The Impact of Zero-Price Promotions on Sales: A case study of Amazon Appstore

The mobile app economy is growing at an unprecedented pace with over half a million independent developers fighting for the attention of same potential customers. Highly competitive environment for the developers and the appstores alike, has led to new innovative marketing strategies like free-mium apps, payper-minute apps, in-app purchase options etc. along with traditional ones like paid advertising. Amazon, after making a late entry in the app economy, has captured considerable marketshare by providing attractive deep discounted promotions like ‘Free App of the Day’. Even though such promotions offer highly sought after ‘visibility’ to the participating developers, they only benefit if the incremental post promotion sales offset the cost of free ‘giveaways’ on the day of promotion. In this paper, I perform a rigorous statistical analysis to show that exposure received during such promotions does not always lead to incremental future sales. Moreover, the utility of the promotions strongly depend on the app characteristics themselves.