“We are about to develop an application!”

On a birthday-party of one of my old friends I had a great conversation with John about his latest project: He and his friends are about to develop an application that should help people to reach their personal goals. Very interesting, sounds great! But already on that evening I started to wonder if is profitable to develop an app and if you can really earn a lot of money in this business?

Apple generates daily revenue of $250,000 to $300,000 only from apps!

To answer this question we have to look what experts of this field say. Lets check out the potential of the market: “According to Gartner, in 2011 global sales of apps accounted for $15 billion and is expected to reach 52 billion in 2015“ Kim May Cutlers, editor at techcrunch.com says that Apple generates daily revenue of $250,000 to $300,000 only from apps! CHECK! We defiantly have a lot of potential here!

 You may have another app that might be of interest to the customer.

But if we belief JOHN MANOOGIAN III, an editor on techcrunch.com there are only two safe ways to generate money with applications: “Users or Advertisers?“ If you bring your app into the app store you can either charge money or you can give away for free and make money with advertisement. Furthermore 30% of application revenues go to apple respectively to the shop provider. Even Gartner estimates that “more than 85% of downloads in stores are made of free applications“. While JOHN MANOOGIAN III beliefs that „The future of app monetization clearly lies in ad-supported model.“ John Solomon sees a possibility to generate money by selling the app: “They pay you a fixed fee, end of story. But it does make sense to keep them in your list and keep nurturing them. You may have another app that might be of interest to the customer.“

Most developers who are doing well earn from $1200 to $3900 per month

In fact Pravin, administrator at forums.esdes, states: “A survey in mid-2011 over the AppStore then showed that 370,000 existing apps were created by 78,000 developers. The maximum average earnings per application were no more of $ 27,000.“ The figures show that there is a huge competition. The developer economics report 2012 pointed out that About 35% of mobile developers cannot earn a living solely by developing apps According to the report, most developers who are doing well earn from $1200 to $3900 per month depending on the platform.

My own view is that, while it’s true that the field has a lot of potential the risk at least as high. Both ways, charging for the app or giving it away for free can be successful even if, in my opinion, the advertising model has a higher potential.
In the end the app market does not really differ from other industries: If you want to make millions you have to provide the best product and combine that with an excellent marketing strategy. I wish the very best to John and his friends to become successful!

Is it okay to stick at nothing for success?

The last two weeks I focused on Red Bull and it’s marketing. While I described Red Bulls marketing in general two weeks ago I pointed out three things to learn for Red Bulls Stratus Project last week.

Red Bull Gives You Wings

When most of the people think of Red Bull they see an energy drink, bulls, football clubs or sport events in front of their eyes. The image of the company is absolutely related to extreme sports. Therefore the well-known slogan “Red Bull gives you wings” fits perfectly. Experts categorize Red Bulls marketing as extreme marketing. But doesn’t extreme mean that there have to be victims?
Hermann Strittmatter, founder of the agency GGK Zurich, Red Bulls extreme marketing has obviously taken victims. The first one was Eli Thompson, who died when he crashed into a mountain with a wing suit. The purpose of his was of course, to produce a Red Bull movie. The second victim was Ueli Gegenschatz who died when his Red Bull sponsored BASE jump in Switzerland was not successful.
He argues that: “The accidents are results of the perversions of event marketing. This time Red Bull went too far”. The Swiss magazine accuses Red Bull to have a marketing strategy of “Break a leg”. Overall, Strittmeier beliefs that “Red Bull acts irresponsible.”

“The risk is obvious”

On the other hand, globali who left a comment on kleinezeitung.at insits, that “every one who does extreme sports knows the risk”. According to him, “an accident like the one of Gegenschatz would not have gotten that much attention if Red Bull did not sponsor it.” He thinks that everyone who does extreme sports and finds a sponsor like Red Bull is lucky because “he does not have to pay for mobility and material.”

“Everyone is responsible for his own life”

My own view is that, while it is true that Red Bulls marketing strategy should be observed very critically, everyone is responsible for his own life. Red Bull does not force anyone to jump out of a plane if he or she does not want that. In sum, I would argue that we cannot blame Red Bull for the death of these two guys even it is very sad. They made the decision to jump and they knew which consequences could result.

“That awkward moment when you realize an energy drink has a better space programme than your nation”

Exactly one week ago Sebastian Vettel won his 3^rd Formula 1 world championship title in Sao Paulo. After one of the most exiting races in history he reached the finish line as the 6^th car and ruined Fernando Alonso dream of still winning the championship somehow. But instead of being enthusiastic of Vettels three titles in a row some competitors only treat Vettel with respect. But why? The answer is pretty simple and equal to many other situations in life: Money. Vettels team RED BULL has the highest seasonal budget and therefore the best team and technology.

