2013-11-05

Let’s face it. Mobile App Developers have caught wind on how much money is really possible building out great mobile apps. However, the problem isn’t an abundance of great application ideas. The problem lies with Developers not knowing how to properly optimize their apps therefore not being able to retain revenue for further development. Today, I want to address this issue. Not just for the Mobile App Developers whom chose us as their primary marketing and advertising partner but to all mobile app developers to have something “reliable” to read, study and implement.

Time and time again when I offer customized mobile app monetization solutions and marketing plans for Mobile App Developer’s I find that they typically wander off the beaten path. Hooray, you built an awesome app and got thousands of downloads in your first month, but wait…Where’s the money? You’re brilliant idea doesn’t make the cash. Your monetization strategies do.

To be honest, I’ve seen a lot of useless hype within the Mobile App Industry. Just like everything else, there is no free lunch. You have to work, and work your ass off to be successful – at anything. If you think building an awesome app is going to land you a new Lambo or mansion, you’re barely even scratching the surface of what’s possible.

So let’s talk monetization. Let’s get to the point.

One of the biggest mistakes I see mobile app developer’s making is pricing their application wrong. Now if you decide to offer your app at a price, you really need to consider what the actual value of your application is. Is it really worth people spenidng $1.99-$2.99 for it? Put yourself in the customer’s shoes for a moment. If I asked you to pay that amount for my app, what would you do? Before setting a price on your app ask yourself a few questions such as:

What exactly IS my app?

What does my app do?

What are the key features of my app?

What are the key benefits of my app? (Yes, features and benefits are not the same)

What apps similar to mine exist already?

What are the price points of these apps related to mine?

How many downloads have they generated?

Which category does my app belong in?

How can my app help people?

Will people use my app on a daily basis?

Tip: Once you have the answers for these questions. Start looking at your competitors and analyzing them. Note key points on how you differ from them. This data will help you on how to place your app within the market.

A second mistake I see a lot of mobile app developers making is “Pre-Calculations.”

The first step for ANY developer should be to sit down and start brainstorming on how much money they think they can make on their monetization models (Yes, I provide some here in a bit.)

Monetization rates are going to vary based on where your app is placed (The Category.) Geography, age groups are also factors in which to consider. Take all of this in, and start estimating the amount of users that will use your app and calculate how much revenue you think you are capable of making. This will give you a much more realistic idea for your app and give you some ideas on how you should proceed.

Make no mistake. Monetizing mobile apps is no walk in the park. It’s not easy. Now, I won’t talk much about paid apps. I want to cover the larger target market here – FREE APPS.

Note: Over 80% of all mobile app downloads in 2011 were free apps. So yes, – I concentrate on where the money is. They tend to reach mass market faster and have more potential for revenue. Combine that with the idea that when you do charge for app, you create really an unnecessary wall between the users and the app download. Besides, how many times have you look at apps and felt much more likely to download the free ones? It’s basic human psychology at it’s finest – We all want something, for nothing.

Let’s consider some of the mobile app monetization strategies you can start putting into practice right now:

1. Paid Downloads aka Pay Per Download – Paid downloads work as users pay up-front to download your app once it’s available in one of the app markets. Paid download apps work well for apps in the gaming, entertainment, productivity, navigation and news categories. However, the more users pay up-front, the less tolerant they may be of advertising or in-app purchases. You might try considering to offer a free version plus a paid version of your mobile app with additional content that contains fewer or maybe even no advertisements.

2. In-App Advertising aka Mobile Ads – One of the most popular among mobile app developers. In-App Advertising works by allowing ads run on space sold within your app and revenue is based on number of user impressions and/or clicks. These really work well on the gaming, news, chat and entertainment category apps. However, the small drawback with in-app ads is that your app will have to bring back users regularly, and basically be designed for heavy use.

3. In-App Purchases or Subscriptions – In-App Purchases work by allowing users additional purchasing privileges, badges or subscriptions inside the app once they’ve downloaded it. These work pretty good for apps in the gaming, lifestyle and news categories. However, this type of app really requires a very loyal following of users that are willing to pay for virtual or ongoing benefits. You will need to regularly add fresh content as well.

4. Sponsorships – Sponsorships can work by individuals or businesses basically under-writing your app in exchange for recognition type benefits. An example of this would be maybe an ad or logo within your app. These work best for Local + Event focused apps and narrow focused audiences. The drawback here is that these are typically a one-shot source of revenue. They usually aren’t ongoing or scalable. However, it’s a pretty good way to get a first app off the ground.

Note: Any revenue you may earn from your app from paid downloads or in-app purchases is most likely going to be brokered from the marketplace of where your app is published. Remember this and keep it in mind when calculating revenues and expenses.

Tip: I’m not really going to cover advertising networks today. I’ll do that later on. If you decide to feature in-app advertisements within your app, you can simplify the process by contacting myself here at Revived Media. We have over 20+ Whitelisted Ad Agency Accounts with most of the Major Mobile Networks out there. However, if you decide to go at it alone, remember that these companies do act as a broker between app publishers who have space available for ads and those wishing to purchase mobile advertising. The systems, payment policies and development requirements will vary from network to network so make sure you read the fine print with any network you choose to do business with. Listed below are some of the revenue generating opportunities some of these networks offer.

