Tag Archives: mobile

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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.

South West Bootstrappers meetup

I am organizing a regular meetup in Swindon (UK) for people who are running (or are interested in running) their own bootstrapped (i.e. not VC funded) software product business. Come along and talk shop with other aspiring and experienced bootstrappers. It doesn’t matter if you are developing for web, Windows, Mac or mobile.

The first meetup is on the evening of Tuesday 16th June 2015. You can find out more and RSVP at meetup.com/South-West-Bootstrappers/.

swindon meetup

Are you wasting your AdWords budget on in-app ads?

2 out of the last 3 AdWords campaigns I have looked at for consulting customers were spending substantial amounts of money on worthless in-app ads, without even realising it. Feast your eyes on the following:

in-app placement ads$1,071.04 spent on clicks from a single game app, that resulted in 0 trials of the software product being advertised. Hardly surprising given that it was a B2B app that cost around $1000. On further investigation this company was spending a substantial percentage of its AdWords budget on completely useless clicks from in-app ads. Ouch.

And this is from a different AdWords account for another B2B software company:

in-app display ads

Many of the apps in the iOS and Android app stores are now funded by in-app advertising. The creator of the infamous Flappy Bird game claimed to be making tens of thousands of dollars per day like this.

Flappy Bird In-App ads

(Note that the ad shown in the screenshot is not related to either of the two companies I mentioned above).

At least the ad is well away from the ‘play’ button. Some, less scrupulous, app makers place the ad in such a way that it is easy to accidentally click on it.

Who would want to pay for in-app ads, knowing that most of the traffic will be accidental clicks from frustrated gamers (many of them children) just trying to get to the next screen? If you run ads on the Google display (content) network, it might be YOU. Google started showing display ads in apps some time ago and it seems that all existing display campaigns were automatically opted in. Worse still, the apps they are advertising in appear to have no relevance at all to your content campaign keywords.

App makers get some money, the public gets free apps and Google makes mega bucks. The advertiser is financing the whole thing and getting (in many cases) nothing in return. But don’t feel too smug. If you have a display campaign that you aren’t carefully monitoring, you might also be throwing away money. To find out:

  • Log in adwords.google.com.
  • Click on All online campaigns.
  • Choose a sensible time frame, e.g. the last 6 months.
  • Click on the Display network tab.
  • Click on Placements.
  • Click on the Cost column to order from highest to lowest cost.
  • Look down the Placement column for entries that start with Mobile App.

Adwords display placements report

While you are there, it is also worth checking the relevance to your product of the other sites you are running display ads on.

Hopefully no horror story awaits you. If it does, you can exclude the offending placements to stop your ads appearing there again.

exclude AdWords placement

But this is a bit like playing whack-a-mole, as you will be continually excluding new apps (I haven’t found a way to opt out of in-app ads wholesale). Alternatively, just pause your display campaigns. Personally I gave up on display ads some time ago. The conversion ratios were so miserable (much lower than search ads) that I could never make any money on them.

If you have been stung for hundreds or thousands of dollars, it may be worth complaining to Google, to see if you can get any money back on the grounds:

  • You never explicitly opted in to in-app ads.
  • The apps your ads appear in bear no relationship to the search terms in your content campaign.

I have no idea if that will be successful, but it might be worth a try.

Google are continually changing the rules of the AdWords game and you would be naive to assume they are doing so with your best interests at heart. If you are running an AdWords campaign you must monitor it continuously or bad things will happen.

Related articles:

Mobile Internet access in New Zealand?

cape reingaI am thinking about a trip to New Zealand with the family (my wife is a Kiwi). As a microISV I need Internet access to keep the business running. I might be able to rent accommodation with broadband or find Internet cafes, but I would like to have mobile Internet access as a back-up. Unfortunately it looks as if my UK mobile Internet provider doesn’t even support roaming in NZ. Even if I swap to another UK provider, roaming costs would probably be prohibitive.

Ideally I would like to just rent a data card in NZ for a month. But a search on Google turned up nothing, apart from one service apparently only available to Australians. My only other thought is to ask one of my wife’s relatives to sign up with vodaphone.co.nz for their ‘no term’ mobile broadband plan, then cancel at the end of the trip. I will probably have to buy a new data card as well, as I doubt my Three Networks Huawei USB modem and SIM would work with Vodaphone NZ.

Any Kiwis reading this? Suggestions would be welcome.

The view from my office

This was the view from my ‘office’ last week, on holiday in Dorset (that’s Corfe Castle you can see in the background). You never really get a day off when you run a microISV, but spending an hour a day answering emails isn’t too onerous. Certainly it is better than not going on holiday. Mobile Internet access is truly a wonderful thing.

The above photo was taken by Claire. Below is a panorama created using Autostitch from 8 separate photos taken by me (click to enlarge).