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Promoting your app in the App Store
Say you are in the business of promoting a new unknown band. Nobody has heard of this band but they have just released their first new album and it's great! Ponder this:
A) Someone walks into a record store with no particular purchase in mind, just to browse around a little. What is the chance that they walk out with your album?
B) Someone walks into a record store with their mind set on buying your album. What is the chance that you make a sale before they leave the store?
Answer: In the first case you have a snowballs chance in hell. In the latter case, you are sure to sell.
That felt kind of obvious didn't it? If you sell apps on the iPhone App Store, the lesson is the same: Try to tell people about your app before they come to the App Store. If not, you won't sell anything. Trouble is, its not as easy as it sounds.
The third man
But wait, there is a third alternative you say: If you advertise inside the store, your chance of landing a sale is a lot better.
Well, you have two options for advertising in the App Store. You can either buy one of the four available ad spots. I don't know how much these spots cost, but they are most likely expensive.
The other way of in-store advertising is figuring on one of the lists. Apple gives you a few hours on the New list "for free" before you are pushed off the list by the next batch of 180 applications scheduled for launch every day. The New list will give you a boost, but you need to be on the Top 25 list to continue selling. In order to stay on the Top 25 list, you will have to slash your price to $0.99.
This may be even more expensive than buying an ad depending on how you look at it. If you believe your app should sell for, say, $9.99, that means a cost-of-sale of $9.33 for each app you sell. Is this more or less that other means of advertising? This is an almost impossible calculation of course. What should an app cost? There are a thousand answers to that question.
You are blind
If you advertise outside the App Store there is no way to know how effective your ads are. The App Store lacks a mechanism for tracking clicks. Even URLs, the most basic concept of the web, does not work with the iPhone App Store. There is no way for a review, or a promotion, or a blog post like this to link to the app itself in the App Store on the iPhone. (It works on iTunes on the desktop.) I can tell you about a nice little app like for example Instapaper. If you click this link on your desktop, it opens iTunes with the relevant page and that nice "Buy App" button. But you can't click the same link on the iPhone and buy the app. Even if you could, the source of clicks is not reported to you (in iTunes). If you market your app 3 ways, you don’t know which marketing activity was effective and not. (Same goes for "Tell a friend". No one but Apple knows how effective this is, and they are not telling.)
This means it is a costly affair to market outside of the App Store. It is better to use the "$0.99 marketing" technique inside the App Store. This of course has the effect that everybody lowers their price to 0.99 in order to stay on the Top 25 list because this looks like the only possible marketing mechanism currently.
Is this likely to change?
It would help developers if this changed and Apple gave developers a way to measure their marketing activities. But I'm not sure Apple feels that it is in their best interest to change this. As long as there is a flood of developers willing to fill the App Store with $0.99 applications, it is not in Apples best interest to share any information with third party developers. If will probably only change if keeping developers in the blind stops the flood of new applications and threatens the market advantage of being able to tempt new iPhone customers with thousands and thousands of practically free applications.