Four Ways Publishers Can Make Money From Apps

By Amy Vale

Nielsen reported that the average number of apps on a user’s Smartphone jumped from 32 to 41 this year. According to ABI Research, the total mobile app revenue will explode over the next five years, growing from $8.5 billion to $46 billion in 2016. The remarkable growth of apps has generated a number of different revenue models for publishers. Let’s look at 4 ways publishers can make money from apps.


1. In-App Advertising

A new report from Juniper Research finds that in-app advertising spend across all mobile devices will reach $7.1 billion by 2015, up from $2.4 billion in 2012. While a larger portion of mobile users are moving away from downloading paid apps on their Smartphones initially – even if it’s $1.99 or $2.99 – the opportunity to generate revenue from free-to-download apps isn’t lost. The more downloads and views an app gets, the opportunities for monetization rise exponentially.

Thanks to rich media and an increase in app usage, in-app advertising can significantly improve click-through rates and create an overall engaging experience. To fully capture the attention of mobile users who are multi-taskers by nature with short attention spans, it’s all about making the content entertaining and engaging. So publishers should partner with rich media providers to ensure integrations are seamless for their advertisers’ creative executions to be delivered to mobile users. App users will be far more receptive to see, and act on, ads when they are packaged creatively in rich media formats like expandable banner ads, in-banner video, etc.

 2. In-App Purchases 

One of the most beneficial aspects of in-app purchases is the additional income stream that can be generated. We frequently see this in gaming apps where additional features and levels can be purchased via “tokens.” In January, mobile app analytics company Localytics found that 44% of mobile app users did so after their 10^th session in the app. For ‘casual gamers’ who, once downloaded, become loyal ‘super users’ of gaming apps like Angry Birds and Words With Friends, paying a nominal fee to keep playing (and winning) seems well worth it.

According to ABI Research, mobile application revenues from in-app purchases this year will surpass pay-per-download revenues. But, the vast majority of in-app purchase revenue is being generated by a small percentage of devoted mobile game players, and some people are concerned that this revenue source could be fleeting. The question is whether mobile developers, other than game developers, will adopt it?

3. Leverage Demographics of App Users

According to a new study from the Interactive Advertising Bureau, what devices people are using, when they are using them, and where they happen to be all matter critically to their content preferences, usage patterns and openness to advertising messages. So it goes without saying that publishers should analyze and leverage these insights in determining what ads users of each device see, and don’t see.

Publishers need to leverage the specific demographics associated with each mobile device in order to monetize apps effectively. It is important to remember that each mobile device, and of course each app, is associated with a particular user – age, gender, socioeconomic bracket and more. Leveraging the demographics of the app user will lead to tailored and customized messaging of both the ads and the app itself, and in the end this is a significant factor in the monetization of the app.

The general demographics of an Android user may differ dramatically from the average user that visits your site. For example, knowing that your typical user is a 15 year old could very well be critical in deciding whether to include an in-app purchase via credit card. Understand, leverage and execute those key differences into your broader mobile monetization strategy.

4. Look at the Data and Tweak

Analyzing the data of your app will allow you to become far more sophisticated in future offerings. Look at the campaign components that worked, what didn’t meet expectations, and adjust future plans to maximize your mobile app revenue. Understanding when, where and why CTRs spiked (or fell flat), among other metrics, will set capable publishers apart.

Developing For The Mobile Web: What You Should Know

By Amy Vale

The mobile web has been steadily growing and isn’t showing any signs of slowing down. ComScore has reported that the mobile media user population (those who browse the mobile web, access applications, or download content) grew 19% to more than 116 million people at the end of August 2011. Thanks to Smartphones, mobile websites are fast becoming one of the easiest and fastest ways for people to access the Internet on-the-go. We’re also seeing, in some instances, that mobile optimized websites are even more popular than their desktop counterparts. Take Facebook for example. Did you know that American Smartphone users spend 7 hours and 21 minutes per month on Facebook via their mobile phones, compared to 6 hours and 31 minutes accessing the hugely popular social network via desktop computers. We live in a 24/7 world, where people spend the majority of their time away from home. That time is often spent performing multiple tasks at the same time, wherever and whenever. With the demand for mobile websites growing faster than anyone could have imagined, what factors should publishers and app developers keep in mind when developing for the mobile web?

Consider how your users access the mobile web – they are generally in transit, be it on the subway or walking to/from work, and they’re more often than not holding their Smartphones and tablets in one hand while doing something else. How and why users access web content on mobile devices is therefore largely influenced by what is going on around them, informational relevance, and the specific feature capabilities of the device being used. Unlike the traditional web experience on desktop computers (which have larger screens, tend to run at faster and more reliable speeds and allow for greater multi-tasking with keyboards and mouse devices), mobile websites are typically characterized by smaller screen space, intermittent and less reliable Internet speeds and require users to be ambidextrous in their use of the devices.

