quick overview of the main mobile monetization techniques
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Quick Overview of the Main Mobile Monetization Techniques
Pablo García Montes- @pabgarmBarcelona – 07/2014
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The majority of app businesses are not sustainable at current revenue levels.
50% of iOS developers and 64% of Android developers are below the ‘app poverty line” of $500 per app per month.
At the top end of the revenue scale there are just 1.6% of developers with apps earning more than $500k per month.
Developer Economics Q3 2014: State of the Developer Nationhttp://www.developereconomics.com/reports/developer-economics-q3-2014/
Mobile Monetization Techniques Paid apps Freemium apps / In-app purchases Subscription Anonymous statistics Advertising
Display Ads Interstitials Video Ads Native Ads Incentivized installs Playable Ads
Surveys
Free84%
Paid16%
Android Free90%
Paid10%
iOS
Paid AppsUsers pay to install an ads-free app.
Pros App monetization from the beginning Guaranteed revenue with every user Less distracted users (no ads)
Cons Lower volume of downloads Limited revenue/user (Price of the app)
Users download a free basic version of the app, which is monetized with extra paid functionality, in-app purchases and/or virtual currencies.
Pros Removes entry barriers Higher volume of downloads Allows upselling
Cons Value perception of the product may be lower May not generate revenue from every user Difficult to set up (can give away too much or too
little)
Freemium/In-app purchases
Users download a free app which requires a subscription to access the content. It is usually combined with a trial period.
Pros Removes entry barriers if the user gets a trial version at the
beginning Allows upselling
Cons May not generate revenue from every user Apple gets 30% of all subscription transactions via the app
Subscription
The mobile application is distributed for free, trying to reach and engage as many users as possible, so all the usage/location data is sold to 3rd party companies interested market data.
Pros Market data can be very valuable if it is properly segmented Monetization via in-app advertising may not be needed if the
volume of data gathered is enough, providing a better user experience
Cons This approach requires a high volume of data to be worthy It may create discomfort and mistrust amongst the users
Anonymous Statistics
Users download a –usually- free app, which is monetized with advertising.
There are different approaches to show in-app ads:
Display Ads
Interstitials
Video ads
Native Ads
Incentivized installs
Playable Ads
Advertising
Pros Easy integration of ad networks Predictable income generation
Cons Reduces available space on the screen Reduces user engagement, as the ads are
usually interruptive or block the user’s interaction with the content
Display Ads
Ads that are displayed full screen taking over the mobile screen after the user either lands on the site or makes any action.
Pros More visible ads, since they take over the whole
screen Users are forced to interact with the ad, either
to close or click on it, so better CTRs Tend to be better appreciated than banners
Cons They are very intrusive, so they have to be
implemented carefully and shown in strategic points
Interstitials
Similar to interstitial ads, a full-screen video pops up and is automatically played. For 15-30 seconds. Some allow the users to skip them after 5 mandatory seconds.
Pros: More engaging than regular banners Can be entertaining if placed during pauses or long
waiting times required by the app
Cons: Can make the user to leave if the timer is too long
and blocks the regular user-app interaction
Video Ads
Ad units aligned with the design of the organic content.
Pros Better user experience, as these ads are
less intrusive Better ad performance, since users are
becoming more aware of traditional formats
Cons Users can be confused or deceived. They
may think they’re being tricked Requires more effort to integrate with ad
networks, as the formats aren’t standard
Native Ads
Users of a free app download another mobile application in exchange for something else, usually in-game virtual currency or goods. This approach is not allowed by Apple.
Pros Better perception from users compared to regular
banners Users can get something out of interacting with
the ads
Cons Interrupts the user’s activity as they are redirected
outside the main app
Incentivized Install Ads
Similar to video ads, a full-screen video pops up with a trial version of a game for users to test it before downloading it. These interactive ads usually run for 15-40 seconds.
Pros More engaging than regular banners or videos Can be entertaining if placed during pauses or long waiting
times required by the app These ads deliver a better performance than regular ads
Cons They may not work in all kind of apps, as they interrupt the
regular usage of the main application. Can work with apps that require a long pause by design.
Playable Ads
Image Source: Inmobi Playable Ads
While running the main application, users get the option to fill in a survey in exchange for a reward. For each completed survey, the developer gets paid.
Pros The user gets something for participating, which can increase
the conversion Depending on the implementation, it can be not very intrusive,
as the user decides whether to fill it or not. These ads deliver a better performance than regular ads
Cons Users can lose focus on the main application by interacting
with the survey It is a technology at a very early stage, which means there may
be a low volume of demand, being too repetitive for the users
Surveys
There’s a growing trend of share of freemium business compared to paid apps. Free apps with in-app purchases generate the majority of the revenue in app stores.
http://www.distimo.com/download/publication/Distimo_Publication_-_January_2014/EN/archive/
Summary
Summary In terms of popularity of advertising formats:
1. Display ads are the preferred format in most of the apps/mobile sites
2. Interstitials and video ads are becoming more common
3. Native is the big bet, but it is still in a very early stage
4. Incentivized installs aren’t allowed in iOS and most of the advertisers on Android platforms aren’t
allowing publishers to use it. This approach is loosing traction.
5. Playable ads could be the next big thing for mobile game advertising, but it is still at a very early stage
6. Monetization via surveys is starting and is not offered by too many companies yet.
Developer Economics Q3 2014: State of the Developer Nation http://www.developereconomics.com/reports/developer-economics-q3-2014/
The History of App Pricing, And Why Most Apps Are Free (Flurry) http://www.flurry.com/bid/99013/The-History-of-App-Pricing-And-Why-Most-Apps-Are-Free
Distribution of free vs. paid Android apps (AppBrain) http://www.appbrain.com/stats/free-and-paid-android-applications
How the most successful apps monetize globally (Distimo) http://www.distimo.com/download/publication/Distimo_Publication_-_February_2014/EN/archive/
References
Who am I?I graduated from Universitat Politècnica de València in September 2008, where I completed a bachelor in Computer Engineering.
After that, I started working as a Program Manager at Microsoft Ireland for the Mobile Advertising Platform in September 2008.
After almost 2 rainy years, I moved to Seattle in April 2010 to join the Microsoft AdCenter Mobile Business Intelligence Team as a Program Manager too.
Missing the Spanish sunshine, I joined Softonic, in Barcelona, as a Product Manager in May 2011 leading the native advertising platform.
I’ve recently completed a Master in Direct and Digital Marketing at the Barcelona School of Management.
Contact me if you have any comments, feedback, or if you’re in Barcelona and want to grab a coffee.
Twitter: @pabgarm Linkedin: http://es.linkedin.com/in/pabgarm
Let’s talk!
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