For reference (feel free to Google these and research more into them), here are a few other options Mobile App Developers can consider for monetizing their mobile apps:

Push Ads: Ads are displayed in the notification tray of an opted-in user’s device. CTR’s and conversion rates are sky high with this format, since there are no accidental clicks like with in-app ads. Advertisers pay on a CPC basis. Unlike traditional mobile ads, these ads are not placed inside apps. Each ad is also tagged with a permanent opt-out link, as well as the name of the app which delivered the ad. However, on iOS systems, you can get really crafty with Apple’s push notifications availability. (Be careful with that).

Icon Ads: Similar to the pre-installed apps which come with a new smartphone, Icon Ads are sponsored shortcuts (icons) placed on the home screen of an opted-in user’s device. Advertisers pay on a CPI basis for each icon installed on a device.

Dialog Ads: Ads are displayed as a dialog box inside an app, presenting the user with a 1 sentence call-to-action along with an OK and Cancel button. For example, the ad can ask the user “Check out a free new 3-d game” with an OK and Cancel button underneath. Advertisers pay on a CPC basis.

SmartWall Ads: SmartWall is a new interstitial mobile ad format which dynamically optimizes between multiple sub-formats such as Rich Media, AppWall, Video and Interstitials. With SmartWall, app developers no longer need to choose between the overwhelming numbers of full-page mobile ad formats available on the market. Via a single SDK, SmartWall determines the optimal full-page ad format to display in real-time based on yield, network connection type, and other parameters. SmartWall generates significantly higher CPMs than other leading full-page ad formats and represents a major leap forward for both developers.

OfferWall Ads: Ads for individual promotional offers are placed in a single in-app interstitial and can be selected by a user for participation. Advertisers pay on a CPC or CPA basis.

Video Ads: High-quality Video Ads are shown in-app. Our proprietary ad server only displays Video Ads to users on a wi-fi or 4g connection, ensuring a positive viewing experience. Advertisers pay on a CPM basis.

Rich Media Ads: A full landing page is embedded inside an app, with a fixed close button at the top. Advertisers can build rich experiences which are directly embedded in another app.

Full-Page Banner Ads: Ad is displayed as an in-app interstitial to users, with a fixed close button at the top. Advertisers pay on a CPC basis.

AppWall Ads: AppWall a new interstitial mobile ad format that Advertisers can use to generate huge CTRs and higher engagement than virtually any other in-app ad type. Displayed within an app session, AppWall displays a variety of different offers and actively optimizes their placement in order to drive results that were never before possible in the mobile marketing space.

No matter what monetizaton strategy you choose for your mobile app (or bundle of strategies) always remember (because most mobile app developers tend to forget this) is that to actually get real value out of any mobile app monetization strategy, you really need to consider when and how ads should be displayed within your app to get you the best possible results.

Ads should always be considered as an integral part of the app – in which they appear. Ads that stick out like shit, not only ruin the concept of the app, they will most likely not generate clicks by users.

Remember This —> Advertising should be part of the experience, not an interruption of it.

Ads that become part of the experience will cause a ripple effect that will encourage users to engage and click the ad. Interaction opposed to interruption will drive up the Developer’s revenue, and the enjoyment of the app users. Then everyone wins.

In mobile advertising, it is all about delivering the users with the right, relevant ads. Targeting users based on location and content they are viewing is just considered the essentials. Doing this will help increase the number of clicks, conversions and overall revenue from your app.

Since In-App Advertising is among the most popular forms of monetizing mobile apps, let me talk a little bit about this subject so that you have a better understanding of it.

When it comes to In-App Advertising, here are a few key things to remember:

Text Ads / Text Banners should always get their own dedicated screen inside the app

Make sure to “blend” the ad to look like part of the app in terms of design – It’s less intrusive

Frequency Caps – Only allow ads to show enough to get attention – not annoy the app’s users

Animate the banner – Simple and effective

Don’t disturb game-play. Put ads between levels of the game or after the game is over

Make the banners stick when people are scrolling down-wards

The “Skip” button for the ad – Delay it 1-5 seconds.

Now if you choose in-app advertising, you should understand that you might see a large percentage of your ad-requests will go unfilled. Just ask your Ad Network of choice about “ad mediation” and they’ll be able to explain the exact process with them. There are tons of ad networks out there so you will have to learn about which ones perform best for you and in what geographic areas and segments. Mobile advertising is still a baby. That means that most major ad networks are still faced with more supply (lots of apps) than demand (the advertisers).

Note: Fill Rate – Fill Rate is the percentage of times a users opens your app and sees an ad. You want this number to be as high as possible to give you the best chance of increasing ad revenue! Just go and ask your ad network of choice, what their fill rates are. For me to even start listing them, would be madness.

Tip: eCPM – When it comes to in-app advertising, developers are typically paid on a metric known as eCPM (effective Cost Per Mille). This really means what you, as the developer are paid for every 1,000 impressions. The higher the eCPM, the better!

In order to integrate advertisements in your application, you first must become a publisher by registering a publishing account with the mobile advertising network. Typically, an identifier is provisioned for each application serving advertisements. This is how the advertising network correlates advertisements served in applications. In the case of AdMob, the identifier is known as the Publisher ID. You should consult your advertising networks for details.

Mobile advertising networks typically distribute a specific SDK, which consists of code that takes care of communication, ad refresh, look-and-feel customization, and so on.

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