What’s happening to advertising and applications? Whether it’s small websites, large media websites, Mac, iPhone, and iPad, what’s happening is competition. And competition improves the quality, functionality, and capability of apps, but it also drives down the price of ads and apps. Therein lies a dangerous trend.
There is an obvious disparity between the price of most apps for the Mac vs. their counterparts for iPhone and iPad. For most, the latter two devices have much lower prices even though functionality may be similar. It’s not etched in store, but Mac apps tend to have a higher price tag. It works in a similar way with online advertising, where the price for an ad to be displayed is minuscule relative to print media or broadcast advertising.
Why? What’s going on? What difference does it make?
The Why? is easy. Competition. There are nearly 1.5-million applications available on the iTunes App Store for iPhone and iPad and merely thousands available on the Mac App Store. It takes marketing muscle and strong word of mouth promotion to get an iOS app to be noticed, and copycat apps abound which also works to lower overall prices. Advertisers can choose from dozens of automated advertising delivery systems which often deliver ads based upon an instantaneous bidding system which drives down ad rates.
An app that may be priced at $9.99 or $19.99 on the Mac App store or direct from a Mac developer may have similar functionality on the iOS version but if it’s priced at much more than $2.99 it’s met with negative reviews for overcharging, and often with comparisons to other apps that do much the same thing for 99-cents. The same thing holds true with online advertisements which may have a high rate today, but is dirt cheap tomorrow (which returns little revenue for the host site).
The What’s going on? is easy, too. Competition is intense. Developers are pressured to add features ad nauseam to compete with functionality from similar apps and those by larger developers with marketing and promotion budgets. While driving app prices into the dirt seems to be a good situation for customers and users, it’s the long term that I worry about. The same holds true for advertising online. Rates are pushed downward; good for advertisers, not good for websites which make up the shortfall by running more advertising which is not good for readers. What a vicious circle.
Apple proudly points out that it has handed back many billions of dollars to the app developer community yet many, many of those same developers struggle to make a living off their apps, and good ideas are copied incessantly by Mac developers from China, India, and elsewhere; locations where the cost of living is far less, and intellectual property rights do not have a translation in their respective languages. Meanwhile, websites continue to lose advertising revenue due to ad blockers and the downward trend in advertising rates.
Where will this end?
At some point there will be a crash, and you’re beginning to see some of it already. Many app developers have moved on to something else, leaving behind tens of thousands of zombie apps which populate the various app stores but which will never see an update or upgrade because sales do not justify the ongoing expense. Websites need advertising revenue to exist, but revenue continues to drop on a per ad basis as ad blockers increase in usage and revenue per add goes down. At what point will hundreds of thousands of unique websites disappear from public view because the revenue model has changed?