Tyrone Dsouza is Managing Director and Partner at Mobobeat. He has been in the mobile Ad-Tech industry for 5+ years and worked with global advertisers, agencies, affiliates, ad-networks and mobile gaming studios across India, China, SEA and Europe. He holds an MBA and prior to that has 1+ years experience in the internet marketing industry.
China has 557 million mobile internet users as per the latest numbers from Statista 2014. Chinese users have purchased 280M iPhone and Android smartphones in 2014. So it’s no surprise that developers have huge potential in China but therein lies lots of opportunities and challenges for Western developers who want to enter this market.
China’s Mobile Ad Market
China has about 20-25 local ad networks so the mobile ad market in China is still in its infancy stages. Many of the local mobile ad network use illegal ways like brush ranking to boost downloads in the app store. Local ad networks will also lure advertisers with the promise of delivering conversion rates as high as 50%. As per latest news, Apple is now penalizing app developers who use such means of artificially boosting their ranking. Many of the top gaming apps have been removed off the app store.
Free Apps Win Over Paid Downloads
Chinese hate to buy an app upfront – those that buy an app may be hardcore gamers, or may have read or heard good reviews of the app. But once a Chinese user installs an app and likes it he will spend millions of dollars in the game in the form of in-app purchases. The freemium model is widely adopted by many app developers. According to smartphone analyst Distimo 72% of Apple’s Store purchases come from In- App transactions.
Chinese are Heavy App Users
Chinese are heavy app users with 55% of the app users spending longer than 1 hour/ day. While most countries have increased their time spent within the app from 300- 500% over the past year, China has jumped ahead by 870% (even more than US consumers). Source – Ad China Research.
China is the Second Largest App Economy
With its heavy app usage, China has moved up the ranks to become the world’s second largest app economy. China now ranks second behind the United States. However in terms of revenue generated from apps, China ranks 8th in part due to app piracy and copycat apps available on Jail broken handsets. This will now change soon with the Government body MIIT starting to regulate China’s app market and mobile application industry at large.
Android Market in China
The android market in China is fragmented with over 100 Android App Stores. Most of the handsets in China are shipped without the standard Google Play App store. Most users download apps off 3rd party app stores like Gfan, Hi Market or just install the APK files off the web. Due to lack of a Google billing framework in China, most in-app purchases happen through Telco billing or local payment gateways. The best way one can promote your App though advertising is to use an APK file.
Even though 60% of the smartphone users are on Android, most app developers look to advertise their games on iOS. Android OS has very few takers. Due to this and the abundant supply of android inventory, iOS commands a much higher premium CPC compared to Android.
Despite the large market and huge revenue potential, as an app developer has a few things to watch out for in China:
- Weak Intellectual Property laws in China. App piracy is prevalent. Laws in China do not safeguard against innovative ideas. As a solution if you’re a small app developer, consider partnering with larger companies.
- Slow 3G speeds in China. GPRS speeds in China are much slower compared to Western countries. Designers should be careful to maximize speed of the app by keeping app designs relatively simple.
- Experts suggest that Chinese users move quickly from one product to another and keep trying new apps. This holds both opportunities and challenges: developers should make sure their apps are engaging and addictive.
- A competitive landscape. The number of app developers in China is doubling each year with developers seeking to make quick bucks in this fast growing ecosystem.
The market’s growth in China is unique –as there is growth in both user app adoption and the shipments of smart devices. With a well-crafted and executed entry strategy there is enormous amount of money on the table.