How Apptopia CEO Jonathan Kay grew Apptopia to $15.9M revenue and 300 customers in 2024.

[Music] hi i'm matt from the mobis marketing team we have a special guest here today Jonathan you please introduce yourself yeah of course thanks for having me guys my name is Jonathan can't have the founder that's okay okay thank you tell us a little bit about app topia of course yeah so we're essentially a mobile app market intelligence firm just actually means that today we can give you a pretty strong insight into how many downloads how much revenue how much usage any app in the ecosystem is is getting and so we're a competitive intelligence tool for most mobile brands tonight great and I'm curious Leo what are the kind of companies now that you're working with who are the brands that are really focused on their app businesses right now yeah yeah so I think kind of like one of the biggest shifts that we've seen is we've started to get a lot of additional interest from like the food space which is not only like quick sort restaurants like McDonald's but huge amount of pop ups around like food delivery so we've started to work with huge amount of like food delivery companies internationally and given that it requires local infrastructure there are there's a different group up in every grub hub in every international region so we started do a lot of work with them and retell there's been some consolidation in the in the food delivery space here in the US is is that the sign of things to come are we gonna see a consolidation of options yeah I mean like right there's only so many cars on the road and like so many people deliver in to so many places at some point even if you think about like Joe's pizza shop around the corner because it really economical for that one person to drive their one car just to deliver that won't the only that restaurant not not really right and so like businesses that are still heavily infrastructure driven are right for a consolidation which is I think why you caveat acquisition and you're obviously a lot more internationally as well because let's say lift decides that they want to compete with Hoover eats like there's existing infrastructure right like they should go in and acquire letter that improve it and make it their own so of those businesses that are currently offering food delivery how do you differentiate yourself in such a crowded market yeah it's a good question so the big play that these guys are making right now is they're trying to sign exclusives with certain brands so much I feel like read about what was happening with McDonald's but I believe McDonald's was actually exclusively on grease which was a huge thing for uber they've pulled out of that I can't I can't share exactly why but I I would lean toward the fact that like there's different platforms that have different audiences and once you've saturated a certain audience you need to like work with other partners that help you get into different audiences but at least in food delivery they're trying to differentiate themselves through like pricing pricing breaks and exclusive exclusive restaurants because sometimes you're like hey I really want to eat at Taco Bell or sweet green or whatever it is right and like you go to the tool that allows you to like get what you want and so I think content in a lot of ways which in this case is food is going to be the driver of the differentiators it's funny I don't think I would have ever thought well I have to use uber eves because that's gonna laughing at my big bag maybe I'm a little different than other people maybe you've just not created a Big Mac at the level that other people they're like the average American does fair enough that's a real thing yeah it's sort of the Bennets that puts out imagine the food delivery companies in a tough spot because you're so reliant on the taco bell's and the McDonald's and the sweet green to the world to differentiate yourself like that's such a hard position to be in because if I'm McDonald's I'm saying how much money goober eats is making off me why wouldn't I just go into that business myself yeah it's fair i my instinct tells me that like there's some deal you get with being an exclusive so maybe it's like I can't even breathe they like feature content to you right and it's like just like on the app store like you want to get feature by alcohol I think restaurants want to get pushed up to the top of the chain and so I think what happens when we breathe it's like eventually a marketplace it's no different than the App Store right just like a food app store the one thing that I didn't like the new breed's did is they offer Hoover it's past now so a subscription so I actually subscribe to every it's I'm like so not trying to promote this but like you don't pay any fees if you pay like ten dollars a month so for like degenerates like me that order out five six seven times eighty times a month like it's like pays for itself in like a week it's interesting it's using the built-in audience of one app to promote your brand and then I want to stick it to Hoover right like so now I end up ordering more from there because I want to get the value of my my technology though it's all psychology right like this is like a huge this is psychology right right game theory for sure and that's so hard for the food delivery apps if you're focused so much on pricing and it you know it becomes an Amazon play where everything just got to push to the bottom and only the strong survive yeah yeah yeah III think there's just there's too much option of Holly today it's good it has to go down to a couple you know it's it's interesting that uber is in this space that lift isn't because in some respects they're very much going head to head and other components of transportation and it's interesting because it's one of the things that we've seen historically from our markets an impact because this idea of the super app so this is especially the case in China where it's not lots of apps that you use for different things but it's everything it's within like a we chat for example and I'm curious we haven't quite seen that certainly Facebook has tried Louvre has tried do you see that model actually coming to the United States a little bit so I'll tell you something cool that lifted recently so lift essentially incorporated