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Why App Developers Are Hitching a Ride on Urban Airship

Whether you prefer an iPhone or an Android phone, there’s one thing that all smartphone users have in common: We love apps.

And there’s certainly no shortage of them. Apple’s (Nasdaq: AAPL) App Store and Google’s (Nasdaq: GOOG) Android Market each offer more than 500,000 applications.

The market is growing, too. In September alone, developers submitted more 42,000 new apps to the Android Market, according to a report from Research2Guidance. 

So it’s more important than ever for app developers to make their applications stand out and keep users coming back for more – no matter how many new alternatives hit the market. Because once apps get lost in the shuffle, developers can kiss their revenue goodbye.

Luckily, Portland-based startup, Urban Airship, has found a way to keep apps relevant, interactive and lucrative in this highly competitive market.

Here’s how…

Keeping App Users Tuned In

Urban Airship provides the tools for developers to integrate push notifications into their apps.

Push notifications are messages that pop up on your phone or tablet, alerting you to something occurring within an application. These alerts can range from anything from sports scores and weather updates, to a new high-score in your favorite mobile game and reminders to grab milk on the way home.

The idea is simple: The more push notifications a user receives, the more likely he or she is to continue interacting with an application. Which means more potential revenue for the app maker.

Urban Airship’s tools allow app creators to see how their notifications are performing, too. That way, developers can make adjustments if a specific message was ignored or irritating enough that the user uninstalled the app entirely.

Plus, the company helps users make purchases within apps – a huge moneymaker.  It was this “freemium” business model that handed Farmville creator, Zynga, 96% of its revenue in 2010.

But to give you an idea of how useful Urban Airship’s toolkit really is, consider this:

It has pushed out a total of seven billion notifications – a current rate of one billion notifications each month. And revenue has exploded, growing 600% this year alone.

The technology can be seen in apps from industry leaders like ESPN, LivingSocial, FOX, Newsweek, Dictionary.com and Warner Bros.

Best of all, two recent developments should make push notifications even more popular moving forward.

~ The Launch of iOS 5

Apple’s latest operating system offers a considerable improvement to the way it sends push notifications.

Instead of the annoying notification box that pops up (usually at the most inopportune times), iPhones and iPads give you the option to receive messages along the top of the screen. And you can access them all in a simple dropdown menu.

Realizing that this less obtrusive option should entice Apple device owners to use the push notification system, more app makers are taking Urban Airship for a spin. The company reports that interest in its services has increased 10-fold just since iOS 5 launched in mid-October.

~ Acquisition of SimpleGeo

Last week, Urban Airship acquired San Francisco-based, SimpleGeo, along with its location-tracking abilities.

That means Urban Airship can now provide location specific notifications. So companies like LivingSocial – which relays alerts to users about events or promotions nearby – should boost profits considerably.

Bottom line: As more applications hit the market, more developers will be flocking to Urban Airship. It’s a one-stop-shop for boosting revenue by using push notifications to keep users coming back to an app.

And considering that two of the company’s strategic partners, Verizon (NYSE: VZ) and Salesforce (NYSE: CRM), just dished out $15 million in financing – bringing Urban Airship’s total funding up to $26.1 million – I’m clearly not the only one who’s tuned in to the company’s potential.

Good investing,

Justin Fritz

Justin Fritz

, Executive Editor

View More By Justin Fritz