App Marketing Tips

Just this week, local Minnesota-based Digital River lost its largest client, Symantec, which represented approximately 30% of their revenue. Based on the public reaction from senior management, it appears that Digital River was blindsided by Symantec’s announcement. The negative 38% impact on Digital River’s stock price was not too pretty. I had been hearing gossip and rumors for months that one of Digital River’s largest customers would likely walk from them, but the general sentiment was that it would be Microsoft and not Symantec.

According to a report Merrill Lynch put out, Symantec might not have been such a great account for Digital River after all. Apparently that portion of Digital River’s business had slowly been declining for a while now, whereas the rest of Digital River’s business had a higher growth rate. My prediction is that Digital River will bounce back. I have always been impressed by their resiliency as a company, having watched them from the sidelines for a number of years and hearing stories from former employees, such as Lisa Nistler, who works with me at W3i and who was recently promoted to VP of Marketing at W3i (congratulations again Lisa!).

Do you have a good customer concentration story or perspective on Digital River’s future? If so, please post in the comments of this blog post.

I’ll give you a customer concentration story of my own… The risk of heavy customer concentration is one of the core weaknesses of W3i’s closest competitors, the toolbar players. W3i’s competitors that are dedicated to toolbar solutions that are monetized exclusively through search feeds run a very high risk tied to the search market. When these competitors have any kind of hiccup with their search feeds, whether it be from a reduction in rates from their search partner, a change in toolbar usage behavior driven by a new browser release, or any other possible factor, application publishers who use these competitors to provide revenue within their installers can see a sharp decline in revenue very quickly. I am so thankful that our business model is centered on a marketplace approach, where we provide a wide range of application offers, including toolbars and other high-revenue-generating Windows applications, versus the toolbar-only model.