public transit api's into their app so now when you open up the left not only will it show you like the options for your like your lifts ride but it shows you how close like the closest public transportation and like I was talking I'm trying to understand like why did you do that like are you trying to like anchor me to actually buy a lift ride like what are you trying to do and their logic was like we just want you to lift that more if you're gonna take public transportation you're gonna take public transportation but rather you view us as that like source of primary information and I was like that makes a ton of sense I completely get that and I respect that and like I might open the app now for that source of information is its structure and I'm comfortable with the UI right it's reliable etc so China's extreme in that regard but I mean as a consumer like I'm kind of all for it right like makes my life easier um I'll have to create another account to user breeds it's so easy right in that way and it sort of presents an interesting situation then because if I am a let's say quick service restaurants for examples he talked about McDonald's and Taco Bell if I'm McDonald's do I look at the app market now and say you know what I think there's an opportunity for me to have my own atha my own branding out there or do I try to leverage the apps that are already in existence to boost my brand and I think direct-to-consumer is a really interesting example yeah right so Dollar Shave Club has their own app but a brand like a Rafi's basically is using Instagram as their app so how do you determine if the app route is actually right for you yeah so I think that as long as you have the infrastructure you have to do both because there are things that like McDonald's can do and does do through their app that they can't do through Averys right and so like essentially if you look over the last 12 months you'll see that Wendy's Burger King McDonald's Chipotle just had a huge shift in actually let's just talk about probably for a second so tripoli essentially just like launched their this huge rewards platform about three or four months ago and we do a lot of work with hedge funds and like you would see their stock like they crushed earnings and it's mostly because by offering rewards program they had a huge amount of active users and like tens or hundreds of thousands start to engage with and maintain their app because the rewards were like meaningful enough for them and so I think at the end of the day like we can't forget that like free food is the biggest driver right I mean like here we are in your office like there's a ton of free food here right we offer a ton of free food to our employees because it's like the cheapest largest impact thing right and so at the end of the day the direct-to-consumer app allows you to control the messaging to your customer and so you kind of have like controlled messaging where you can get your you're hyper like loyal users and you can maintain them and like continue to monetize them you need to work with like the grab pops of the world because you need distribution channels outside them just direct right now the question is how do you transfer a user from one to the other I don't I don't really answer to that but I think by not doing both you're probably like leaving leaving money on the table you can leverage the existing brand and audience that comes with an app like a Facebook or a GrubHub a seamless and also use your own app to nurture your own audiences your recommendation for sure I just think there's different like types of customers right like even with your platform but you probably have advertisers that like are you talked to on a daily weekly basis and then you have advertisers that you work with for years they come in maybe monthly right you have like different types of customers and they require different types of engagement and treatment and I think the food space is no different right you have your loyalists and they will have your app and you want to maintain a direct line of communication with them but the market is so huge you need other distribution channels right and so these third-party apps offer that in spades you know sure I think that you brought up in a point about the own app specifically with have Chipotle users reward do you see rewards is the the main driver for getting someone to your own app if you're a restaurant I think so right and like I think we can say rewards and free food at this point are like synonymous but like essentially let's take Burger King as an example another example so Burger King at the end of 2018 started to run ad campaigns where they offered a free burger if you downloaded their app I don't know what like Burger Kings cost for a burger is but like probably single-digit cents right and so they added about like three to four hundred thousand new users at the end of the year to their app which is substantial as a result of that and we did some math and like essentially like four months after the promotion they maintained like over eighty to ninety thousand of the users so there was like a bunch of users that just like wanted a burger and that was that but there was also like it's a lot of people who after three or four months maintained the Burger King app on their phone and now whatever that costs that like fifty thousand dollars and burgers they now have these users they can directly engage with and so I mean I think in cities and suburbia it might be a little different but like I've seen no evidence that free food and rewards is not like continued motivation for people yeah yeah absolutely I guess then it begs the question how do you determine what incentive is enough to turn someone to make them actually download your app and use it on a regular basis versus becoming yet another transactional customer how do you figure that out endless testing there's absolutely no answer but there's no answer like you have no idea I mean you and I are like pretty educated people hopefully that's why we're sitting on this couch right there there's some bar we like somehow superseded in and the truth is is that there's no way to know it's different in every city in every country for every different type of food and anyone who tells you that they know the answer and it's probably lying or