Mobile Monetization Strategy

Our last post dealt with how to polish your brand image with a mobile app. Clorox introduced an app that persuaded those who knocked on their door that Clorox has immediate solutions for specific needs–stains. Now that you may be considering using apps, the sticky part is how to monetize, how to get people out there to buy what you have to offer.

Did You Know: More than half of the apps on Android charge nothing to use.  It is approximately one-in-three on Apple’s app store.

If you choose not to make an up-front charge for the app, how are you going to make money? Two principal routes to mobile app monetization: Ad Networks, and In-app Purchases.

Ad networks generate revenue from a CPM (Cost Per Thousand) model. This means, for every thousand impressions your app attracts, the app developer receives a certain dollar amount. This is obviously the easy way for apps to generate revenue: no need to solicit advertisers when the material in the app is good enough to attract thousands of eyes. High volume is the key. Without volume there’s no real revenue potential. It’s a risk because app purchases are clearly among the best ways to generate mobile app revenue. Remember, roughly half the Android-based apps charge up-front and two thirds of those on the Apple platform charge.

The In-App purchase strategy can produces significant revenue for app developers; it is assumed that it will be the leading revenue source for app makers by 2013.  While interacting with the app, banner ads will appear during game play. Unlike ad network banner ads, which might be related companies, an in-app ad usually is specific to the game you’re playing, either in the form of a virtual good or an upgrade in your app.  These contextual ads derive success from the fact that the sale has been set-up by the interest generated by the content of the application.

What is the best strategy? It’s likely to involve the Freemium model. Angry Birds for example, with well over 75 million downloads, Angry Birds is at the top of the mobile success heap. The free, “lite” version (no charge to download the game) limits the levels of play, but it definitely sets the hook, and becomes addicting, enticing users to want to move to the next (and next) level. Users become challenged and competitive, and want to pay the fee for more levels.  Angry Birds has In-App ads guiding users to their paid app.  It can be a seamless transition for the user and they’ll mostly view it more as a value add than a banner ad.

Monetization of your mobile app is a challenge. Download fees rely on the developer’s skill in getting someone to buy blind. It can turn a significant number of prospects away from trying your app.  With enough intrinsic appeal to curiosity to attract takers, it’s a great way to generate revenue. On the other hand the freemium model has proven to be successful both online (think Linkedin) as well as in mobile apps. The freemium will surely be adopted by more mobile application developers in the coming months.

Key: Any monetization strategy is going to come up short if your app is a non-starter. Create … and test …and prove a great product; then work on the monetizing scheme.

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  • Anonymous

    I think the next question is how to increase app longevity and “lifetime” value in order to continue monetization…

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