or SQL. My claim is that it is much quicker, easier and less error prone to do in Easy Data Transform. No programming or scripting required. I am hoping that people will be able to start using it within a couple of minutes of downloading it (I plan to do lots of usability testing). Will people pay for that? I hope so. I’m not aiming it at programmers. Perish the thought.

Naming is hard. I came up with some 70 names. Things like ‘Data Hero’, ‘Transform Flow’, ‘Transmogrify’ and ‘Data Rapture’. But the domains were taken, people I asked hated them or there was an existing service or product with that name. So I ended up with Easy Data Transform. It does what it says on the tin.

Why desktop? Surely no-one is writing new desktop apps in 2019? I believe a desktop solution has some real advantages in this market. The biggest ones are:

  • You don’t need to load your (potentially highly sensitive) data on to a third party server.
  • Not having to upload and download (potentially very large) data sets makes it much more responsive.

Easy Data Transform is currently free for anyone to use. You can get it from the super-minimalist easydatatransform.com website. The current 0.9.0 version expires on the 4th August 2019. You will then be able to get another free version. Once the product is mature enough, and if I am convinced there is enough demand, I will release a paid version. The free beta will probably last several months. Please try it and let me know how you get on. I am particularly interested to get feedback from anyone using it for real day-to-day tasks.

Of course the real challenge is always marketing. How to get noticed amongst many competing products. As well as helping to improve the product I am hoping that this extended beta will also help me to get some traction and better understand the market. For example, what price to charge and what trial model to use. Watch this space.

Deciding what features to implement

This is a guest post from roving software entrepreneur, Steve McLeod.

Each feature you add to your software product takes time to implement, adds ongoing complexity, and is hard to get rid of later. So you need to choose wisely when adding new features.

Here are some tips on choosing which features to implement.

Does your product really need new features?

This question might be surprising, but it is an important one to ask yourself. A software product is never completely finished. There is always scope for improvement. This makes it hard to know when to stop working on it.

If your product is mature and has stable revenue, there might not be much opportunity to increase sales. Adding new features would please some customers, but would not be a good use of your time.

Products that should be considered “done” can still have a large backlog. Don’t be fooled into thinking that your product will only be done once all existing feature requests are done.

Your product might have great potential to grow, but not by adding new features. Perhaps you need to improve your sales and marketing efforts. Don’t use your feature request backlog as an excuse to neglect the other important parts of running your product.

It’s okay to ignore your backlog

Feature request backlogs seem to never shrink. Implementing improvements leads to even more feature requests.

Looking at your backlog can be overwhelming. You’ll see feature requests that are years old. There are others that you intended to implement, but never did. It is okay to ignore these.

Don’t feel that the entire backlog consists of promises that must be kept. Some requests are no longer relevant. Some are from customers who no longer need your product. Some are simply not worth the substantial effort.

Keep your grand vision in mind

Prefer to implement highly requested features. But before you do, make sure each feature fits your long-term plans. Ask yourself:

  • who is your ideal customer? Is the feature relevant to them? For example, your enterprise customers might be asking for “single sign-on”, whereas you are more interested in working with small businesses.
  • will this be an ongoing cost- and time-sink? For example, a particular feature could require HIPAA (a US health industry regulation) compliance, while you have no interest in the extra workload and costs of HIPAA compliance.
  • does this proposed feature agree with your marketing angle?

Each new feature has ongoing costs

Remember that each additional feature comes with ongoing costs in support and complexity. Each new feature is an additional place for bugs to hide, adding to your future workload. Take these future costs into account when deciding if a feature should be added.

Features interact with each other, sometimes in unexpected ways. Even one additional checkbox in a settings panel can lead to ongoing confusion.

Be wary in particular of features that require integration with third party products. For example, many a product owner was burned when Twitter turned off some parts of their public API. Another example is my own experience adding support for connecting to customers’ email inboxes. I then found myself supporting not just my own product’s problems, but those caused by customers’ email service provider.

Sales-blockers are high priority

Not all feature requests are equal. Requests for feature A might come only from long time customers of your product, while feature B is requested only by your trial customers. It sounds ruthless, but you should prioritise the feature requested by trial customers.

When running a business, you do need to care for financial concerns. Take into consideration that:

  • A trial customer is likely to report a showstopper (for them). When you implement features requested by several trial customers, you are likely to increase revenue.
  • An existing customer is likely to report an inconvenience. You probably won’t lose the customer by delaying the improvement they asked for.
  • You need new customers to keep your business healthy.