Because of these differences, the mobile web requires a very different, scalable approach and strategy when it comes to development as well as mobile advertising. It’s important to evaluate the strengths and weaknesses of each mobile device in market, and then optimize mobile websites so they deliver a fully immersive and rich user experience. What happens all too often, and what we advise against, is “miniaturizing,” or squeezing all of the content from a full website to fit the smaller screen of a mobile device.

Oftentimes, publishers come to us saying their mobile traffic is surging at unprecedented rates with upwards of 2 or 3 million mobile visits, millions of mobile videos streamed, and Smartphones and tablets topping the list of devices driving mobile traffic. Yet, they don’t have a mobile optimized website and recognize a huge missed opportunity for monetization.

Here are some best practices to consider when developing for the mobile web.

1. Mobile users are often short on time, squeezing in several, if not dozens of, online tasks while on the go. Design your mobile site to load fast and make copy easy to read with clear navigation and calls to action.

2.No matter what product or service being advertised on a mobile site, it’s essential that the user experience is simple and requires very few clicks, whenever possible. Make it easy – and fast.

3. Consumers look for local info on their mobile devices regularly—include functionality that helps users find and get to their desired product or service.

4. Include a mobile site redirect to automatically direct users who are on a mobile device to the mobile-friendly version of your standard site.

5. Ideally, a mobile site should work across all mobile devices and all handset orientations. Find alternatives to Flash since it does not work on certain devices running on iOS. In those cases, HTML5 is a smart alternative and allows for greater interactivity and animation. These are qualities that could determine if users click on your mobile optimized site.

Are Facebook Mobile Ads The Golden Ticket?

by Amy Vale

With over 900 million users worldwide, Facebook is a marketer’s dream come true. Brands, no matter how big or small, should be looking at Facebook as thegolden ticket to grow their awareness, and ultimately, revenue. With users spending upwards of 8+ minutes each day on Facebook’s mobile site, where does the opportunity lie not only for this social network, but for the industry-at-large when looking at growth, as well as advertiser adoption and acceptance of the media channel?

In December 2011, there were a reported 425 million monthly active users on its mobile platform. According to the comScore Mobile Metrix 2.0 report, major brands experience heavy engagement on Smartphones. In fact, U.S. Smartphone users spend over 7 hours on Facebook (based on data from March 2012), compared to 6 hours and 31 minutes via desktop computers. What’s clear from these figures is the huge monetization opportunity that can be made possible with mobile advertising on Facebook. Until now, users have been very vocal in applauding the social network’s ad-free mobile versions. But the more users spend time accessing the social network via its ad-free mobile versions, the more revenue it stands to lose. It’ll be interesting to see how and if Facebook can bring in as much, if not more, mobile revenue than its desktop and products.

This may be the reason Facebook recently did something it’s never done before. A few weeks ago, the social network announced its plans to roll out its first ever mobile-only ad product. Essentially, marketers can now buy Facebook Sponsored Stories for the News Feed specifically for mobile devices. This is a very promising and telling move for Facebook.

ABI Research found that overall revenues from mobile applications, including pay-per-downloads, in-app purchases, in-app advertising and subscriptions will reach $46 billion by 2016, more than four times greater than the $8.5 billion earned in 2011. And 82% of the time spent with mobile media happens on apps. These numbers offer a very compelling business case for why more publishers will leverage mobile apps to earn revenue from consumers.

Think about how people use mobile apps. It’s a common fact that apps which are free to download initially get far more downloads than ones with a pay-per-download fee. However, as an app receives millions and/or billions of views and downloads – as we’ve seen with Instagram – the opportunities for monetization increase exponentially.

In-app purchases are another very promising and realistic avenue for mobile revenue. In January 2012, mobile app analytics company Localytics found that 44% of mobile application users who made an in-app purchase did so after their 10th session in the app. Zynga’s hugely popular gaming app – Words With Friends – has done a solid job of capitalizing on the exploding growth of casual mobile gamers. Users have the option to purchase in-app “tokens”, which they can then use for certain features, such as being able to disable in-app advertisements.  With an estimated 8.6 million daily active users, Words With Friends users gladly pay a nominal fee to continue playing the “viral” hit.

Finally, we can’t offer up ways that Facebook can grow its mobile revenue in smart and effective ways without talking about geo-location targeting. It may already be at the top of their minds given their recent acquisition of social location startup Glancee, a Smartphone app that tells users when people with similar interests are in the same or nearby location. We wouldn’t be surprised if the Facebook mobile product team isn’t analyzing what Glancee is good at doing (and areas for improvement) as part of its plans to leverage in location-based ads not only for people, but also to include notifications of relevant stores, merchants and businesses.

When you have a social network with the sheer volume of adoption and user interaction that it has, it’s impossible to ignore the many opportunities that Facebook offers to both brands looking to transition into mobile advertising and the industry at large.

Why Is It Important To Test Ad Units On Your Mobile Site Or App?

