The Impact That In-App Promo Codes Could Have On Apple's App Store

May 26 2014, 6:26pm CDT | by

As noted in Forbes’ regular Apple Loop column, Apple appears to be testing a promotional code system, where developers can redeem codes to gain access to in-app purchases. Currently being trialled on a very small number of application, including EA’s Real Racing 3 which was already seen as a test-bed of the freemium model by the publisher, the widespread availability of promo codes for use by developers may be one of the announcements at next week’s WWDC.

If it does happen, then the promo codes will have a notable effect on Apple’s App Store ecosystem. They will act as a new form of lead generation, and aid discovery of the applications which use them.

Until now Apple has discouraged promo codes for in-app purchases, going so far as to reject applications which implement a home-brew solution to this problem. The inclusion of this system in Real Racing 3 is not something that will have been missed by Apple’s quality control – it is tightly tied into the App Store experience and is there with Apple’s blessing.

Not only does this mean that the payments for any promo codes will stay within the App Store environment, ensuring Apple receives the 30% cut of any money flowing around iOS apps, it also acts as means of promoting a specific app in the App Store. When you input the promo code for Real Racing 3 and you do not have the app installed, you are promoted to install the app. Promo codes will be advertised and made available in the wild, but they will all lead back to Apple’s own infrastructure.

Spending to acquire users is nothing new, but the promo code system on display in Real Racing 3 will allow other developers to implement this approach easily through the App Store, while allowing Apple to retain as much oversight and control as possible.

Developers should also consider the impact that promo codes are going to have on the Top Ten charts in iTunes. How will promo codes affect these charts? Will they count as regular sales and boost the rankings of your apps in the top grossing charts? It’s not yet clear if developers still have to pay Apple the 30% tariff for the in-app purchases covered by the promo code, even if the user receives the good for free. Even if that is the case, isn’t that simply Apple monetizing the user acquisition cost through the App Store, rather than pushing developers away towards alternative networks?

It’s unlikely that the Real Racing 3 experiment is a one-off. Once Apple offers the ability to provide in-app promo codes to all developers, the landscape around marketing applications will change once more. A changing marketplace will offer opportunities to the developers and marketing teams able to react quickly to the new landscape.

It’s going to be an exciting environment when it’s unlocked.

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