In the ever-evolving landscape of mobile application development, the quest for success is a perpetual journey that demands an acute understanding of market dynamics, user preferences, and technological advancements.
As the demand for innovative mobile applications continues to soar, developers find themselves amidst a competitive fray where only the resilient and strategic prevail. We talked with Vladimir Linev, CFO at Reliz, about the main rules for doing business in the ever-growing field of mobile app development.
The number of mobile applications on the market continues to grow rapidly. Development is becoming more accessible and understandable for many companies; over time, more excellent specialists and companies appear on the market that can help create an application for any business; no-code development is actively developing, which does not require programming knowledge. All this makes the barrier to entry into this market much lower. Thus, according to a report by data.ai, in 2022, users downloaded 11% more applications than in 2021, and the average time spent on mobile applications increased by 3%, the record is 5 hours a day.
However, the market is moving into a more mature phase of development, where there are already clear leaders. It is more difficult for young companies to become profitable since it is no longer enough to release a good product simply – they have to compete with huge corporations that can wait years for the payback of their applications and conduct thousands of A/B tests in search of the best user experience.
To answer the question more accurately, I would divide companies that use applications in their business model into two groups: those for which the mobile application is their main product, Mobile First companies, and those for which the mobile application is another communication channel with the user. The former include, for example, the creators of mobile games, and the latter include developers who offer their residents a more convenient interaction interface through a mobile application.
It’s an excellent time for the second category and we’re seeing a surge in these applications, with every company looking to start using this channel. However, entering the market is becoming increasingly difficult for mobile-first companies.
Both options are accurate: for many companies, mobile applications are a new breath of air for attracting a new audience, working with the current one or more globally updating their image. At the same time, it is a clear result of the evolution of the market, in which technology has become more accessible, analytics more transparent, and potential consumers are more favorable to modern companies using modern applications instead of outdated websites.
The most obvious is the improvement in the overall quality of all applications. Three factors are critical here: increased device performance, significantly increased user expectations, and most importantly, competition between platforms for consumers. For example, Google recently released more stringent quality assurance requirements for developer accounts and apps. Thanks to this, we expect a sharp reduction in the number of hastily assembled applications and, as a result, higher quality standards for other applications.
Simplify development through the proliferation of cross-platform solutions and more streamlined development platforms.
Mobile application security: from protecting user data to protecting against fraud when marketing applications. By the way, this is also an excellent niche where many startups are developing.
And, the most relevant thing is the use of artificial intelligence. An actual trend for 2023 is that AI helps end users not only during the development itself but also during application design. This trend will gain momentum.
The main principle we used is that the Product is good, but Marketing is God. No matter how great the product is, achieving results with a huge amount of marketing testing will only be possible. Trying different sources, different creatives, different audiences, and new technologies in advertising is the most important thing for a product to achieve payback. Unless, of course, you will burn many investors’ money on endless improvements to the product without achieving payback.
Decide in advance on the technology stack, and try to use only some available SDKs and programming languages. It is crucial to only switch during development if there is a clear need since this usually does not produce results.
Think about the entire product line and platforms on which you will distribute the application in advance. This will prevent you from switching between technologies, selecting a more targeted team, and exchanging knowledge between different product teams within the startup.
Take a prudent approach to the issue of user attribution when conducting marketing. Traffic in mobile applications is much more challenging to track than on the Web so a sound attribution system will save you millions of dollars.
Mind your own business. If your business is developing utilities, try to avoid writing analytics, marketing, or attribution systems on top of that. Many other companies do this professionally, and even if with your development you get this or that feature faster than using SaaS software, in the future, you will not be able to invest as much time in supporting your solution, and over time from it, you will have to refuse.
Of course, there is competition. The market is already very established and it will take a lot of work for a new startup to bring its product to the market. So, even though the number of downloads increased in 2022, sales of applications fell by 2%.
Another critical challenge is the deformation of the market by fraudulent traffic, which is why many startups with excellent products cannot understand the reasons for their unsuccessful marketing campaigns, and large companies that have launched mobile applications as an additional channel of communication with the user make the wrong conclusion that advertising on other platforms, such as TV, pay off better. As a rule, this happens due to the illiteracy of marketing departments in companies.
As in any business, well-coordinated teamwork, high expertise, a clear understanding of your product, its audience and purpose, timely market research, lack of subjectivity, obtaining reliable statistical data on your product, and maintaining up-to-date knowledge about the market through communication with a wide audience has already successful startups. Your company’s jurisdiction will also be a very important factor since advertising networks will often have different tools and response rates for two similar companies located in different countries. For example, in Malta, we received a response several times longer than in Israel.
In this, we had, and still have an excellent competitive advantage. The core of our business is a marketing agency, so we have excellent contracts with all the major advertising networks, an excellent internal analytics team, and a creative team.
Initially, we focused on traffic from Facebook. Still, we now have more than 50 active traffic sources in our arsenal, including our product, Reliz DSP, which we taught how to optimize for the verticals we need.
We never aimed to attract venture capital investments, so we focused not on accelerated revenue growth but on quality indicators like EBITDA. Ultimately, we tried to achieve payback for the purchase on the very first day of the user’s subscription. Just 2 years ago this turned out to be an easy goal, but with increasing competition, it is now almost unattainable. The average indicator on the market now is the payback for the user within 1.5-2 years.
There are endless applications: Angry Birds, Talking Tom Cat, Instagram, etc. As a rule, they all released an excellent product on time that users liked virally. But I want to comment on the success of TikTok and ByteDance in general. Yes, they made a superb product, too. But, judging by what we see, their performance per user is much better than the market. We believe that they were able to achieve this thanks to their highly advanced AI-based internal analytics systems, access to a vast amount of user data, which other companies, for one reason or another, process much worse, as well as AI-generated content, which is very cool adapts to user expectations. This is just our hypothesis.