By Amy Vale

It’s becoming increasingly accepted that rich media and innovative ad units gain the attention of consumers, creating a higher probability of increased CTR (click-through rates), according to Mobile Marketer. InsightExpress also found that mobile advertising is four and a half to five times more effective than online advertising. This is due to various factors, including the lack of clutter in mobile, typically one ad per page, and mobile pages them¬selves generally tend to be very clean. Also, the proportion of the ad on a mobile screen is greater, so it gets more attention from users. But what about the ad unit itself – what works best and how do you test this as a publisher?

The size of ad units can have a significant impact on the performance and earnings of mobile ads. As you know, not all advertisers create ads for all display sizes, and not all ad blocks hold the same number of text ads. For this reason, it is essential for publishers to test ad units for different sections on their mobile sites and applications. By testing ad units you will have a greater chance of increased click- through rates and other conversion metrics.

The Interactive Advertising Bureau, IAB, has recently launched an initiative to test mobile formats. They selected five mobile ad concepts to test for possible inclusion in its Standard Ad Unit Portfolio, which currently does not include any mobile formats. The Mobile Rising Star initiative, announced earlier this year, seeks to create new canvasses for brand advertising on digital platforms. The five winning ad concepts, selected from a pool of more than 60 entries, include the “Filmstrip,” “Slider,” “Adhesion Banner,” “Full Page,” and “Push.” Once a Rising Star unit has been selected, it will go through a testing process and, if it’s successful, it will be inducted into the IAB Standard Advertising Unit Portfolio.

Yet another great example is Facebook. The social networking giant is currently monetizing its mobile app through the testing of a new ad unit - Sponsored Stories. Earlier this month, Facebook began allowing advertisers to specify that they wanted their ads only shown in mobile, and now we are getting a deeper look at how Facebook mobile ads perform. According to a recent TechCrunch report, Mobile Sponsored Stories are getting over 13 times the click-through rates and earn 11.2 times the revenue per impression (eCPM) on mobile compared to Facebook’s desktop ads, and 1.93 times the CTR and 2.65 times the eCPM of Sponsored Stories on the web in the two weeks since Facebook began selling them separately from online ads.

The Facebook example and the IAB initiative underline the fact that the testing of mobile ad unit is critical to the performance and earnings of mobile ads. IAB’s aim to include a “winning” format into its Standard Ad Unit Portfolio highlights how essential it is for publishers to recognize the different strengths in various ad units and concepts, and Facebook’s new ad units, “Sponsored Stories”, which are specially designed for mobile ads, has had stunning results in terms of click-through rates. Are you testing your ad units for different sections on your mobile site or app?

The Rise of Social Mobile Gaming

By Amy Vale 

 We all know that mobile gaming has become a huge phenomenon in the past few years. Undoubtedly, it is the result of several factors, such as the massive rise in Smartphone and tablet sales, mobile Internet subscribers and app downloads. Young adults today, in particular, have grown up with computers, Internet, instant messaging and social media, at their fingertips. Gaming has evolved from a solo activity to an inherently “social” activity that lets users connect and engage with others. So what is the implication of social mobile gaming for you and other publishers?

According to a recent comScore report analyzing results in December 2011, game-playing was performed by 31.4 % of the mobile audience – that’s 2.6 percentage points up from September 2011. In just a short period of time, we are witnessing big gains. What’s the reason for this rise in social mobile gaming?

Mintel has found that sales in the mobile phone and tablet gaming market in the U.S. more than doubled between 2005 and 2010—reaching $898 million—and sales are forecasted to increase 82%, to $1.6 billion, by 2015. Smartphone sales in the U.S. increased a massive 538%—from 11.3 million units to 72 million units—between 2006 and 2011. What’s more is that U.S. tablet sales are forecast to more than triple between 2010 and 2015, from 10.3 million units to 44 million units. These numbers are staggering. Of relevance here, comScore has found that about 25% of mobile Internet subscribers (as of February 2011) are playing games. They also found that each additional Smartphone or tablet owner is likely to use their device to play games.

What does all this mean for us? Mobile gaming is fun, and a widely-accepted cultural pastime. But in the marketing world, it’s also a key tool for generating revenue and a significant amount at that. In 2010, revenue from mobile gaming reached nearly $850 million, but only 6% came from ad support, according to a new report from eMarketer. By 2014, mobile gaming revenues are expected to top $1.5 billion with ad-supported gaming making up 12.3% of that total. That means ad-supported gaming is expected to double, and the “Freemium” gaming app model can be seen as one of the major contributors to this growth.

As you may know, most social mobile games are offered in both the free or paid app model, but most people agree that the Freemium model has changed the face of mobile gaming. Why? This model lets users install the basic versions of a game for free and then prompts them to upgrade or add key game functions or features, such as “unlocks” or other virtual tools by making an in-app purchase. Free apps or those under the Freemium model almost always rely on mobile advertising as a source of income to monetize the app.

Not only are the sales of Smartphones and tablet devices expected to explode over the next several years, but it’s clear that ad-supported gaming is also on the rise. So now is the time to get on board with social mobile gaming, if you aren’t already.