Apple cracks down on incentivized iOS app installs

The news: Once upon a time, wily iOS developers could depend on incentivized downloads to vault their applications into the upper rungs of the App Store's bestseller lists, teaming with app monetization and distribution platform partners to create visibility and demand for their newest efforts via promotions within existing iOS favorites. For example, an established iPhone or iPad hit might offer consumers virtual currency and other premiums in exchange for downloading an up-and-coming app promoted by the sponsor. While Apple (NASDAQ:AAPL) claims a 30 percent cut of all conventional in-app consumer purchases, these pay-per-install app agreements existed outside of the computing giant's purview, with all money changing hands between developers and their platform partners. Needless to say, the model couldn't continue forever.

And it didn't: In April, Apple brought the hammer down, rejecting a wave of applications running incentivized install promotions. Apple contended that the apps violated section 3.10 of its App Store Review Guidelines, which states "Developers who attempt to manipulate or cheat the user reviews or chart ranking in the App Store with fake or paid reviews, or any other inappropriate methods will be removed from the iOS Developer Program."

Several weeks after Apple instituted the ban, monetization and distribution platform Tapjoy surveyed close to 500 iOS developers and found that two thirds of respondents credited the pay-per-install model for generating 20 percent of revenues. Some said PPI revenues accounted for more than 60 percent of their earnings. Without options to earn in-game currency by installing or engaging with other apps, consumer complaints spiked, and many developers reported a decline in daily active users as well.

Developers weren't the only ones scrambling to overhaul their business model--their monetization partners were forced to evolve or die, too. Tapjoy is now reinventing itself as a personalized app marketplace, promising consumers customized recommendations based on their likes and dislikes, the apps they're currently using, apps that are popular among their friends and other predictive factors. It's an approach that plays by Apple's rules--at least until the rules change yet again.

Why it was significant: Discovery and monetization remain enormous challenges for all mobile developers, and with Apple's decision to ban incentivized apps, iOS devs not only lost a reliable revenue stream but also an effective tool for driving consumers to their creations. But the emergence of recommendation and discovery services like Tapjoy and Chomp signals a more advanced and compelling approach beneficial to developers and consumers alike.