The YUDU ReportMay 2011

Introduction

“Branded Reader Apps” - iPad and iPhone Apps that housepublications such as magazines, catalogs and brochures, as well as other content such as video. Users download the App and can thenaccess and read the publications within it.

YUDU media are web, mobile and tablet ePublishing specialists who have been serving digital publishing solutions to publishers, retailers and brand owners since 2003. With customers in over 70 countries, producing up to 1,200 digital publications a day and having developed almost 100 iPad and iPhone Apps, they have exclusive access to statistics that shed some light on the success of reader apps and the habits of their users.

The YUDU report draws on analysis of real digital publishing statistics taken across the spectrum of 80 YUDU customer’s iPad and iPhone Apps(and content within the Apps). It focuses on live iPad App usage, offering rareinsight into the habits of consumers downloading and using Branded Reader Apps for the iPad and iPhone.

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In the interest of providing a useful resource for a broad audience across many different sectors, the results were taken from several types of app with readable content - e.g magazine apps, catalog apps and brochure apps. Where possible, these sub-categories will be examined independently from eachother. When a more broad observation is appropriate across these types, they are collectively referred to as ‘branded reader apps’. For simplicity, the app owner will be referred to as the ‘publisher’ in all cases.

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1 Almost 40% of People who Download a Reader App Supply Opt-in Data

After downloading a branded reader app, an average of almost 40 percent of users register their details when given the option. The information supplied via data capture forms is the property of the publisher and can be exported using a simple CSV download. Although Apple provide minimal statistics to thepublishers, they do allow opt-in data capture, giving the user the choice ofsupplying data or not.

The highest rate of user registration was found to take place on Magazine Apps, with 41.48 percent of readers opting to supply their details. A surprising 38.65 percent of brochure app users supplied their details, with only a slightly lower proportion doing so in Catalogue Apps, where 37.48 percent of readers opted to supply their details. This is a remarkable number, showing that users arealmost as likely to supply their information in a promotional app as they are with a magazine title app.

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The average proportion of users registering optional details across all three app types is therefore just over 39 percent. These figures are encouragingly high and also remarkably consistent with one another, with a difference of only 4% between the highest and lowest app types.

With Apple announcing that the App Store has had over 10 billion worldwide downloads since its conception, publishers have potential access to huge amounts of reader or prospective customer data, creating additional reach which may not previously have been available to them.

Percentage of Readers Registering Details50%

40%

30%

20%

10%

0%Catalogue Apps Magazine Apps Brochure / Promo Apps

Publication Type

2 Average Reading Time for iPad Publications is Increasing

On average, the length of time people spend reading iPad publications isincreasing. Across two publication types, magazines and brochures, the visitor length of the ten most recent issues of each publication type were examined (with the 10th being the most recent issue at the time of writing).

It was found that time spent reading brochure editions on the iPad hasincreased by 67 percent over the last 10 releases, a surprisingly larger increase than with iPad magazine editions, which showed an increase of just over 50% since the start of the examined period.

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Time Spent on Editions (from earlierst to latest release)

1 2 3 4 5 6 7 8 9 10

Magazine app

Brochure app

Both publications follow a similar growth curve, maintaining a steady trajectory throughout the period examined. Encouragingly, the highest growth recorded for brochure Apps is between issue 9 and issue 10- increasing by just under50 percent. These figures indicate that the time spent reading brochureeditions on the iPad is increasing at an accelerated rate.

The average time spent on iPad devices overall is also increasing. A recentsurvey by Business Insider found that 77.6 percent of tablet owners haveincreased their usage of the device since purchase. These results suggestthat as users become better acclimatised to the functions available ontheir tablet devices, they are spending longer interacting with them.

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3 Individual iPad Publications Get an Average of 50% Return Rate

YUDU examined return visits across two reader app types: Magazine Apps and Brochure Apps. On average, 64 percent of Magazine App readers return to the App and an encouraging 43 percent of users return to a brochure app.

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0%Brochure Apps Magazine Apps

Publication Type

10%

20%

30%

40%

50%

60%

70%

Percentage of Return Visitors

Magazine editions are by nature more content led than a brochure and so the higher return rate - almost twice that of the brochure - would be expected.However, the brochure return rate of 43 percent is still encouragingly high, given the promotional nature of brochure content. The findings suggest that the iPad is being used regularly by consumers as a research tool for products and services.

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Average Number of Return Visits

0.5

0

Brochure Apps Magazine Apps

Publication Type

1

1.5

2

2.5

3

3.5

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On average, magazine App users return to each issue 3.7 times and Brochure App users return to each brochure 1.8 times.

4 Over One Third of Reader App Users Download Software Updates

Of all downloads of YUDU reader apps, 33.7 percent are software updates toexisting apps, while new app downloads account for the remaining 66.3 percent.