This is just another great picture that illustrates the marking of the Energy Drink seller Red Bull. A company that has nothing to do with racing wins the most important Formula in the world. Another example is Red Bulls latest coup that caught the words attention: Felix Baumgartner’s Space Jump. A guy jumps from the edge of the world for scientific reasons and an Energy Drink seller sponsored all of that. A tweet described it as “That awkward moment when you realize an energy drink has a better space programme than your nation.”

Vettel Gangnam Style

An Air Race without Red Bull signs? Impossible.

But what can we learn from Red Bulls obviously great Stratos-Project- Marketing? For Nicola Kemp, a professional blogger on marketingmagazine.co.uk, the first lesson is the final purpose: “Red Bull Stratos has not only underlined the brand’s authentic link to extreme sport and innovation, it has also provided its employees with a motivation bigger than selling sugar water (or energy drinks for that matter) for the rest of their lives.” People built connections between extreme sport and Red Bull in their heads. An Air Race without Red Bull signs? Impossible.

Her second derivation from the Stratos Project is that companies should not only look on their own advantages but even more on societies fortune. The projects purpose was, besides the marketing factor, to deliver important data for scientists and NASA. People like that and it makes a company look trustworthy.

Felix’ Baumgartners Space Jump

“The message is clear: to be truly great, brands must transcend ROI”

Point Number three: Take a stab back. Nicola Kemp beliefs that the Energy Drink producer didn’t want the event to look like a marketing event: “In fact, Red Bull itself has blocked agencies involved in the project from talking to the press because it doesn’t want the event to be viewed as a marketing stunt.” James Kirkham, managing partner at Holler, insisted that for some people the event created something like an “I was there moment”. This is great for the company and without being totally presented as the initiator of everything people built a likeable connection to Red Bull. For Nicola Kemp: ”The message is clear: to be truly great, brands must transcend ROI”.

Overall we can conclude that Red Bull taught the world another great marketing lesson. The Red Bull Stratos project pushed marketing innovation forward into another dimension. From today on, marketing is not only supporting aids research and social projects; it’s also delivering space jump data to the NASA.

 

RED BULL everywhere you look and go!

It was a beautiful spring day in 2009 – the 19^th of Mai to be more appropriate. The huge energy drink seller Red Bull released its coup called RB Leipzig. What is RB Leipzig? RasenBallsport Leipzig is a football Team that currently plays in the fourth league in Germany. The special thing about the club is that Red Bull already invested millions into new players, a new performance centre and professional structures. Therefore the club is quite successful and made up two leagues since the foundation in 2009. But the project in Leipzig is only one of many Red Bull Projects. The energy drink company owns a very successful Formula 1 team and several other football clubs in Austria and in the United States. It supports almost every successful extreme sport talent world wide, host’s air races and employs fancy DJ’s.

“Red Bulls 8000 employees world wide work in the marketing or sales department”

It seems like everywhere you go you see Red Bull signs. Marketing all over the world, in each and every country, in every modern club or restaurant. According to JÖRN KABISCH, economic editor at freitag.de: “Red Bulls 8000 employees world wide work in the marketing or sales department. The production of the bottling of the drinks is made by extern companies.”

An analysis of the economic magazine “brand eins” states “Red Bull spends 1 billion euro yearly only on marketing while the production cost amount is 600 million euro.” That led me to the questions: Does this advertisement effort make sense? Red Bull spends so much money on promoting the product everywhere but do they generate enough profits?

”Red Bull uses 30% of its yearly revenue only for marketing”

Jörn Kabisch quotes that: ”Red Bull uses 30% of its yearly revenue only for marketing. This is a lot. Only food producers like Nestle or Beiersdorfer invest an equal percentage.” But the most important thing about Red Bulls advertisement strategy is that people a ready to pay up to 2,50€ for one bottle of Red Bull. Kabisch insists: “After deducting the costs of production Red Bull has a profit margin of 70%. There is no comparable drink producer.” The advertisement is also responsible for Red Bulls huge growth over the last 20 years. “Since the release of the product in 1987 Red Bull only had binary growth rates.”

In the first place we can conclude that the companies advertisement is essential for its success. But how much profits are there actually? A view on Red Bulls balance sheet tells us something about 311,2 million Euro in 2011. Since 2011 the company does officially not have any debts.

WOW! A totally healthy company!

