Latest posts by Hussain Fakhruddin (see all)
Monetization isn’t a simple process for mobile developers. Advertisements, paid installs, in-app purchases — these all can generate revenue for mobile app developers, but they aren’t the only methods available. Also not everybody is capable of making a ‘kick ass app’.
Each time we download an app, we reveal a little bit about ourselves. A glance at the apps on your phone can indicate whether you are a fan of sports, gaming, or public radio, and whether you love to hike or cook or travel. But our choices of apps also reveal our individual tolerance for advertising, and how we feel about the trade-off between paying for content directly, or paying indirectly by (implicitly) agreeing to view ads.
In many cases, apps are available in two forms: free (with ads) and paid (no ads). If you truly can’t stand to see ads in apps, you can usually pay $.99 or $1.99 to eliminate the ads and possibly get some additional functionality too. Even when a specific app does not come in paid and free versions, there are often other apps to choose from, free and paid, that perform very similar tasks like calling a taxi or looking up recipes. However, we are often confronted with examples of rather widely used apps that still cannot be considered commercially successful.
Here are a few innovative strategies to monetize mobile apps:
1. Expanding to Gaming
LINE is the most popular mobile messaging app in Japan with over 80 million users. It’s also completely free.
To maintain its massive user base, LINE turned to gaming to cash in on its existing user base. It launched a puzzle game called LINE Pop, which garnered more than one million installs in one day and 10 million installs and $1 million in revenue in less than two weeks.
The success of LINE Pop is definitely a wake up call for many productivity apps (especially messaging apps like Whatsapp) to think about new ways to capitalize on their user base.
2. Internationalization: Go Where the Money Is
Not all users are created equal; some citizens in some countries are more willing to pay for apps than others. Smartphones help to speed up globalization, but not all developers think globally, and most Silicon Valley app developers tend to focus mainly on the US market. This makes sense as long as you have enough run rate.
According to Distimo’s report on the fastest-growing countries for App Store revenue, countries like Japan, Russia, China, Taiwan, Thailand, Brazil, Mexico, and Korea all showed a higher year-over-year growth in revenue than the U.S., which ranked 13th with a growth rate of 44 percent. Once you forget about these countries, and you’re missing enormous revenue potential.
3. Drive Installs for Other Mobile Apps
Dolphin Browser generates revenue by driving installs for other mobile developers.
A great example of this monetization model is Appsfire, a popular app discovery tool that tracks free or temporarily discounted apps. Its developers were able to build a big following and drive revenue from other developers who want to market to Appfire’s users.
4. Employing the Free & Freemium Model
Noom is a weight loss coaching app that gives users daily tasks and helps them with long-term weight loss.
Instead of charging for installs and selling advertising, Noom was successfully able to bridge the gap and charge for monthly subscription to its premium coaching services. Its basic app is free, but for those users who want a bit more, they need to fork over a few bucks. It’s a win for everyone, the casual users who get smaller benefits free of charge, the company that makes money for its work, and the serious users who have the option to get high-quality content.
The recent research by SensorTower reveals the interdependency between app categories and business models. It shows that for such categories as Newsstand, Social Networking, Lifestyle, Entertainment or News free is in most cases the best way to go, while in other categories such as Weather and Navigation, there is much more latitude when it comes to having paid apps.
5. Turning Advertising Into Entertainment
This is not ordinary advertising. No banner, interstitial, cross-promotion, or offer walls in the game. Outfit7 (creator of Talking Tomcat, which has 600 million installs) has mastered the art of turning advertising into entertainment. Here’s how:
DreamWorks approached Outfit7’s chief revenue office, Narry Singh, last year wanting to integrate DreamWorks’ film Madagascar into the Talking Tomcat experience. Singh knew his clients would not settle for a simple banner ad, so instead, he designed interactive, nine-second applets. A user could activate the Madagascar experience by beating Talking Tomcat five times. Once activated, a Madagascar dream cloud would appear and the game background would change completely.
“We want to integrate Madagascar as part of the game.” Singh said. “Your customers don’t buy your app, they buy your story.”
This strategy of turning advertising into entertainment scored Singh and the Outfit7 team a click-through rate higher than 9 percent.
Overall, considering the recent developments of the app market and the various options available, freemium seems to be the most suitable business model to start with. You will gain your users much faster and after the analysis of your app usage will figure out how to monetize your user base in the most profitable way. Even WhatsApp recently moved away from charging their users for download. Now they provide the app to its users for free during the first year and charge $.99 a year after that. However, certainly, there are cases when in-app purchases are hard to integrate into the functionality of a specific app. In these cases, charging for downloads appears to be the only way to make money.