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Container App Downloads

New App Downloads

App Software Updates

This high rate of software updates indicates on-going interaction with the app. User retention is particularly important for edition based magazines, whose sales are largely driven by customers returning to the app when new contentis available. While this data doesn’t specifically document the loyalty ofcustomers when purchasing editions, continuing user interaction with the app in the form of updates is a useful guideline for assessing the retention ofcustomers who interact with the apps.

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This proportion of new software updates is relatively consistent across thedifferent types of reader apps. 33.2 percent of all Magazine app downloadsare software updates, while 38 percent of brochure app downloads aresoftware updates.

These are impressive findings in a marketplace where free apps are considered by many to be disposable. Research conducted by appanalytics company Localytics, found that across all app types, 26percent of those downloaded are used only once.

5 App Downloads Increase with Apple Device Sales

There is understandably a direct correlation between the amount of appdownloads and the number of Apple devices sold. The graph below illustrates the increasing number of downloads between the beginning of October and the end of February. During the Christmas quarter of 2010, 7.3 million iPad’s were sold globally - as many as the previous 2 quarters combined. The notable increase in appdownloads that occurs during this time is no doubt a product of the steepincrease in iPad sales over this period.

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Oct 16 Nov 11 Dec 07 Jan 02 28 Feb 23

On December 25th, app downloads increased by 112 percent on the previous day, and nearly 72 percent on the previous peak on November 21st. This peak in downloads was part of the reason why December saw 33 percent more app downloads than November 2010. Following on from this, app downloadscontinued to increase into early January, with just over 100 percent more apps being downloaded in January 2011 than December.

While the immediate increase of app downloads in times of high device sales is noteworthy, possibly more significant are figures that show App downloads have remained higher than prior to the device sales peak. In February 2011, nearly 78 percent more downloads were recorded than before the peak inNovember 2010, and 89 percent in March 2011.

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With the release of the iPad 2 in April 2011, and the success it’s had in thebrief time it’s been available (at the time of writing), a similar surge in app downloads and market growth as a whole can be anticipated.

November December

Free App Downloads (Daily Average)

January February March

6 In-App Purchase is Increasing

Apple’s in-app purchase system, which lets users buy individual publications or subscriptions from inside an app, is an increasingly important monetization tool for iPad publishers and developers. Our data suggests usage of thisfunctionality has surged in recent months.

When the rate of in-app purchase was examined, it was found that as with free Branded Reader App downloads, in-app purchases have reached a new plateau in the early months of 2011.

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Oct 16 Nov 11 Dec 07 Jan 02 28 Feb 23

Clearly there are two notable in-app usage peaks on January 21st andFebruary 19th, however more significant is the general upward trend of in-app purchases over the past three months. The rate of in-app purchase remained consistent, if unspectacular up-to and including December, however it can be seen that an upward trend of in-app purchases began in 2011.

In January 2011, 53 percent more in-app purchases were made than in Decem-ber 2010. This growth accelerated in February, with January’s download figures being exceeded by 81 percent. March saw a smaller but still significant growth rate of 8 percent.

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The relative consolidation of downloads in March demonstrates anew plateau being reached in the popularity of the in-app purchasesystem. Even though up-front payments still make up the largestrevenue portion for iPad Apps, the data suggests that the revenue stream from in-app purchase is on the increase and should mostdefinitely be considered as an avenue for publishers and appdevelopers to explore.

ConclusionThe findings of this report suggest that Branded Reader Apps are proving tobe a successful channel for publishers and brand owners. Particularlyillustrative of this is the finding that an average of 40 percent of reader app users are opting to share personal information with the publisher when asked. The importance of this cannot be overstated. Publisher’s main fear (and oneof the main reasons they have been holding back on selling magazinesubscriptions in the iTunes Store) was that Apple’s policies would mean they could not get the all-important subscriber data that is often the life bloodof every publishing house. The significant marketing opportunity this datarepresents may go some way to offset Apple’s 30% fees, especially given the additional reach that the App Store opens up to Publishers. Brand ownersbenefit from the creation of an opt-in database of prospective customersthat can be used for future marketing.

Other findings show that app interaction levels with reader apps are high;an average return rate of 67 percent to iPad magazine editions is a notablefinding showing that readers are engaging and interacting with the magazines multiple times. In addition, with over a third of app downloads taking the form of software updates by existing app users, it is clear users continue to engage with their apps well after the initial download as they are keen to downloadthe latest technology.

These findings point to the sustainability of branded reader apps as a viable business model for publishers looking to sell on the App Store and othercompanies who wish to share branded content. What’s more, the recentrelease of the iPad 2 is likely to fuel the popularity of branded reader appsand continue to close the gap between print and digital readership.

We will review the results of this in the next YUDU Report.

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Other YUDU Reports Include:

iPad Trends & Statistics 1 iPad Trends & Statistics 2

YUDU Media www.yudupro.com

email: ipad@yudu.comUK Tel: (+44)0870 760 9258 / US Tel: (+1) 888-367-9838