overconfident like you run the test you test ten different price points like you see what works what motivates people and you probably test that in a small market and then you go national with the one that worked the best if i'm tripoli for a free burrito free guacamole free free soda yeah maybe two free burritos and and then you just figure it out and like in the world we live in today where you can do such hyper local granular targeting there's so many tools for these guys to run like really specific campaigns just in like Palo Alto just like one small region where they can like test these things on a small scale so that when they go national or internationally with the campaign they're like pretty confident that they found the red formula and that's the benefit of doing all of this within a mobile and specifically a mobile app environment is that you can have a much deeper understanding of of someone that you probably aren't going to get even from a mobile website well and just like the cost the cost of getting information we're essentially talking about like how do you collect information that you need to be successful to run a good marketing campaign a good you a campaign and mobile allows you to collect an unbelievable amount of detailed data not like privacy data like data about what works right like you're poking someone like how do they react right right um and you can get that really quickly in weeks right where I was like imagine you have to make a change to your website you have to push out a billboard we have to run something out in stores I mean like it's six months and like you may not have the data yet right sure so I think one thing you know we're talking a lot about very established very well-known brands if I'm a newer entrant to the market today I'm a brand new salad chain for example how do you ensure that you get both awareness in a sufficient scale to and to go along with any kind of user acquisition half download campaign yeah it's a big it's a big it's a big question what I would say is is that the first thing you need to do is kind of identify like who your audience is and it sounds like a really stupid comment because like you're a salad chain you're looking for like people who like health food right great you know your audience like that would be when someone who's uneducated would say but the truth is is that your audience on mobile might be different than your audience who's like walking down the street and you know that they're interested in healthy things but what other things do they do are they runners because if they're runners you can have a partnership with Strama or you can have a partnership with Matt my run and you can actually start to like run like really targeted ads that block out your competitor in certain apps that like are relevant but like might not be directly relevant maybe you find out that like actually people who are interested in your salad chain are there like puzzle geeks so like you actually want to run ads inside puzzle games and Tetris and like all these different places and like actually that has a huge high correlation because high conversion rate because there's a correlation between these activities and so on mobile it's about figuring out like where is your audience that is not just in the most obvious places and then like using ad networks and platforms to help you like target those users in those hyper local places other things I advise is like we've seen that in terms of like ad creatives so we do a lot of work with ad creatives around like helping people understand what works two biggest things we've seen or like one just like transparency so like sometimes we see these like hugely produced ads like it's not super relevant for salad but like if you look at all the Game of Thrones apps that come out and you look at the ads like the mobile ads that are running with Game of Thrones dude it's like you're watching the movie it's like Daenerys is like in like 4k HD on your phone but then you download the app and it's like playing Starcraft you know animated it's like old-school graphics and that's like a huge letdown for the user because you showed them this like hyper visual thing you got them really pumped up about that and they downloaded the app which is great because that's what you want but you set such a wrong expectation and now they're like in your game in your store and like it's not actually the truth right and so you need to be careful on mobile advertising to set the rent expectation because you could do a lot of work spend a lot of money you got a lot of downloads and then have really shitty retention it doesn't matter because you've set the wrong expectation yeah it's it's not enough to get someone to download your app you want someone who's actively engaged and it's a quality user it doesn't make sense for you to spend money to acquire downloads if those none of those downloads or repeat business or using your app or any value to you I think this is like a huge misconception like we see lots of ads today also for games or they're so like very beautiful when playing the game and it like catches your attention but like then I've watched the whole 30-second ad and like I've seen I still know the game tons so maybe I'll watch the ad but like I have no idea what you have actually your game does and so we've seen a lot of like misses in mobile where they're like might be attention-grabbing but they're not actually like transparent and so it's a tough balance right Li you have to find you have to like bring them in but you have to give them enough information that there's like like an agreement between you and the user that like you understand what you're getting when you download yeah yeah and I think that is so hard to manage because we see so many ads in every component of our life right billboards TV ads desktop ads mobile ads you have to be so thoughtful about how you cut through the clutter and really make an impact so I definitely see the impulse to have these very eye-catching flashy ads and there's a concern I think if I'm a Sam advertising the Chipotle app if I'm just saying download the app to make ordering burritos easier is that really enough I can see the impulse to go the opposite direction to do something more akin to what's traditionally seen saying in TV advertising