Advertising in Applications

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Few things elicit the visceral reaction that advertising inserted in applications does. Just the mere mention of the word brings out a stream of critics who decry the intrusion that ads impose on usability and express dismay at the treasonous behavior of the developers and companies in question.

Yesterday Nick Bradbury released a beta version of FeedDemon that includes a small display ad served by The Deck. As Nick states, his goal was to include the ads in a tasteful manner while also including highly contextual ads that reflect the predominately tech oriented community that uses desktop feed readers, hence the selection of The Deck.

I’ve watched the comments that first appeared on his post and then as the day went on. The comments reflected a good balance of 1) no big deal, 2) disappointed but understand why, 3) want to pay for an ad-free version, and 4) going to look at other products.

NewsGator has to support these apps not only from an operational standpoint but also from a continuing development perspective and the costs of running a datacenter that supports sync, 4+ million feeds, search services, and then the development of a complete portfolio of client products are daunting. We made client apps free a year ago and at that time made no commitment about advertising other than to say we were not doing it at that time. Nick has continued to develop FeedDemon, this is the 3rd release of the app since Jan. Even when we charged for the product, not all upgrades were free therefore it’s still a good tradeoff, IMO.

I looked at what we were doing with our client applications and rightly concluded that if we could generate some revenue that would offset the cost of supporting those apps, then that would be the responsible thing to do. As Nick (and Brent Simmons and Nick Harris) will support, what we talked about was the right approach to doing this. We didn’t want Viagra or University of Phoenix ads showing up in the apps and we didn’t want ads in feeds and we didn’t want interstitials. It was also important to not impact performance negatively so compact asynchronous ad streams were important.

What we wanted were ads that reflected the community of users who rely on these products and placement in an unobtrusive manner that, if we selected the right network partner, would prove to be actually useful to the community. Nick was the most skeptical but as he writes in his post, even he has been clicking on the ads because they are relevant to him.

The FeedDemon v2.8 release is a beta, it’s something we are trying and while we welcome the feedback it’s also important to recognize that adding ads to an app that is being made available for free is not unreasonable. It may turn out that this doesn’t work as well as we would like, hence the reason for calling this a beta, and we reserve the right to change our mind but from where I sit this is a good compromise that satisfies our financial requirements while also presenting ad content that is not distasteful or overwhelming to the user experience.

The reality about desktop applications is that very few outside of large packaged software apps can generate a large enough community of users who are willing to pay for them, at least not enough to pay at a level that supports those applications on a fully loaded basis. This is even more true when you are competing against some very good products that are free. A reasonable person might consider that the alternative of having the app go end-of-life is a less appealing alternative to running ads to offset the operational costs of supporting them. We’ve just gone through a period of time where you could reasonably make the argument for free as a business model but given the economic realities of right now and what 2009 is looking like, you simply have to rethink everything.

Lastly, for the part of the community that remains unsatisfied by this decision and wants to voice their criticism, don’t direct it at Nick, direct it at me.

More on this topic (What's this?) Read more on Beta at Wikinvest

NetNewsWire iPhone Application is Very Popular

Today we released some statistics for adoption and usage of our NetNewsWire for iPhone application. To recap, this is the downloadable and installable version of NNW for the iPhone, not the web-based version we launched last year when the original iPhone was released.

# There are over 200,000 users of NetNewsWire for iPhone
# Over 115,000 iPhone users have signed up in the past 30 days

# The average NetNewsWire iPhone user subscribes to 26 feeds

# One NetNewsWire/iPhone user has over 2,800 feeds — wow!

# More than 130 million items have been marked read by NNW/iPhone users

[From NetNewsWire iPhone Application is Very Popular: NewsGator Widget Blog]

Here are the 2 stats which mean most to me, new users in last 30 days and items marked read. The new users in the last 30 days is meaningful because it indicates strong word-of-mouth traffic and all while the App Store on iTunes has become very crowded. People like this app and are telling other people about it.

The items read (along with another stat that we track showing how many registered users are accessing it daily) is really important because it underscores a very important point, people are installing the app AND actually using it on a repeat basis. I can think of no more important metric to track as an indictor of the value people are getting from this application.

I could read into the average number of feeds subscribed to, but I’m a little hesitant to because this could have many meanings. The 26 feeds per iPhone user could mean that we are reaching into the “mainstream mass market” and not just the RSS geek and early adopter market, or it could suggest that users are actually being very specific about the feeds they are reading while mobile and taking advantage of our “Locations” capability to organize their experience.

These are great numbers that we are certainly proud to talk about, but it also fits with a general attitude we have about being transparent about our business.

NewsGator iPhone App

nnwOnHomeScreen.PNG NetNewsWire is now available on the iPhone. I don’t normally write about every product that we release but this one is really really cool because it takes full advantage of the touch interface to vastly enhance the user experience of a mobile feed reader.

