ITP 140 Mobile Technologies. Monetization

Transcription

1 ITP 140 Mobile Technologies Monetization

2 Who makes more money? Two app developers walk into a bar. It sounds like the start of a really bad joke, but hear me out. One has a free app, and the other charges $4.99 just to download it. Which one makes more money? Consider this: While there are plenty of successful paid apps out there, free apps make much more than paid apps do any day of the week. 2

3 Who pays you? Paid Apps Users Pay Free Apps "You" = the creator, developer, or publisher of the app. Advertisers Pay Users Pay 3

4 Paid Apps The easiest and most straight-forward way to monetize apps is to charge for it Good you will begin seeing your earnings as soon as people download your app Bad you ll have to work harder to market it Most users expect basic apps to only cost 99 cents, so you ll need tens of thousands of downloads before you actually begin to see a return For utility apps and more complex gaming apps, expect to charge between $2.99-$4.99 4

5 Global Paid-for Mobile App Revenues 5

6 Free Apps Reality nobody likes to pay for apps Free apps rule app stores because it s a winwin situation Users don t have to pay anything up front, while developers get the exposure they need 2 main ways: Advertisers pay you (the app developer) via display ads Users pay with freemium downloads, in-app purchases, subscription services, or 6

7 Free Apps Advertisers Pay Advertisers Pay Display Ads CPC CPM CPA 7

8 Display Advertising Display ads range from banner ads placed on top or bottom of the screen to full screen ads while the app is launching or in between use (e.g., game levels) 3 different mobile ad models Cost-per-click (CPC) Cost-per-mille (CPM) Cost-per-action (CPA) Glossary - 8

9 Mobile Display Ad Spending Mobile programmatic display ad spending will account for 60.5% of total U.S. programmatic display ad spending this year (2015), with $9.33 billion, surpassing desktop's share of programmatic for the first time, according to a new report from emarketer. 9

10 Ad Spending 10

11 Cost-per-click (CPC) AKA pay-per-click You (the app developer) get paid by the advertiser when the ad is clicked Problem It s too easy to inadvertently click on an ad Google s Page is hopeful that mobile CPCs will rise Companies

12 Cost-per-mille (CPM) AKA cost-per-thousand CPM charges advertisers per 1,000 impressions ecpm = effective cost per mille Problem An impression does not always mean the user sees the ad User can scroll by or switch views

13 Cost-per-action (CPA) You get paid when the user performs an action Examples: completing a form, installing a different app, making a purchase Problem Takes users away from the app Takes too many steps Chances of conversion (and thus getting paid) is fairly slim 13

14 In-app Advertisers An innovative way to integrate display ads is by partnering with inapp advertisers This can be in the form of a sponsorship (e.g., Sponsored by or Brought to you by followed by the advertiser s logo) or by integrating their products into the app Example: Waze, a social GPS app, works with retailers and merchants by allowing them to list their businesses and special offers to nearby consumers using the app Companies: AdMob: StartApp: InMobi: Millennial Media: Tapjoy: 14

15 AdMob Currently supporting 50,000 mobile businesses with in-app advertising, Google's AdMob is one of the biggest mobile ad platforms in the industry. With thousands of advertisers to choose from, developers can choose the ads and the formats most relevant to their product, and get paid each time an ad -- most commonly a banner -- is clicked. AdMob also has a mediation feature that helps you juggle multiple ad networks, allocating traffic by percentage, location, or ad revenue. You can also use AdMob to advertise your product in other apps. 15

16 StartApp The software development kit offered by StartApp allows a developer to integrate a mobile search engine add-on into their app. Integration takes between 3-5 minutes, and developers can instantly share in the revenue generated from user searches. This unique model is a hit among developers because it doesn't alter the app experience -- keeping it free of ads -- and they are paid for each download containing the add-on, rather than for every time the search engine is utilized. StartApp is currently available for Android apps and has been downloaded over 250 million times, making it a worldwide monetization phenomenon. StartApp's search engine can be found on roughly 20 percent of Android devices worldwide, making it the largest mobile search engine in the Western world. 16

17 InMobi Using both SDKs and Server Side API integration, InMobi is an easy-to-integrate performance-based ad network that helps you not just monetize users, but acquire and engage new ones. By advertising on InMobi's platform and using their top-brand ads on your own app, you'll be tapped into a market of 578 million consumers in 165 countries. InMobi also boasts a conversion tracking system, which helps you identify if the right ads are being displayed to the right users -- maximizing ecpms and revenue. InMobi is considered the largest independent mobile advertiser in the world. 17

18 Millennial Media Founded in 2006, Millennial now has offices from Los Angeles to Singapore and a developer base that includes The New York Times Co. and Zynga. Developers can manage the ads used in their apps, as well as the format -- including mobile video, other rich-media or banners. Known particularly for its premium ads, developers have the choice of running Millennial ads, third-party ads, house ads or client ads. Millennial has won Mobile Marketing Campaign of the Year awards on numerous occasions, and more than 30,000 apps worldwide use their platform. 18