yeah so how do you and maybe there isn't a way to balance that maybe there's nothing that we can say that I'll say you need to do this while also doing this for every single mobile app that you run yes and I think like it depends on the type of the type of company so which Apple a they probably have brand dollars and user acquisition dollars right so like the ad of like the farmers who are like smelling the the fresh produce that makes that really healthy stuff that you get at Chipotle like that's not meant to spark action it's meant to just remind you that chipotle exists it's branding atom and there's no like KPI tied to that other than like staying top of mind but then if you're running a mobile campaign like some mobile is branding but at the end of the day you're so close to taking an action like they just literally click and then the app is on their phone that at least from our worlds we work with people that are more tied to like you a like there's a dollar an ROI that they need to get on the money that they're spending on ads in which case just keep in mind don't run a brand that on mobile and expect but user acquisition action so I think it's about like having the correct ads and the correct API is tied to those atoms right it's just having the right conceptions and mind of if I'm running this ad this is what I want to see from it and this is how I'm gonna measure success for sure and like going back to the Game of Thrones example like maybe a shame on me because maybe the ads that I'm critiquing work chopped up as brand ads right but it's just a matter of like having the right the right expectations and I think maybe that's also a component of mobile in-app advertising that's really key is that there is so much that you can do from a performance and app download perspective that you can't do in any other format and maybe that's just key for advertisers to keep in mind that they have these options within mobile and app advertising that don't exist anywhere yep yep and one other thing that I would say is is that I think one of the bigger Miska today we're not misconceptions but like misses in mobile is people who rely heavily on audio so I'll speak for just myself at the moment but like at least in some of the data that we see as well like audio doesn't really land like I'm scrolling through Instagram or I'm like playing a game and like an ad pops up I don't want like a huge glaring sound right like I might be on like the subway or the bar then like and maybe I have a headphone thing maybe I don't I don't like want to deal with the audio and so as we've seen perform really well they might have audio but they actually have text scroll on the screen which mimics the audio and so it allows somebody to like a make sense of what the ad is and what you're trying to communicate so if there's no audio it might just squirrel pass it cuz they have no idea what it is if the audio starts blaring I immediately like get out of the app because I'm like either a making a scene or it's just annoying alright but sometimes like it'll catch me and I'll actually catch myself reading the text and so some of the ads we've seen perform really well skills has done good ones word escapes has done really good ones they have text that like moves pretty quickly on the screen and it almost feels like a challenge through that I have to like read what it is it's moving pretty quickly and then you end up consuming the message anyway right and so I think just knowing that like different people will consume your ads in different ways and providing different ways that people can get the message if they're listening if they're not listening if they're just watching my think is really important to make sure that you have the most impact for your spend yeah and certainly we've seen advertising that includes rich media that includes interactivity um think about just how ubiquitous the swipe up feature has now become within the mobile app experience you know those kinds of components that you can do within mobile apps that you certainly can't do in traditional TV advertising I think there's a lot of opportunity for advertisers to make the most of those kind of experiences that aren't that we don't necessarily see all the time so one day I want to talk about I want to go back to kind of an in-app user acquisition point so I think when we're thinking about like a food delivery app or an app like a Chipotle so these are companies that certainly have the possibility for a often repeat user Oh what about brands that are much more transactional in nature so I'll take a carbine I think is a good example you're only going to buy a car maybe once every three to five years at most how does say a Ford or a Chevy or a Mitsubishi how do abs figure into their branding and does it make sense for more transactional companies to even bother have their own app see that's a good one I like that so listen I I'm of the mindset that like it makes sense for everyone to have an app because at the end of the day like having your brand on my mobile device is the single best placement for your brand in any way shape or form and so I think it's about thinking about like at the end of the day is there some ongoing value you could provide to the user so what you've seen is that the Ford and the Chevy apps like now allow you to like do things inside of the car so like they maintain access to their users by not only letting you like browse cars or like fine collar dealerships or do something around the transaction but they give you some convenience that happens after transaction as well which creates some like relevancy for you to maintain their brand other things we've seen is for for apps like like maybe like a carbonyl or a CarGurus which is not like entirely different than like a kayak or Expedia or Skyscanner or it's all transaction based they started to do a lot of work with alerts which i think has been really cool so if you're booking a flight do subscribe to get an alert they'll notify you via push messaging anytime you're like flight is less expensive maybe you're looking for maybe you're buying a used car you want to know if other cars come up with you're searching for specific cars you can put like a feeler out there so there's a reason for you to keep it because maybe you're not proactively going into