But while the profits are increasing this year there was a time in 2010 when sales decreased. Kabisch already predicted that: “Red Bulls golden times are over”. From today’s point of view we can say that he was wrong. What many people don’t know is that the energy drink producer owns over 70 different other companies all over the world. The popular health drink “Carpe Diem” is one of them. So even if sales should sustainably decrease one day … by that time Red Bull will have a supporting leg with a huge marketing support …

Cars and Money are not important anymore

„Do you want a car? An Audi?“ „No!“ „A Porsche?“ „No, thanks“ …  lately that conversion took place at a Roland Berger Consultancy office in Germany. A car was offered to on of the consultancies Junior Partners but he returned the offer. “They don’t need no cars, they use public transportation or bikes. What they want is social responsibility and Life Quality.” Martin Wittig, CEO of Roland Berger insists. The Roland Berger Office in Berlin is the fastest growing office all over Germany even though the consultancy doesn’t have any project in Berlin. Financial Times Germany beliefs: “Something has changed; the questions stayed the same only the answered have changed.”

What is most important in life?

According to Magnus Graf Lambsdorff, Partner at Egon Zehnder International, more and more young people search for reasons in life: “Less young people search for material things.” Financial Times add: “The importance of own decisions is growing. That includes that they don’t want give up their whole social life for work.” Currently we can observe a change in society. While material things, money and job positions become less important many young people search for freedom, life quality and a satisfying private life.

Huge selection for job starters

When graduates start to work in their first companies they often find old structures and mountains of work without fun. “If a young employee does not like his work he just searches for another employer.” Jutta Rump from the FH Ludwigsburg noted. The selection for job starters is big enough; especially for the IT and Technical sectors of the economy. What does that mean for employers?

What does that mean for employers?

Employers have to change their way of thinking. It’s not the company that chooses the employee; it’s the employee who chooses the company. Lately Siemens, the IT-Giant, pointed out: “We as an employer have to put effort on getting the young talents!” At the moment the development in many companies are not very far. In times where fathers stay at home to raise their children there aren’t enough part time concepts. FTD states: “Every third would like to work at home, part time or take a break.” The study: “Life and work in Germany” showed there is “a lot of space for improvement for working time accounts or part time solutions.”

We can conclude that employers defiantly have to jump on the train and have to adapt to the current situation. “Otherwise they will lose their best employees” Kathrin Menges, board member of Henkel says.

What’s wrong with Apple?

Some facts: The course of the Apple Share fell over 16% since the 21 of September. That means a loss of almost 80€ per share. At the same time the company decreased the revenue expectations for the upcoming fourth quarter of the year. According to the Financial Times Germany, “Apple showed amazingly weaknesses; weaknesses that do not fit to Apples high standards“. But what are the reasons for this development? Is that a crisis? How did the CEO, Tim Cook, react on the issue?

Do you remember the fourth of October 2011, the day before the death of Steve Jobs? The IPhone 4S was introduced; as well as the revolutionary language assistant Siri. But is Siri really revolutionary? Financial Times declares: “The planned revolution did not take place”. 

Maps came out to be full of mistakes

In January 2012 Apple presented the IPad 3 and did a major mistake: “It only runs with the fast LTE connection in the United States. Apple installed the wrong module for the connection for the rest of the world”- Financial Times insists.  Finally Apple sorted “Google Maps” out of IOS, the operating system for IPhones, IPods and IPads and released it’s own map software “Maps”.  “Maps” came out to be full of mistakes. “Apple CEO Tim Cook had to apologize and even recommended to use the rivals product Google Maps”

The 23^rd of November Apple released its latest product “IPad Mini” and presented an “unexpected” updated version of the normal IPad as well. Financial Times professes the “IPad Mini” to be a sign that: “Apple fights for market shares and therefore neglects its profit”. With the updated version of the IPad Apple recovers its former mistake: “A new chip, new docking connection- a LTE module which works for important selling regions like Europe”.

“Firing Browett is the admission of an own mistake”

After many mistakes Tim Cook made decisions: He fired Scott Forstall, one of his most important managers. Financial Times beliefs: “For Apple he is a manager who is too careless – something that Tim Cooks does not suffer”. Forstall was not the only person who had to go. John Browett who was hired nine month ago and the board member responsible for the Apple Stores had to go as well. “Firing Browett is the admission of an own mistake”- Financial Times interprets.

(Tim Cook, Apple’s CEO)

“The company is going to present a record quarter”

Apple did mistakes in 2011 and 2012, which its costumers are not used to. An indicator is the stock market development of the Apple share since the 21^st of September. The CEO drew conclusions and fired two very important board members. The future will show if this is going to be enough. Is that a crisis or not? Financial Times supposes not: “The company is going to present a record quarter after the Christmas trade in January”.  One of Apple success keys was the usability of its products. But the usability was missing lately if one has look on “Maps” for example.

One thing is for sure: If Apple wants to stay the most expensive company in the world it has to avoid these kinds of mistakes.