19 Tapjoy Developers who use Tapjoy take part in an incentivized monetization model called Mobile Value Exchange. Users are encouraged to click on and interact with advertisers (sometimes downloading another app outright) in order to gain virtual currency or other bonuses in the app they are currently using. The payment comes from the the maker of the other app, who benefits by collecting new users and increasing their exposure. More than 110 million mobile users are said to take part in this kind of incentivization program, on over 75,000 apps. Tapjoy claims that developers have seen a % increase in monetization. 19

20 Mobile Ad Models CPC = CPM = 10 CPA cost-of-advertising-cpm-ecpm-andcpc.html#axzz2gvj22t00 20

21 Free Apps Advertisers Pay Display Ads User Pay Freemium Model Lite Versions Subscription Update In-app Purchases Full Versions 21

22 Freemium Functionality Freemium is a business model that allows a consumer to receive basic services for free, but requires them to pay for any service deemed to be premium People are more willing to play for an app once they ve tried it themselves People always spend more on upgrading freemium apps than on apps they can t download for free How it works User downloads free app à User like app à User pays for more features 22

23 Freemium According to data released by both the IDC and App Annie, the freemium business model is winning in the mobile app sphere like no other model. Turns out after almost a decade of owning smartphones people are still uncomfortable spending on apps outright. As per data on many sites, at least 83% of all listed apps are leveraging this business model. This model alone is generating a whopping 92% of the total revenue generated by all apps. It is also known as free-to-play (video games). 23

24 Freemium Example - HootSuite HootSuite is a popular social media management tool. They offer free plans for individuals who want to manage up to three social profiles, and business plans for those who need more. HootSuite s freemium approach is to allow users to get to know the benefits of using their platform with enough access to their main features to know that they want access to more. Their approach works because most social media users, even individuals, will have more than three social media profiles to manage. And with plans starting at $9.99, it s easy to say yes to the upgrade. 24

25 Freemium Example Temple Run At its best, free-to-play games offer the complete game for free and focus on cosmetic changes in the store. A great example of this model at work is Temple Run, a popular game that started the 'endless runner' craze. Temple Run's online store allows you to purchase cosmetic changes to the game or take shortcuts on acquiring certain enhancements, but all of the features of the game can be unlocked without spending any money. Players are also not forced to pay for any items to extend their daily game time, which means you can play the game as much as you want. 25

26 "Lite" Versions LIVESTRONG s Calorie Tracker Lite It is a free, ad-supported app. Buy the paid version and the ads go away. Users also get the extra perk of being able to sync their info with their web-based account. Words with Friends In the free version, an ad is displayed after each turn. Buy the paid version and the ads go away. 26

27 Subscription Update Remember the Milk It is free with limited functionalities. Upgrade for $25/year and get exclusive features like unlimited auto-syncing on multiple devices, push notifications and more. Evernote Premium It gives users higher capacity, offline notebooks, larger files and more for $5/month or a discounted $45/year. 27

28 In-app Purchases Definition: Purchases made from within a mobile application Access special content or features in an app such as power-ups, restricted levels, virtual money, special characters, boosts, etc Microtransaction is a business model where users can purchase virtual goods via micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. 28

29 In-app Purchases Examples In Zynga gaming apps, users can buy tokens and other virtual currencies and goods to progress in the game, score more points, or outdo their friends. In DragonVale, the top in-app purchases are: Pile of Gems $1.99; Sack of Gems $4.99; Bag of Gems $9.99; Pile of Food $0.99; Pile of Cash $

30 In-app Purchases Global revenue from mobile in-application sales reached 2.11 billion US dollars in 2012 and are projected to surpass 14 billion US dollars in As of November 2015, there were some 1.8 million apps available in Google Play, the world s largest app store, while the Apple Store, the second ranked, boasted some 1.5 million available apps in June As mobile apps become more popular and mobile internet more widely available, revenues generated from applications are reaching unprecedented records. In 2016, it is estimated that worldwide consumers will spend some 50 billion U.S. dollars on mobile apps via app stores, but this number is expected to double by

31 Worldwide In-app Purchase Revenue 31

32 Other Ways Companies pay you (the developer) for your customer base (users of your app) Another company buys your entire app/ company Another company buys your technology You provide your technology as a service to other companies Companies hire you to build similar apps (what can you think of) 32

33 Monetization Summary Freemium apps get the best of both worlds: The same potential downloads as free apps, while being able to combine multiple monetization strategies You can even add on various upgrades and functionalities as users grow Give users freedom from hard sells and allowing them to wait until they are ready to buy The top 5 grossing apps are all free apps Get money through In-App Purchases 33

34 World Mobile App Revenues 34

35 App Revenue Statistics 2015 Total app revenues are projected to grow from $45.37B in 2015 to $76.52B in 2017 Paid-for app revenues growth forecast for 2017 $1,95 billion In-app purchase revenues will reach $28.9 billion by 2017 The in-app purchase share of the total app revenue is projected to hit 48.2% in 2017 Apps contribution projection to overall itunes revenue will hit 20% by the year

36 Worldwide Mobile App Revenues 36

37 Resources how-to-monetize-an-app/ an_overview_apps_monetization/ ads-and-ux.html

38 Resources /04/29/7-examples-of-freemium-productsdone-right/3/#11a2336a