It is important, of course, to care for existing customers. Don’t take this as an argument to ignore existing customers altogether in favour of potential customers.

Identifying and fixing sales blockers as a matter of priority is especially important for new products. It takes time to find the right balance of features a new product needs to meet the demands of the market.

Prefer the easy things, but not always

Let’s say you are deciding which of two features to implement next. Both feature A and feature B have been requested dozens of times. Feature A will take a week’s worth of work, and feature B will take a month’s work. Which one do you do?

Feature A, right? Maybe not.

Feature A is usually the correct choice. But you’ll be repeating this scenario over and over. Your product will gradually gain many relatively trivial features, while never getting the important features you need to create a compelling product.

Sometimes you need to do the hard work to add the features that are difficult to implement.

Listen to your customers…

Your customers are a great source of ideas for improvements to your product. As they use your product they discover what’s missing and what’s poorly implemented.

Therefore make it exceedingly easy for your customers to get suggestions to you. Consider adding a “Suggest an Improvement” link to your support page and to your help menu, if applicable. This makes it clear to your customers that you are actively seeking suggestions. My experience has been that customers notice these links and use them.

A “Suggest an Improvement” link can be as simple as a “mailto” link. A basic dialog or web form also works well. If you are seeking inspiration on how to do this, look at the “Report an Issue” form linked from the Google Chrome’s Help menu.

Another way to get customer suggestions is by asking them via a survey. This is okay, but it requires people to imagine back to when they last used your product. Us humans tend to be pretty poor at recalling things. It is much better to encourage customers to send suggestions as they encounter difficulties, while it is foremost in their mind.

I found collecting and organizing feedback for my own product, Poker Copilot, to be a pain. So I launched a new product to help manage feature requests. It allows your customers to suggest and upvote improvements for your product.

…and not your competitors

You’ve probably already heard that you should “listen to your customers, not your competitors.” I’m repeating it, because forgetting this can be deadly to your business.

Feature-envy leads us to believe we have to add every feature our competitors offer. Like regular envy, it is best to ignore it.

When your competitor announces a new feature, it can be demoralising. You feel you are falling behind and unable to compete. If the feature looks impressive, you’ll be tempted to add it to your product as soon as you can.

But wait. Have any of your customers actually requested this feature that your competitor added? If not, it is probably because it is not all that useful to your customers.

Your competitor might eventually regret adding that feature, as it turns out that only a small but demanding percentage of their customers use it. By not adding it, you could be giving yourself an advantage.

I’ve discovered that customers often learn about the good features my competitors have. They then tell me that they want these features. Only then do I start considering adding them.

Small tweaks versus major features

I just recommended listening to customers. But be careful of only using customer requests as a source for improvements.

Your customers tend to ask for incremental improvements. Customers are more likely to ask for an additional option in a drop-down menu than they are for a innovative new way to view their data.

If you rely on customer suggestions alone, you’ll never get the innovative new features that can make your product something much grander.

Make sure you balance your customer-contributed requests with your own innovative improvements.

Beware of preferring “pet” features

I just argued in favour of choosing innovative improvements. However this comes with a warning. Innovation can be used to justify poor choices. When you are in charge of decisions for your product, you are in danger of choosing improvements that you find interesting instead of those that have a strong business case.

Be careful. You could spend months working on a feature that is not very helpful to your business.

This is the type of feature that only one customer requested, but because it sounds more interesting to you than anything else in your massive backlog of feature requests, you immediately start working on it.

My own experience with this: I added scripting to a product even though no-one had asked for it and my target customer was not the type of person who would be interested in custom scripting. When I announced the scripting feature, not a single person seemed to use it. I eventually got rid of it.

How do you decide?

The tips I’ve offered you in this article come from my own experience. Do you have tips of your own for deciding which features to implement? If so, please add them in the comments below. I’d love to read them!

Steve McLeod runs a small software company in Barcelona, Spain. His products are Poker Copilot, a desktop analytics app for online poker players, and Feature Upvote, a web app that allows your customers to openly suggest and upvote features they want to see in your product.

