News | Hamburg, 05/22/2023

Apps for the World

Boost@Bertelsmann: Applike Group

Hamburg-based Applike Group is one of the world‘s ten largest app platforms. Its business of marketing apps, building reach, mobile games development, and automation is to be strongly expanded with extensive Boost investments.

The figures are impressive: experts put the revenues generated annually worldwide by apps for mobile devices at around 100 billion euros. Advertising revenues from global branding reach a volume of around 800 billion euros a year, money that could potentially flow into the app market. Experts agree that the app business will continue to grow, and it’s not just app developers, operators and marketers in the United States and Asia who are getting in on this growth market: the Hamburg-based Applike Group, too, is among the ten largest app platforms in the world. It was founded in 2015 by Jonas Thiemann and Carlo Szelinsky with Gruner + Jahr as majority shareholder; today the stake is held by Bertelsmann Investments and assigned to its new Bertelsmann Next division. Bertelsmann Next opens up promising future lines of business for Bertelsmann. This is an ideal environment for the Applike Group with its current portfolio of four companies: Adjoe, Justdice, Sunday and Justtrack. A fifth company in the field of branded games is in the process of being founded. These companies cover the business fields of app marketing, reach building, mobile games development and automation. As part of Bertelsmann’s Boost strategy, Bertelsmann Investments and the Applike Group had announced in April 2022 that they were investing 100 million euros in the global expansion of the app platform. In an interview, Applike Group’s co-founders and CEOs talk about what has happened since then, their plans for the future and the challenges they face.

Applike Group is now active in practically every country in the world with its software solutions. Most of the revenues are generated in the United States: calculated across all businesses, the United States accounts for about 30 percent of total revenues, while Germany, the company’s home country, generates about half of that. The United Kingdom and France together account for around 10 percent, and the growth markets of India, Brazil and Indonesia together account for another 10 percent. While Applike is in the process of setting up sales offices for business customers abroad for the first time in Boston in the United States, its most important market, and in Istanbul in Turkey – India is also being considered – Hamburg is and will remain its headquarters. There, in an attractively located office building on the Outer Alster Lake, the Applike Group has now rented four floors with around 4,000 square meters, which currently accommodate 220 employees whenever they are not working from home. At the beginning of 2022, there were just 130. And they all have their work cut out for them, because if there’s one thing Jonas Thiemann is sure of, it’s that business is booming for the Applike Group. “Admittedly, the app market shrank slightly in 2022 for the first time in a decade after two coronavirus-induced record years, similar to the post COVID-induced stagnation in the e-commerce sector. But at Applike we still managed to keep growing, and our growth potential is great,” he says happily, pointing to the company’s double-digit returns on sales. Even before Bertelsmann’s big capital injection, Applike Group had been working consistently and successfully to develop its existing businesses using its own resources. And, he says, this process is now being significantly intensified. “For us, Boost means growing organically, i.e., developing software solutions ourselves, investing in the development of new businesses, technologies and platforms – and, at least for the time being, not acquiring other companies,” says Thiemann, describing the plan for how the available money will be used. A substantial portion of it will go into building up a fifth company, the final name of which has not yet been decided. Co-CEO Thiemann says its working title is “Brand Games.” “It should launch before the year is out and will complement our existing lines of business,” he adds.

Because while Applike itself may not be a household name for smartphone users, many of them come into contact with the apps developed in Hamburg practically every day. One example is Justdice (www.justdice.io ), an application originally developed by Carlo Szelinsky himself and sold to game developers by Jonas Thiemann. It represents Applike’s original business idea “Game Recommendations,” before further apps were later added and the Applike Group was founded in 2020 as a holding company with various business units. “The apps offered by Justdice today analyze the usage behavior of Android users and, based on this, recommend new apps published by Justdice customers,” says Thiemann, explaining the company’s first business model. “For their loyal use of these apps, users are rewarded with vouchers or virtual currency that they can redeem for various coupons and rewards.” Justdice-powered apps, such as Coinpop, Appstation and Cash’em All, have been downloaded more than 250 million times in the Google Play Store to date. “This is the company we now plan to grow into a game publisher. In other words, Justdice won’t just operate recommendation apps that suggest games, but will also develop its own ‘play-to-earn’ games,” says Thiemann, describing the investment project that should ensure the aforementioned organic growth of this particular Applike company. “Play-to-earn” (P2E) is the name given to a category of mobile games whose users can earn real rewards by being successful in the game.

Core modules of the Boost strategy

“Next in Applike’s history came adjoe,” co-CEO Carlo Szelinsky continues. Adjoe (www.adjoe.io) is a pure B2B business, specifically a marketer of in-app advertising space. “App publishers can use Adjoe to earn money with advertising addressed to their target groups and attract new users,” explains Szelinsky. It also serves to market the reach of the company’s own companies, Justdice and Sunday. For the two Applike founders, Adjoe is the core module of their Boost strategy. “Here, we plan to invest in a video advertising platform that will make it possible to market video advertising in apps,” says Szelinsky, explaining the plan. “Think of it as a smart auction mechanism: for example, you might have an app with a certain volume for ads, which is then offered in a real-time auction to advertisers around the world to fetch the highest possible price.” Jonas Thiemann adds that this platform is so important “because we can use it to potentially monetize not only a given number of apps, but basically every app worldwide.” From gaming apps to news apps to dating apps, all of them could display video ads in this way and make money. “This would really take us to the mass market,” Thiemann continues. With around 6 billion smartphone users and around 3.5 billion mobile games users worldwide, there are enormous scaling opportunities for Adjoe – the company has apparently already reached 500 million of these users. After a year of development, a beta version of “Adjoe Wave,” the name of the expansion, is currently in testing; it is already being used to market Justdice and Sunday. Jonas Thiemann is optimistic: “We expect to have our first third-party customers by the end of the year.”