Apple made a couple of really strange design choices, like the headset jack requiring an extension, and the lack of copy/paste, but adoption of the touch gestures really makes this device in my opinion. Ironically, touch gestures may be a primary reason why we don’t have copy/paste…

Brent put a lot of work into this app and it reflects not only his intuitive sense of what is right in a Mac app, or in this case, a Mac app on an iPhone, but also what works for users. I’ve always admired that NetNewsWire has a deep bench of features available to the user, but the user experience doesn’t overwhelm you with features.

Here are some screenshots of the app in action. Go download it from the App Store today.

nnwMainScreen.PNG nnwNewsItemsList.PNG nnwNewsItem.PNG

Share Your NewsGator/FeedDemon Clippings with ReadBurner

Coolness, I love it when different services and products start integrating.

NewsGator has partnered with ReadBurner, and as a result, it’s now dead simple to share your NewsGator clippings with ReadBurner. This means that FeedDemon, NetNewsWire, NewsGator Inbox and NewsGator Online customers can easily share their clipped articles with ReadBurner.

[From Nick Bradbury: Share Your NewsGator/FeedDemon Clippings with ReadBurner]

NewsGator Client Apps Want to Be FREE!

Today we announced that NewsGator Inbox for Outlook, FeedDemon, NetNewsWire, NewsGator Go! for Blackberry, Windows Mobile and iPhone, and NewsGator Online are now available for free. That’s right, the license costs you zero, zip, nada.

But that’s not all, we have also released new versions of FeedDemon, NetNewsWire, and Go! mobile apps, and a public beta for Inbox 3.0. We are continuing to invest in these products and where we are taking them is a function of expanding their market reach.

I’ve been a NetNewsWire user for years (I was almost giddy the first time Brent Simmons sent me an email), like many I believe that this is without question the leading desktop RSS client application for the Mac. Windows users feel the same way about FeedDemon, it sets the high water mark for what an RSS application should deliver. NewsGator Online was one of the first web-based readers and it has a tremendously loyal customer base, Inbox defined the category for Outlook feed plugins and our Go! mobile apps are built for power users.

You should rest assured that this is not a move to take an end-of-life product line and get some additional mileage out of it, we will continue to invest in these applications and we will continue to lead the market.

We could have thrown a lot of money at marketing our client applications, signed up a bunch of distribution deals, and possibly done some kind of embedded OEM deal, but in the end the most expedient path to expanding the reach of these applications is removing the one barrier that exists that prevents people from downloading or signing up for them – economics. In effect, giving up the license revenue that we generate with these products is a form of marketing expense.

So if we are generating zero dollars of revenue from the client applications that we used to sell, well what is our business? Today we generate the bulk of our revenue from enterprise software, which is predominately server products but also includes these client applications (we call them “endpoints”). The fact remains that we actually generate a significant number of enterprise leads from people who are using our client apps and then realize they would benefit from enterprise management products. By that logic, more client applications in use is more enterprise goodness for us.

Okay, so we get all these client products out in the market, generate lots of enterprise software business, are loved by millions… surely that cannot be what this is all about? It isn’t.

The RSS market is maturing beyond supporting multiple feed definitions and doing extras like handling attachments. The three pane reader style is well established and features like setting read states and clipping and sharing have incremental value. Our users simply don’t say they need more content, they say that they want better content and we have been responding with an expanding portfolio of “attention” enhancements.

Better content means feed discovery based on preferences and behaviors, network search and relevance filtering, in effect achieving community-based collaboration and filtering on top of what the system can do off keywords and word association. You will be hearing more about this in the months ahead, we have a slew of partnerships and product updates in the works that will deliver best in class features to help you find feeds that are map to your interest areas, and individual content items that are relevant to the posts you are clipping and sharing.

Good relevance features depend on good behavioral data, in other words we will benefit from the surge of new users on our client applications in that we get a lot of data about subscription patterns and feed reading habits. We collect the subscription and behavioral data and anonymize it, then use it to improve the quality of our search results and relevance features in much the same way that search engines use search results to improve future searches.

Users can opt-out of the data collection mechanism and run standalone; we hope you don’t but we’re certainly not going to stop you from doing that or penalize you if you do. We have also rewritten our privacy policy, we wish to avoid any confusion or concern about what we are collecting and how we are using it, this policy is available for review at http://www.newsgator.com/privacy.aspx.

The new features we are building into our client applications and in our syndication services business (widgets) will take advantage of the behavioral data in a big way. Our partners who are using our APIs to access our content network will also have access to this data and our widget customers will be able to plug in network search for additional relevance features.

This is an exciting day for NewsGator and for me personally. When I joined the company I was motivated by the belief that the company had a clear vision for where RSS in the enterprise and consumer markets was going, this move not only highlights that vision but puts our money where our mouth is.

Here’s a FAQ that includes information not in the press release.