Strategic thinking is experiencing a renaissance on the web through content strategy, which is giving web authors and managers the tools they need to consistently create successful digital content. In more technical circles, however, strategy is often still overlooked in favour of just doing it. Although this eager tactic has some merit, this article demonstrates how a little prior research can benefit most web apps. Best of all, it’s quick and free.
Researching the approximate size and shape of your market sounds like a theoretical exercise that’s only useful for those seeking investment, but it’s a critical step in influencing the direction of your app. Is your market large enough to support an advertising-funded app? Is it small enough to generate word-of-mouth recommendations and community loyalty? Does most of the market live in a country that makes it worthwhile to support translated versions and foreign currency support? Will your market still be around in 12 months time?
Luckily for us, and thanks in part to our increasing apathy towards personal privacy, there are more research data and tools freely available than ever before.
Let’s assume that we’re building an app that automatically analyses the design of a website; not the code or the content, but the actual graphic look and feel. It can extract and analyse the typography hierarchy and adherence to micro-typography rules, the percentage and distribution of whitespace, the colour palette, and consistency of layout.
Not only will it give you a report, it will highlight potential issues and will enable you to tweak elements in real-time to preview how your website would look with a superior typography system, a consistent grid system, or a more considered colour palette.
1. Market Validation
Do people want this tool? Would it be used? The simplest and most widely propagated advice for market validation is to simply ask yourself, “Do I need this? Would I use this?” Software built to address your problems will almost certainly also address those of others; it’s rare for anyone to face a dilemma that is unique to them.
Even so, gut-based reasoning isn’t always enough. Without quantifying your market, it’s difficult to make informed decisions about pricing, promotion, interface design, architectural scalability and other important elements of your app.
Seeking out competition is an easy way to start, but we don’t necessarily need to identify existing competitors to prove that we’re building something that people want. If we can’t find competitors, we can alternatively look for people blogging about problems that the app solves, or qualify that people search for topics related to the app domain.
In the case of our example app, Google doesn’t return any direct competitors, but a similar and fairly active manual design critiquing service is highlighted. This is great news for us, with the best of both worlds: no direct competition, plus validation that the market exists for such a service.
The Google AdWords Keyword Tool supports this assertion; a significant number of people are searching for topics related to the app. More importantly, the relatively high Cost Per Click for these topics demonstrates that companies – who we presume are offering related services or products – are willing to pay top-dollar to attract customers, so the market is feasibly lucrative.
2. Market Size and Growth
There are two ways to measure the size of a market: in dollar terms (“the market is worth $3 billion”) or potential customer base (“2 million people”).
The market dollar size is more difficult to estimate. It is normally used once you’ve started to generate revenue, so that you can calculate your share of the market monetarily. Nonetheless, if you’re eager to get some idea of potential revenue, the Hoovers website tracks the sales revenue from published company reports, which are displayed in the free search results. If you can find companies that offer services or products similar to that of your app, it’s a decent yardstick.
Along the same lines, industry market research reports by companies such as eMarketer or Forrester provide professionally researched statistics on market size, but often cost hundreds of dollars. Although these supply accurate data and expert analysis, they are impractical for most web start-ups.
A more informal approach is to use social networks to estimate the size of a customer base.
Twitter is a great place to start: a significant percentage of people use it, professional interests can be identified and it’s searchable. Although Twitter Search doesn’t offer a method for searching user biographies, various third party apps do, such as Twellow.
Unconvinced by the completeness of third-party databases, I prefer the simpler approach of using Google to search Twitter biographies (replace topic with a subject relevant to your app):
site:twitter.com intext:”bio * topic”
The number of Twitter results is a wildly inaccurate guess, but at least you will get a feel for a top-end ballpark figure, and have a measurement that you can compare across different topics.
What we really need is a few more numbers, so that we can start to make a more informed guess.
The LinkedIn advanced search provides a useful means for searching job titles. In our case, we want to identify how many people might use the web design improvement tool. A search for the title of ‘web manager’ – people in charge of websites, a large constituent of our target audience – returns 83,370 results.
We now have three figures: 60,500 people search Google monthly for a topic related to our web app, 198,000 people on Twitter have an interest in part of what our app addresses, and 83,370 people on LinkedIn may be in a position that the app would appeal to.
Let’s conservatively estimate our market size based on this range of figures to be about 50,000 people. We don’t need to be accurate for this information to be useful; we can be fairly sure that our market size isn’t 100 people or 1 million people. If we aim to initially capture 1% of the market, that’s 500 customers – we can use this later to guide pricing and other decisions.
Why 1% of the market? The app will exist in a competitive market. Even though there are no feature-for-feature competitors, there are numerous tried-and-test alternatives for improving design: hire a graphic designer or user experience expert, perform a user survey, or use website analytics. In a highly fragmented market, it’s difficult to capture market share.
Should your app exist in a more consolidated market – for example, email readers or search engines – you’ll have a tougher fight on your hands to establish a presence, against well-known entrenched competitors. On the flip side, a successful app can more easily capture a larger market share, in the tens of percent.
To check that the market will still be valid in the future, the Google Insights for Search tool can be used to identify trends in interest. The example below reveals a rapidly growing interest in typography within the Internet category, a good sign for the future of our example app.
3. Market Segments
Once you’re confident that there’s a valid market out there waiting for your app, it’s time to find out more about who they are.
The LinkedIn search results that we used earlier are also segmented by country. This gives us an idea of where our target customers live and work.
Be careful with this approach. If your app targets a more generic subject, such as shoes, your initial results might highlight a peak US demographic, but this data may be better combined with searches for chaussures, zapatos, etc.
Additional market segmentation can be performed using Facebook. Follow the website instructions to create a new Facebook ad – don’t worry, there’s no need to actually create or pay for one. Once on the page where you create an advert, scroll down past the first few advert text fields to the Targeting section.
You can specify country, city, age, sex, relationship status, interest and education level. As you enter data into each field, the Estimated Reach (number of Facebook users) automatically updates.
Start near the bottom: enter topics related to your app. Be as specific as possible. The Estimated Reach on the right will update to give you the total number of people on Facebook who might be interested in your app.
Next, specify a variety of locations, age ranges, sexes and relationships statuses. Each time, record the new Reach in a spreadsheet or text file. We’ve already estimated the market size so we’re not interested in the absolute numbers; rather, the demographic split of the audience. Once you’ve recorded a range of demographic data, calculate or plot the percentages.
In the case of the design analysis app, over half the target market is in the 22-31 year old age bracket, more than 75% live in North America, almost half are married, and females outnumber males.
As with LinkedIn, the numbers are influenced by the popularity of Facebook within each age range, penetration within each country and the language used to match interests. Bear these things in mind throughout your analysis.
Once you’ve got an overview of your market, combine permutations of the main demographics to identify significant, specific segments of your user base. For example, we can determine that 5% of our target customers are 22-30 year old married females in the US who have graduated college. These represent specific archetypal users that can be expanded into full personas, and should be regularly referenced in critical project decisions regarding app features, marketing, pricing, design, etc.
Data is power. Social networking websites and public search data allow us to perform rudimentary market research quickly and at no cost. The results can challenge the validity of the app, and provide quantifiable data on which to base all kinds of decisions that influence our chance of success.