An in-depth analysis of M&A in mobile app analytics

It's not the kind of thing you can easily plot on a graph, depict in a chart or even list as a series of percentage points, but there has to be some way for developers to analyze what's happening in the mobile app analytics space. 

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App Annie says its purchase of Distimo is atypical of the M&A happening in the analytics sector. (Image source: Distimo)

It may have started last year when Facebook acquired Onavo Insights, but over the past few months the pace of consolidation among those who collect and interpret data on all kinds of mobile apps has accelerated considerably. There was App Annie's purchase of its rival Distimo, for example, which happened in late May. Less than a month later, Yahoo said it would buy Flurry, another major player in mobile app analytics, for more than $220 million. More recently, advertising technology provider Tapjoy, based in San Francisco, acquired 5Rocks, a young startup in mobile analytics from South Korea. 

If this trend continues, it's going to be difficult for developers to keep track of where all the mobile app data is going and, more importantly, who's the best provider of services that will help them boost their businesses. 

"Switzerland" of the app space
In an interview with FierceDeveloper, App Annie CEO Bertrand Schmitt said that acquiring Distimo is a different kind of deal than many of the others that are happening in the sector. 

 Bertrand Schmitt App Annie CEO

Schmitt

"We see ourselves as the Switzerland of the app space. We don't want to become an advertising platform. We want to stay focused on the data," he said. "We don't see ourselves as competing against Flurry or 5Rocks. They are in our space, but we're not in direct competition. We manipulate different types of data. They focus on their own data, not looking at all the market or the position [of mobile apps] across the industry."

Wilhelm Taht, who has worked in mobile game organizations like Playground Publishing, agreed. In the case of App Annie and Distimo, for instance, it's about having better access to more data, while M&As such as Flurry and Yahoo are part of the more general trend. 

"Large media companies such as Yahoo have no choice but to either become extremely knowledgeable in mobile analytics by themselves or to acquire the knowledge. Otherwise they will never be able to serve the needs of the knowledgable performance marketers of today," said Taht, who recently founded a predictive analytics company called Taranoko based in Estonia. "Mobile ad and app monetization companies, such as TapJoy and PlayHaven, have precisely the same need. Mobile analytics expertise and technology is a must for them in order to stay ahead of the competition and respond to the mobile marketing trends."

Developer benefits
According to Raul Castanon-Martinez, an analyst with the 451 Research Group, market consolidation will benefit developers because until recently, the number of vendors with similar but not quite the same solutions was overwhelming. In many cases, developers relied on more than one vendor to meet their requirements. 

"It's not only vendors with similar offerings that are merging, as in the case of App Annie and Distimo," he said. "We're looking at vendors with solutions that work better when used together, either merging or making integration between their solutions easier, as in the case of Tune, which was already working closely with MobileDevHQ before acquiring the company."

Andy Yang, CEO of Upsight, which was the result of a merger between mobile marketing firm PlayHaven and analytics firm Kontagent, said his firm has frequently come across developers with 10 to 15 provider SDKS running in their apps. 

"The costs for developers are enormous. Integration is a pain. Managing multiple dashboards and their respective, disparate data sets can be crippling," he said.

Steve Wadsworth Tapjoy CEO

Wadsworth

Steve Wadsworth, president and CEO of Tapjoy, argued that the real differentiator is being able to provide actionable insights from mobile app analytics that will give developers specific ideas on how to improve the way they monetize their work. That was the thinking behind the 5Rocks deal, which he said would result in a single SDK that incorporates both Tapjoy's ad tech optimization tools with 5Rocks' deep insights around customer engagement and optimization. 

"App developers want something more comprehensive than four or five point solutions," he said. "Integrating all these SDKs is not insignificant for resource-constrained independent [developers]. Offering that can provide a significant lift in the value proposition to integrate these tools and use them. It makes it easier to say 'yes' to mobile app analytics."

Free vs. paid services 
All the M&A activity raises other questions about what providers will offer for free or at low costs versus paid services. App Annie, Distimo and Flurry are all known for frequently publishing research about app store activity and market trends that are available to anyone. While Schmitt said providing free data will remain a core of App Annie's mission, Wadsworth wasn't sure whether Tapjoy would do the same. 

"That's a bridge that we'll cross once we get deeper into this. A lot of it will come down to what is valuable to the industry," he said. "The answer is: 'Likely,' but no commitment at this point."

Raul Castanon-Martinez 451 Research

Castanon-Martinez

Castanon-Martinez said he believes the trend is leaning to free analytics as a standard model for analytics vendors. For example, Upsight recently launched its free tier, he pointed out, and has been successful in enrolling more users. Then there's Amazon Web Services (AWS), which recently launched AWS Mobile Services and offers a free tier that is even higher than most analytics vendors. "Vendors will offer free analytics services for up to a certain number of active users, events or traffic, and monetize with premium features, but developers will still get a lot at that level," he said. 

That being said, mobile app analytics providers need to make sure the way they make money off developers doesn't alienate them. 

"I have completely written off those types of services that gather data from me or my users to aggregate it and sell it to third parties," said David Barnard, founder of Contrast, based in Austin, Tex., which makes Launch Center Pro and other apps. "Instead, I pay for Mixpanel, which has a clear privacy policy and doesn't aggregate data across accounts."

Indeed, despite all the acquisitions taking place, there seem to be plenty of choices that remain for app developers that want to keep their options open. Castanon-Martinez pointed to firms such as Priori Data, Kochava and Keen.io, among others. 

"What is really interesting to me is that all these innovations that are disrupting the space are coming from startups, and not from established BI, CRM or marketing automation vendors, or even from companies like Twitter and Yahoo, who are instead buying some of these companies to build their analytics capabilities," he said. "So while some of them are definitely prime acquisition targets for tech giants like Facebook and Google, and we might see some of them eventually become acquired, I do believe there is a market for standalone analytics providers that are ahead of the curve when it comes to developing and applying technology."

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