If app stores don’t change, they’ll die.

[[134594]]

The wave of mobile Internet entrepreneurship is gaining momentum, and even the Prime Minister has begun to cheer for "Internet +". However, behind the mobile Internet entrepreneurship, the cost of promoting mobile applications is rising, the demographic dividend is gradually disappearing, and homogeneous competition is very serious, which really shows that entrepreneurship is increasingly difficult. Moreover, the incremental distribution of app stores is slowing down, and the channels are increasingly monopolized. They can no longer meet the promotion needs of most APP entrepreneurs and are in urgent need of change.

Android demographic dividend is fading, app store structure solidifies

According to the latest data from Baidu Mobile Distribution Report: In 2014, the growth rate of Android users slowed down. From Q4 2012 to Q4 2014, the year-on-year growth of Android daily active users was 35%, 31%, 27% and 17%, showing a decreasing trend. This shows that the days of relying on new devices to drive the growth of application distribution are becoming fewer and fewer. Mobile application distribution has entered a bottleneck period. As the demographic dividend disappears, major application markets are likely to enter a "zero-sum game" stage, and a fierce battle is inevitable.

In terms of the market structure of application merchants, EnfoDesk iResearch released the TOP200 mobile APP rankings in March 2015, with Baidu Mobile Assistant, 360 Mobile Assistant and App Store ranking the top three. In addition, Xiaomi App Store, Le Store and Huawei App Market, which represent domestic mobile phone manufacturers, were also included in the top 100. Among them, the top three application merchants accounted for 86% of the distribution market, and in the past year, the market share of the three has not changed dramatically.

Therefore, for APP entrepreneurs, Baidu Mobile Assistant, 360 Mobile Assistant and App Store have become the three major channels that mobile Internet entrepreneurs must pay attention to. However, there are so many APPs. According to the iMedia Research report, more than 80% of the 4 million mobile applications in China are zombies, and the average life cycle of an APP is only 10 months. If there is no traffic distribution support from the channel, it is very likely to become a zombie application, which shows the difficulty of starting a business.

App stores face the choice of reform and change

As mentioned above, mobile application distribution channels are becoming increasingly concentrated, entering an era of oligopoly, and presenting a trend of three-legged tripod. At this moment, the existing mobile application distribution model has long been unable to meet the needs of mobile Internet entrepreneurs for their own APP promotion, and it is imperative for application merchants to reform their distribution model.

It is obvious that when millions of APP developers face the current situation where the three major app stores monopolize the app distribution channels, they are definitely at a loss. Previously, in order to solve the problem of promotion difficulties for small and medium-sized developers, Baidu Mobile Assistant launched the "Golden Bear Paw Award" plan and 360 Mobile Assistant launched the "Dandelion Plan", both of which are trying to resolve this curse.

In addition, due to the homogeneity of application merchants themselves, the high similarity of APP resources and the head APP effect, users' behavior habits of what applications to download and where to download applications have become fixed. Once users make the first choice, they may not change in the future. Therefore, in the case of application merchants themselves facing homogeneous competition, the first camp of mobile distribution led by Baidu, 360, and Tencent must seek change and innovation in increasing brand added value and differentiation in order to consolidate and enhance their competitive position.

Application distribution characteristics under the new situation

1. Distribution of life service applications becomes a new growth point

Since 2014, entrepreneurial projects in the field of life services, represented by O2O, have experienced explosive growth, and with it a surge in user demand for downloads of life service applications. Among them, the download volume of vertical market applications such as education, finance, medical care, automobiles, and maternal and child care has grown rapidly, while the download volume of news reading applications has declined. Life services have become a new growth point for application distribution.

2. Mobile distribution is expanding to third- and fourth-tier cities

In the past two years, the visit of well-known domestic Internet companies to rural areas to paint walls has become a highlight and topic of conversation. This is enough to prove that the rural market is gradually being influenced by the Internet, and hundreds of millions of rural users have begun to become the target users that major Internet companies are competing for.

According to the Baidu Mobile Distribution Report, the trend of mobile distribution sinking to third- and fourth-tier cities is also very obvious. The number of APP downloads by users in third- and fourth-tier cities and towns has grown rapidly, and has gradually become an important incremental market in 2015. Just like the previous companies painting walls in rural areas, major application stores must be aware that the third- and fourth-tier cities and even rural markets may play a huge role in driving growth in the future.