Bundlefox review

I have been using bundles and 1-day sales as a useful way to increase the exposure for my visual planning software. I have had positive experiences with BitsDuJour, Macupdate and BundleHunt. Once you put your software in one bundle you inevitably get approached by people who run other bundle promotions. I was approached by Bundlefox and agreed to put Hyper Plan in their Mac software bundle. I wish I hadn’t. It has been a pretty miserable experience from start to finish. In brief:

  • I never knew when the promotion was going to start or end. I was told it was going to start on 27th February, but it eventually started on 20th April. It was supposed to run for 3 weeks, but actually ran for 6 weeks. This is a problem, because it means you can’t put your software in other sale or bundle that require an exclusive discount.
  • Communication was poor. They generally took several days to reply to emails.
  • The number of licenses sold was very low, especially compared with sales of Hyper Plan on BundleHunt.
  • Worst of all, they only paid me 60% of what I was expecting per license. When I queried this they emailed me back “It’s **% revenue share after fees, most of the sales came in through affiliates and we had to pay them off before sharing the revenue”. I went back through their emails and their ‘Vendor Manual’ and there is no mention of affiliate fees being subtracted. It just says “You would receive a percentage of the total payments received for the bundle minus PayPal fees”. In fact I had emailed them “So if you sell 2000 bundles for $12 of which 500 choose Hyper Plan, I get **% of $12×500 = $***?” and they replied “Your calculation is correct”. I feel deceived.
  • The low number of licenses sold and the low payout per license means that it wasn’t worth the effort to setup.

I don’t know what Bundlefox are like to deal with as buyer, but I recommend vendors give them a wide berth.

It’s OK not to have a social media strategy (really)

I have heard various product owners beating themselves up about how they don’t have enough of a social media presence. Well, I have been running a profitable one-man software company for the last 12 years and I am here to tell you that neither of my products have a social strategy worthy of the name – and that’s OK.

My seating planner software, PerfectTablePlan, has a Facebook page and a Google+ page. Whenever I publish a newsletter for PerfectTablePlan I publish a link to the newsletter on these sites (which is a few times per year). That’s pretty much it. My visual planning software, Hyper Plan, has an even smaller social media presence than PerfectTablePlan. To be honest the small amount I do on social media is intended mostly for the benefit of the mighty Google.

My forays into social media have not been encouraging:

  • I once sent out a newsletter to over 3000 opted-in subscribers and encouraged them to follow a newly created PerfectTablePlan Twitter page. Exactly 0 of them did.
  • I created a Pinterest page for PerfectTablePlan and paid someone to post to it for a few weeks. It generated a bit of traffic of questionable quality, but the traffic dried up as soon as they stopped posting.
  • I have tried paid ads on Facebook and Twitter and the results were miserable.
  • The PerfectTablePlan Google+ page has just 14 followers.
  • The PerfectTablePlan Facebook page got a miserable 4 views last week.

The question isn’t whether social media can bring you traffic, but whether that traffic will convert to sales and is social media the best use of your limited time? Social media is a productivity black hole and the opportunity costs of noodling around on Twitter should not be underestimated. Also various studies show that email still out-performs social media by quite a margin.

“E-mail remains a significantly more effective way to acquire customers than social media—nearly 40 times that of Facebook and Twitter combined.” McKinsey

People go on social media to chat to their friends and look at cat videos. Not to buy things. They use search, Amazon and Ebay for that. When is the last time you even looked at an ad in the Facebook sidebar? Or clicked on a sponsored post in Twitter? Exactly.

Making an impact on social media is hard. 90% of tweets are not retweeted. And even the followers that are real humans may only be interested in discounts:

“The IBM Institute for Business Value found that 60-65% of business leaders who believe that consumers follow their brands on social media sites because they want to be a part of a community. Only 25-30% of consumers agree. The top reason consumers follow a brand? To get discounts – not exactly ideal for a company’s bottom line.” Forbes

A lot of the ‘engagement’ on social media is fake. You can buy 1000 Twitter followers for less than £10. The BBC advertised a fake business with “no products and no interesting content” as an experiment on Facebook and got 1,600 highly suspicious ‘likes’ within 24 hoursCopyblogger deleted their facebook page due to the amount of fake followers and the low level of engagement.

A thread I started on the Business of Software forum showed that many other small software product companies had tried and failed with social media. Why do you think you will fare better? Most software products just aren’t inherently social. There is a limit to how much you can usefully say, day after day, about seating planning. I could try and create a social media presence talking about the latest wedding and catering trends and try to sneak in some references to seating plans. But I would rather commit suicide with a cheese grater.

