Apple Reportedly Rejecting Apps With Pay-Per-Install Campaigns

Apple (s aapl) isn’t just tweaking its App Store rankings to include more than download numbers and possibly lessening the impact of incentivized pay-per-install marketing campaigns. It’s actually banning apps that use pay-per-install, according to one of the leading providers, Tapjoy.
Tapjoy said a number of developers have had their apps rejected recently, apparently because they were running incentivized app installs, a form of cross-promotion marketing for app developers, who pay to have their app installed in other apps. This jibes with another report from Pocketgamer, which also reported that a number of apps have been rejected for offering virtual currency in exchange for downloads of apps. Tapjoy said it believes that while there is no app store rule banning pay-per-install, Apple may be using section 3.10 of the developer program license agreement, 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

Tapjoy said the problem may come down to a misconception about incentivized app installs. The marketing campaigns allow a consumer to obtain virtual currency or goods in an app in exchange for downloading an app. These campaigns have helped boost the download numbers of some developers who work with Tapjoy and others such as Flurry and W3i to get their apps promoted. Tapjoy said the model is beneficial to users, who get to receive a coupon for virtual goods in exchange for trying out new apps. It also benefits advertisers and developers who only pay for installs. And it’s good, Tapjoy said, for publishers, who are able to monetize users who wouldn’t otherwise pay.

“Tapjoy has been and continues to be very supportive of the Apple app ecosystem, and we were not surprised about the Top Free & Paid rankings algorithm changes — we’re all for incremental changes that add to the user experience and keep the environment dynamic. But banning the largest and most effective channel for app installs has a significant and long-term negative impact on the user experience, developer innovation and advertiser utility,” the company said in a statement.

This comes, as I mentioned, right around the same time Apple has apparently started tweaking its app store rankings to factor in more than download numbers. It appears Apple may be using ratings and/or usage to help move apps up. But the changes could have also been aimed at blunting the effect of incentivized app installs, which some have called gaming the system. That’s something no app store owner wants because it can undermine their rankings and encourage developers to manipulate the system rather than put out quality apps.
The thing is, this has been around for a while now and is widely used by many developers. I wrote about these alternative payment systems in January and noted how many developers and brands such as Kayak, Fandango, Tapulous (s dis) and Groupon are using the campaigns to distribute apps. Tapjoy, which was also part of the scamville controversy on Facebook when it was running questionable offer-based payments as Offerpal, recently reported it was serving 1.5 million app installs a day across iOS and Android (s goog), generating $35 million per month.
The money involved may also be part of the problem. With pay-per-install, Tapjoy and others don’t pay anything to Apple. Had a game developer just used in-app payments to sell virtual goods instead of incentivized app installs, they would need to fork over 30 percent of the in-app purchase to Apple. But alternative payment providers aren’t required to hand over some of their revenue to Apple from the money they receive from these campaigns. So it’s potentially lost revenue for Apple, something it’s getting more serious about. 
I’ve reached out to Apple for confirmation and clarification and will update when I hear something. But it’s not completely surprising that Apple might target these incentivized app install campaigns. They do have a way of helping apps jump into the top of the rankings through incentives rather than just relying on good reviews, word of mouth and more traditional marketing.I’m in favor of tweaks to the App Store rankings algorithm to reward more quality and engagement and lessening the power of incentivized campaigns, but I’m not sure Apple has to ban all apps that use incentivized installs. That’s a powerful move, completing removing one avenue of promotion and marketing for app developers, who have to get noticed in a sea of 350,000 apps. Developers who relied on incentivized installs will need to make big adjustments in their business model.
But it’s Apple’s store to run. It may be the company is looking to increase the quality of apps on its top rankings and remove incentives for developers and brands to buy installs. Or it could be Apple would like a cut of the revenue from this growing business. Apple might also be looking to direct more dollars to traditional display and rich-media mobile advertising, which it can benefit from through iAd. At any rate, Apple is showing it has a tight hold on the store, and it’s not afraid to assert its authority when its reputation, or perhaps potential revenue, is at stake.