Sunday (www.sunday.gg) is the name of the third company that became part of the group. “It specializes in the development and marketing of mobile games, especially ‘hyper-casual games’,” explains Carlo Szelinsky. “This refers to games for smartphones that can be played quickly ‘on the fly.’ These types of mobile games currently make up the largest media category in terms of usage time per day. The market for such games is very competitive and subject to rapid change,” continues Szelinsky. Games are constantly being developed and redeveloped, and new ways of making money from games and the advertising in them are constantly emerging. “At Sunday, the Boost investment is going into the expansion of the publishing division,” Jonas Thiemann continues. Sunday is divided into two business units: one of them develops its own games, the other helps other companies do so. “The advantage of working with one of several thousand game studios is that we gain access to many more creative ideas and can test and ‘make them big’ quickly and automatically by offering them on our publishing platform and linking them to innovative advertising formats. In this way, we can profit from the most popular ideas,” says Thiemann. Sunday also serves as a reach enhancer for the group itself: through Sunday, Adjoe advertisers can reach even more users.

Automated reach-building

Jonas Thiemann tells us that Justtrack (www.justtrack.io) was the Applike Group’s first start-up after last year’s Boost investment. “Justtrack is a software like a kind of dashboard on which the most important results from data analyses, for example on views, users, user retention, return on investment from advertising campaigns, and in-app behavior, are visualized in graphics as needed and at a glance,” explains Carlo Szelinsky. “Smartphone apps can use this dashboard to increase their reach by driving automated marketing campaigns for themselves.” Jonas Thiemann gives an example: “Let’s say I want to attract new users for a game. To do that, I need to work with numerous partners – such as Google and Facebook, or even Adjoe. Justtrack makes it possible to do exactly that via a single dashboard, and it’s automated, too.” Justtrack is already being used in-house, says Thiemann, and has resulted in high efficiency gains for the company’s own marketing teams. Three external customers are also testing the software in its preliminary beta version.

Company number five with the as-yet non-final name is, as mentioned, in the planning stage and is meant to connect users of mobile games with prominent brands from the end-customer business. “It’s not that easy to draw users’ attention to a brand on a smartphone with its limited-size display,” says Thiemann, explaining the rationale behind “Brand Games.” “That’s why we want to develop brand-related games, such as a car racing game for a car manufacturer or a build-a-burger game for a fast-food chain, in which the brands are present but don’t seem intrusive. And especially for large, globally active customers, we can develop such a game with our other companies and beta-test and evaluate it with a limited number of users – and we can probably do this better than anyone else. With our marketing power, we can also ensure a correspondingly large global reach, which would be in the millions of users,” he estimates.

Bertelsmann Investments’ network is very helpful

“Because we are doing so well, we are always on the lookout for new specialists,” says Carlo Szelinsky, citing a limiting factor for further growth. In part, this search has been successful, among other things due to the influx of Ukrainian and Russian IT experts who have come to Germany because of the war in Ukraine. “But we’ve been able to attract many new colleagues from other regions of the world as well,” Szelinsky says happily. At this point, around 70 percent of Applike employees are not from Germany; they move to Hamburg from other countries specifically because of Applike. But even that only helps to a limited extent: “The shortage of skilled workers is and will probably remain the biggest challenge for the foreseeable future. Our target for the end of the year is to have 300 employees,” says Szelinsky. And people are now working in the office again, so that they can meet spontaneously and develop ideas together as needed. At least three days a week in the office, but also three fully remote weeks at a stretch are common. Specialists with IT skills are needed above all, he says, but also professionals with skills in management, sales, and human resources. It may be possible to recruit the qualified workers who, as has been reported in recent weeks, are being let go by large tech companies, for Applike, but this remains to be seen. The two co-CEOs, who each own a stake of around 10 percent in Applike Group, are also giving priority to the expansion of the second management tier, for which suitable personnel are also being sought. “Our goal is for both of us to increasingly focus on the strategic development of the Applike Group as a whole and to place the management of our soon-to-be-five companies in the hands of the respective management teams,” says Jonas Thiemann.

“In sum, the extensive Boost investments will enable us to speed up the process of making our highly scalable businesses fit for the future and to grow significantly faster,” the co-CEO continues. “On top of this, we clearly benefit from Bertelsmann’s network in general and that of Bertelsmann Investments in particular. We are in exactly the right place there because we are dealing with businesses and business leaders who bring a similar mindset to similarly innovative environments. In this respect, we benefit enormously from the global exchange of knowledge with each other and, of course, from the extensive network that we can draw on. Last but not least, working with Carsten Coesfeld as CEO of Bertelsmann Investments is great fun. We’re often on the same wavelength, and end up just bouncing ideas off each other.” In addition, Carlo Szelinsky continues, there is the trust of the Group’s management and the support provided by Bertelsmann’s corporate services. “We have the shared goal of building a really great company. That can also mean not selling the company at the first opportunity,” he affirms. Thiemann adds: “And when it comes to setting up a new business unit, for example, or to tax, legal, or accounting issues, we always quickly find the right people at Bertelsmann’s Corporate Center who understand our business processes and our concerns and can help us. So in many cases, therefore, we don’t have to deal with developing such competencies ourselves. This takes a lot of pressure off us when it comes to executing our growth strategy. After all, we want to move even further up the rankings of the world’s biggest app platforms. Our vision is to connect with every smartphone owner worldwide.”