the app but I love apps that like provide value to me without me ever having to open them like I just know it's there they're kind of looking out for something for me okay I'll keep it that's that's valuable right one thing I always kind of wished would happen and this doesn't exist today but like so like I have a Honda okay I know that they want to buy back cars and so I would totally keep the hot app on my phone if like they could send me offers to buy back my car and like I got some exclusive offer to buy that my part which they wanted to do anyway they already know all the information about my car and I can only get those through mobile this would be amazing right like its total motivation for me to keep the app and so I think these transactional companies needs to do better if I like alerts and offers because like my fear of missing out is high and I will keep it up on my phone for sure if I feel like I'm not missing out on something Honda if you're listening a potential great idea for you yeah I think that's interesting there's there's so many ways in which someone can interact with an app on their phone it's just a matter of figuring out as a brand what's right for my customers whether they're in the planning phase whether they've already made a purchase or whether maybe they're a former customer and I'm back apps can play a role in that that there's a wide variety of ways to think about an app versus maybe necessarily what's the most common options out there yep completely agree so one thing I think is I know has come up is especially with individuals with older phones you are limited in the amount of space does that present do you think that's enough of a barrier for brands to maybe consider other options besides an app or our apps still powerful enough that you should still push it despite device limitations so device limitations is a real is a real issue and so we typically advise clients to design their apps in a way that is light is as light as possible and so like maybe instead of posting a bunch of content directly in the app you host it in a CDN or like you don't have a million SDK since that installed inside your app you like test the ones that work and you keep the SDKs that are relevant but like we've seen file size and apps have like a pretty large impact on like engagement with customers I mean in games like if you can't download it on a mobile network you've cut 50% of your downloads out right up right out the gate right and yeah it's true like if you have a foreign app on your phone that was taking up a bunch of space you run out of space that's pretty quick on the chopping block and so I think it's a matter of like brands figuring out how to build experiences in the mobile app that are like pretty much you I only not like a ton of content or if there's ton of content like hosted in the CDN so that the app is really really light I just think you need to know who you are right like if you're a brand you're on the chopping block like build a really lightweight speedy app and like invest time into that so I think you can get around that so I would still suggest mobile app but I think you need to like be honest with yourself around where you sit on the priority list on the mobile device and you need to like make some products accordingly maybe also make sure that you're providing so much value to your consumer that they're never going to get rid of it I think especially here in San Francisco you're never gonna get rid of uber or lyft because it's become such a integral part to how people in San Francisco get around it's just a matter of making sure that your app is valuable enough that it's a must-have not a nice to have completely agree so I want to go back to some we've touched on different components of the user acquisition I would say overall regardless of the type of app what are the the main things that you think apps need to absolutely adhere to keep in mind whenever they're running a user acquisition campaign yeah so like most obvious one is however many ad creatives you think you need to build you probably need to build as many as you think because we talk to like some of the most successful advertisers in the world and there's single best creatives sometimes performed for like two days it's the single best partner performant creative but for some reason it works for like two days a week three days whatever it is and so you need to have a lot of option allottee because the second that people get used to seeing something they'll stop consuming it the vocab already seen this one I get this point I've seen so many Gardens get bad that I just like refuse to watch them anymore but like they actually do a pretty good job around like pushing out a bunch of different types of content on on ads and like so like every four or five I see something new and so I'm like my brain knows that it's something new and so like I think the volume of creatives that you need to you need to design is way more than you think and I think the really big publishers know this that we've seen smaller publishers like optimize their team by hiring like for you a people and one designer and I think it should be split like one or two really sharp people can allocate the money especially given the resources that like works like you guys offer today but like higher more Design resources it will be the single biggest bottleneck of your success that would be like my first kind of pillar second pillar would be just like be really clever around who you target and how you target them so there are always like obvious buckets but you need to keep in mind that your competitors are probably also playing in the obvious buckets right and you have to find the other places that your users spend their time and their money and you need to target them in places that might like require like two two steps you know what I mean but if you do the research and you get the data and you figure out where your users are spending their time like be a little bit creative around in what forums you target them and what other types of apps because you might be like the only puzzle app running ads inside to help them fit in this app because you figured out that correlation whereas inside like a role-playing game there's like 75 different puzzle apps advertising it's really really hard for...