3. Users are most active at night

In terms of user usage behavior, Wi-Fi is still the main download environment for users. Considering that the possibility of downloading during working hours is lower, application downloading under home WIFI conditions is the main scenario, and it is mainly concentrated in the evening.

Combining the five types of life service apps mentioned above, users of education apps are more active at night and on weekends; users of car apps are much more active on Sundays than on weekdays, and from a 24-hour distribution, the activity increases significantly after 9 p.m.; users of maternity and baby apps do not have a significant weekend effect, but from a 24-hour distribution, the activity increases significantly between 7 and 9 p.m. Therefore, for the operation strategy of the app store, the evening time period is worthy of special attention.

4. Students become high-potential target users

Thanks to the development of mobile online education, the download of educational applications has grown rapidly, and new applications have risen rapidly. The market space for K12 education and early childhood education applications is huge. In addition, in terms of downloading and updating mobile applications, young people in first-, second- and third-tier cities are the main force, and colleges and universities are the main gathering place for this group. The demand for learning, entertainment and life service applications among college students is also growing, and has a strong word-of-mouth communication effect, which will play an important role in brand communication and user acquisition of app stores.

Some suggestions for app stores

In the context of a favorable mobile Internet entrepreneurial environment, app stores that shoulder the heavy responsibility of app distribution are facing some challenges, but after carefully analyzing the characteristics and problems of the new situation, we can still find solutions. As a former app store operator, Sha Shui has the following suggestions:

1. Use the new to bring the old to meet current needs

The “new” features are that life service applications have become a new growth point, and the student group has become a high-potential new user group. In view of these two new market characteristics, app stores must have new solutions or marketing strategies in terms of product innovation (to be discussed later) and market expansion.

Only by highlighting the new features under the new situation and making changes can the app store keep pace with the times to meet the ever-changing user needs and enhance user stickiness. In this way, while meeting the new needs of users, the original "old" needs of users can be better consolidated. Similarly, only by pre-exploring and marketing new high-potential user groups and conveying their own brand symbols to them can they have a better chance of winning in future competition.

2. Channel expansion and emphasis on nighttime operations

The user groups in first- and second-tier cities have a deep-rooted and mature understanding of app stores. However, users in third- and fourth-tier cities, especially rural users, are relatively indifferent. For the top three, Baidu Mobile Assistant, 360 Mobile Assistant and App Store, the first two are more recognized by users because they carry the Baidu and 360 marks, while App Store is relatively less recognized. Before users in third- and fourth-tier cities have formed an inertial thinking about brand recognition, it may be a good choice to make arrangements in advance, or even paint the wall, but the user education cost may be higher.

Since users download and use apps mostly between 7-9 p.m., which happens to be the end of the working day, the time period that should be the focus of operations is contrary to the normal working system, thus missing out on the best operating time. This is something that all app store operators should pay attention to.

Strengthening nighttime operations, through a new mobile app store operation model, creating prime time for users to download apps and forming user usage habits can better open up a differentiated operation model for the app store, establish its own brand differences, and enhance user favorability towards the brand.

3. Product innovation creates brand differentiation

The first thing that needs to be addressed when new user needs change is that products need to keep up with the times and be iteratively optimized or even rebuilt from scratch. In the app store, the old form of app recommendations is mostly manual sorting recommendations, mainly based on advertisers' needs. At this time, advertisers' financial resources become the main recommendation criteria. Even if there are a few excellent app recommendations, they are always insignificant.

With the rise of local life service applications, the regional attributes of APPs will become more important. The application distribution and recommendation model based on LBS functions should be given enough attention and reflected in the product design of the application store. For example, an O2O application for home massage only provides services in Beijing and Shanghai. When users in Shanghai and Beijing fuzzy search for local home massage APPs, it is recommended to provide local services. This not only solves the problem of accurate promotion of local life service applications for the application store, but also greatly improves the user's download experience.

Of course, this is just one area that can be improved. It is also possible to have special area application recommendations for the top target groups, whether by occupational attributes or age attributes. The segmentation and refined operation of each dimension can bring differentiated positioning of the brand, thereby enhancing users' brand awareness and improving user stickiness. App store brand awareness should shift from "who am I" to "who are you", so that differentiation can become a user's labeled memory of you, so as to get rid of the quagmire of homogeneous competition.