App bubble 1 or Dot-com bubble 2 (Remember Dot-com bubble 1)?

headline "bubble burst"In January 2016, approximately 5,000 new apps and games per day were listed for download, according to the most recent research published by Statista. On the App Store alone 50,750 new apps and 19,130 new games were listed during the month.

There are currently over 2,200,000 Apps listed for download from Google’s Play Store and another 2,000,000 on Apple’s App Store and the growth continues to be exponential.

The question is whether it is possible for so many app developers to survive – remember the growth before an explosion of IT/web developers publishing new websites in the period 1997-2000. They were seen as having the potential to make a fortune.  In fact, very few were able to make a living although some raised a lot of money before spectacularly collapsing when the Dot-com bubble burst 1999-2001.

In our view something similar is looming with apps and the reason is also similar with lots of competition and very few apps finding a market.

Most of them will fail due to customers not being aware of them. Those that are found and installed are often only used once before being uninstalled since the trial found them either irrelevant or not capturing the user’s imagination.

Marketing an app requires a huge investment to draw it to people’s attention and get it installed and trialled. Equally important is ensuring it stays installed because it is either really useful or great fun or users simply want it.

Without those two things an app is never going to be commercially viable.

Expert marketing and significant investment

A clear strategy is vital for marketing an app and needs to capture people’s imaginations in the same way that a good movie does – and remember a movie is only a hit if it is seen and that means it has to be marketed expertly.

It is estimated that when budgeting for marketing an app the calculation is to spend £1 for every app install.  It is also important to remember that for every install there are likely to be a percentage of uninstalls.  Of course, that does not mean people have not shared the app with other people so there is always a chance it might go viral but this needs a level of critical mass.

However, to attract attention against a field of thousands of competitors means spending real money. On average it is estimated that people have about 35 apps on their mobile phones and actually use only about 25% of them regularly.

Google has launched a Universal App Campaign that works in the same way as Google Adwords. The advertiser of the app pays per install but there is still the possibility that apps are subsequently uninstalled. However, any other app marketing strategy is difficult to deliver unless the promoter already has critical mass.

Given the difficulties of marketing an app and getting it noticed it is a reasonable prediction that there is a bubble looming and that sooner or later it will burst.

That doesn’t mean there won’t be an app equivalent of Lastminute.com that closed its funding just before the Dot-com bubble burst and used the funds to effectively buy market share.

The alternative is to exploit an existing brand like the strategy pursued by Nintendo and its Pokémon GO app.

Please tell us how you plan to get your app noticed.

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