As a rule of thumb it might be worth putting serious effort into social media if yours is the sort of product people are likely to talk to their friends about down the pub. In that case social media may be able to usefully enhance your visibility and reach. But for the vast majority of software that doesn’t fit this description, you are trying to hammer a square peg into a round hole. At the time of writing the pop star Taylor Swift has 74,638,154 Facebook likes. While Intuit, one of the world’s largest software companies, has 221,130 likes.

Next time somebody tells you that you must have a social media campaign ask yourself:

  • Is your product a good fit for social media?
  • Do they have an agenda, e.g. a social media tool, ebook or consultancy to push? Or an article quota to fill?
  • Have they produced any real evidence that a social media campaign translated into actual sales?
  • Is social media the best thing you could be doing with your valuable time?

Ignore any vague waffling about ‘engagement’. Nobody ever paid their mortgage with engagement.

Choosing a market for your software

The efficient market hypothesis states that “asset prices fully reflect all available information”. If the efficient market hypothesis is true, then you would expect actively managed funds (where fund managers pick the stocks) to do no better than index funds. That does seem to be the case:

“Numerous studies have shown that index funds, with their low costs and ability to closely mimic the returns of markets both broad and narrow, steadily outperform the returns of most actively managed funds.” Wall Street Journal

Unless you have some sort of insider knowledge (which it might be illegal to exploit), you might as well invest in index funds or get your cat to pick your stocks as pay someone else to do it.

But I am interested in a different sort of market efficiency. If you have to pick a vertical market to start a software business in, does it matter which vertical market you pick? If the market is perfectly efficient for businesses, then each vertical will have a level of competition proportional to the size of the market. In that case you should have an equal chance of success whether you decide to write a game, a developer tool, an anti-virus product or a CRM system.

From lots of reading and talking to other software business owners I have come to the conclusion that the market is highly inefficient for businesses. The market vertical you pick has a big effect on your chances of success. It seems to me that the three worst verticals are: games, developer tools and consumer mobile apps.

Games are fun! Writing a game sounds like a blast. Much more exciting than writing software for boring businesses. It has also been getting easier to write games due to the ever improving tools. Consequently, the market for games is totally saturated. The outlook for independent games developers looks grim. Today on the Steam platform there are 12,971 games listed. Even some of the big and famous games developers only seem to survive by forcing their staff to work vast amounts of unpaid overtime.

Pretty much every software entrepreneur has considered creating a software development tool at some point. I know I have. It is a market that we all understand (or think we do). But consequently it is saturated. Software developers are also pretty horrible customers. They are used to using lots of free software. And that tool you spent years developing? They think they can write something better over a weekend.

“Thousands of people used RethinkDB, often in business contexts, but most were willing to pay less for the lifetime of usage than the price of a single Starbucks coffee (which is to say, they weren’t willing to pay anything at all). … Developers love building developer tools, often for free. So while there is massive demand, the supply vastly outstrips it. This drives the number of alternatives up, and the prices down to zero.” Why RethinkDB failed

I wrote back in 2010 what a horrible market the iPhone app store is for developers. Since then the number of apps has increased tenfold to 2.2 million, the average paid app price is a measly $1.01 ($0.48 for games) and some 90%+ of apps are free or freemium.

You should be wary of markets with no competition. But the really high levels of competition in these three markets drives down prices and makes it very hard to get noticed. Obviously not everyone in these 3 markets is failing. It is possible to create a product in one of these markets and be wildly successful (Indie game developer Notch of Minecraft fame springs to mind). But I think the odds are very much stacked against you.

So what market should you pick to maximize your chances of commercial success? Aside from the obvious factors (e.g. something you are interested in and knowledgeable about, something that solves a real problem etc) I suggest avoiding anything considered ‘sexy’ by other developers.

Here is a radical idea – create a software product aimed at women. The vast majority of software is written by men and consequently it tends to cater for men. 50% of the world’s population are women and they buy software too!

Just because a product is not in a ‘sexy’ market doesn’t mean that it has to be boring to create. I have found plenty of interesting usability, optimization and visualization problems to solve while developing my own seating planning and visual planning software products.

Here is a thought experiment. Imagine you are talking to another software guy at a conference and explaining what you product does. If your imaginary software guy says “that sounds cool”, then it’s probably a tough market to create a commercial product in. But if they look a bit surprised or their eyes glaze over, then you might be on to something.