posted by Bernd Leger
In this week’s Whiteboard Wednesday session, Localytics VP of Marketing Bernd Leger talks about the different ways you can monetize your app. From paid downloads to generating non-digital sales, this short video will help you get started with your app monetization strategy.
Welcome, my name is Bernd Leger, I’m the VP of Marketing here at Localytics, and thank you for joining us for another Whiteboard Wednesday.
Our topic today is monetizing your apps. There’s two key segments we want to cover - the first is how to monetize your apps directly within the apps themselves, and the other is how to get your apps to work in conjunction with your traditional offline channels, such as in-store marketing.
Let’s jump right into it. The first in-app monetization option is the more traditional paid download model. This was most frequently used in the early days of the app stores, and is still used fairly widely, typically at a 99 cents price point.
It is, however, becoming increasingly difficult to drive people to download paid apps. With over 800,000 apps in Apple’s app store alone, it can be difficult to get users’ attention, so adding another hurdle in requiring them to pay makes it even harder to coax a download.
Currently, paid downloads represents about 24% of Apple App Store revenues. Additionally, it’s reported that 4 in 5 paid apps in Google Play are downloaded less than 100 times.
As paid apps face greater difficulties gaining market traction, we see other models becoming more popular. The first is the in-app advertising model, representing a $7.3 billion business.
Initially traditional advertising networks and mobile-specific banner ad networks grabbed the bulk of in-app ad revenues, but recently new publishers have moved into the space. For example, a few years ago Facebook had no substantial app advertising revenue, but today drives roughly $3 of every $10 spent on in-app advertising.
The other model here is in-app purchasing. If 24% of Apple App Store revenues are generated by paid downloads, the rest comes from non-paid downloads, and interestingly 71% of all in-app purchases come through apps that are free to download.
Some in-app purchasing examples include game upgrades - say you’re playing a game and you want to accelerate through a particularly tricky level, you can buy a virtual good that allows you to move up a play level more easily.
We’re also seeing a fair amount of mobile commerce for real goods. Ebay for example drives $12 billion per year directly through mobile. This is a model that is growing in popularity.
So that’s a quick look at some in-app revenue generating methods. Next we’re going to look at some monetization strategies outside the app itself.
For example, if you run a brick-and-mortar store, having an app allows you to combine your rich digital experience and your in-store experience, maybe with a digital loyalty card, to drive purchases. These can be driven from the app to the store and vice versa.
Another interesting example is that of Angry Birds maker Rovio. They’re actually leveraging all of these methods in one way or another - they have a paid download model, they have advertising-supported free versions, they provide in-app upgrades for purchase, but perhaps most fascinating, 45% of their revenues come from licensing.
Think about that: almost half of their revenues are coming from non-app-related activities. If you’re able to create a brand like Rovio has, that can be a surprising revenue stream.
So what are some of the concrete steps we can take as app monetization recommendations? In the end, it all comes down to being extremely personalized, being extremely content-driven, and being in the position to deliver the right content - be it editorial or a monetization ask - to the right app user at the right time.
Ensure that when you have eyeballs on your app, you’re able to maximize your opportunity.
With that, thank you again for joining us for this week’s Whiteboard Wednesday. We look forward to seeing you again soon.
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