While there are well over 100,000 iPhone / iPod Touch applications available in the App Store today, early adopters might remember the “Where To?” application (iTunes link), initially developed by tap tap tap, which was one of the first 500 to debut on the platform.
It did pretty well, but tap tap tap ended up putting the app up for sale in October 2008 regardless. German startup FutureTap outbid other potential buyers and ultimately purchased the iPhone app from tap tap tap for $70k upfront a couple of months later.
In a blog post published earlier today, FutureTap’s Ortwin Gentz looks back at his initial expectations following the acquisition, and the way it turned out to be instead. He also talks about sales numbers in detail, which is why we think you’d be interested in the story, too.
Since the acquisition – and beating FutureTap’s projections – the “Where to?” iPhone app made a total of $325.055 in gross sales. Apple took a $97.157 cut on sales revenue, so that means the young company made a $227.538 profit on the app in 2009.
FutureTap acknowledges that success depends on a combination of factors, like getting featured by Apple, releasing new versions and pushing the app by advertising across platforms. And speaking of advertising, Gentz has some interesting things to say about that as well (emphasis ours):
Speaking of advertising, we experimented with all kinds of different media and types. While in the first half of the year we had decent success with cost-per-click campaigns such as Google Adwords, in the recent past virtually all sorts of paid advertising were totally ineffective (with Admob and Facebook offering the worst value in terms of ad dollars spent per sale). The root of the problem is that at a sale price of $2.99 ($2.10 after Apple’s cut) and typical click-to-sale conversion rates of 5-10% the maximum affordable CPC is at around 10-15¢. For apps priced lower than $2.99 or promotional offers the maximum CPC is even less. At this level, however, the available inventory is nearly non-existant. This is the reason we drastically reduced our ad spending since September. Overall we spent roughly $50k in ads so far which is far lower than initially planned.
It’s interesting to see that paid advertising doesn’t work as well as getting featured by Apple, positive reviews and good rankings from users and simply by releasing upgraded versions at a regular basis.
Another interesting data point revolves around internationalization: FutureTap has localized “Where To?” for 9 different languages, integrating local categories and brands in the app along the way. This contributed to a noticeable increase in non-US sales for the startup: while sales in the United States prior to the acquisition accounted for about 90% of the total, by December 2009 the non-US share increased to nearly 50%.
Read the full post for Gentz’ reflection on the year after the acquisition of the app, and don’t hesitate to send us similar stories (we like it when startups are transparent about sales numbers and such).