Like all content creators, app owners need to monetise their content to reinvest for their users – and to stay in business. Often that means turning precious screen real-estate over to advertisers, who pay to promote their products to app users. That revenue pays for new levels, new features and even new apps.
Advertising comes with two specifications: an audience to promote to, and somewhere to house the message. But advertising is often an inelegant solution to a sophisticated problem. It can undermine the work and effort that app owners invest in creating rich and engaging experiences. It frustrates and it annoys app users. But it is seen as a necessary evil for those who wish to provide and consume quality content – for free – online or on mobile.
2015 saw the emergence of ad-blockers across both web and native mobile channels, and a decline in advertiser liquidity has placed new strains on the cost-reward proposition for many app owners. At the 2016 MWC, WPP’s Martin Sorrell lambasted the poor quality of mobile advertising creative – and when Apple’s iAd platform can’t make it in the present environment, who can?
For the 80% of app owners who earn eCPMs in the $0.10 – $0.80 range, the belief that advertising can support an attractive and sustainable app business model is beginning to fade. App owners eager for new ways to monetise their mobile apps to replace or supplement their existing revenues have a range of options. In this article we’ll explore some of the common and emerging app monetization alternatives in 2016.
1. In-app Surveys
2016 has seen the rise of a new interstitial format in the form of in-app survey platforms from PollFish, Apptentive and Survicate. App owners embed a code snippet (SDK) within their apps, which produces a custom in-app survey that users are invited to complete. The resulting information is collected on behalf of advertising brands and research agencies who pay to use this insight in their business decision-making. The revenue generated by the sale of these surveys is then shared back with the app publisher – at around $0.30 per poll completed.
Pro: survey formats can be more acceptable to users than display advertising as they are often less visually aggressive
Con: surveys take over the whole screen, and are just as disruptive to the mobile user experience as a full interstitial ads
2. Ad Re-targeting
Is it possible to earn revenue from advertising without having to serve it? Advertising on mobile, just as on web, has become increasingly personalized and data-hungry in the last 2-3 years. DMPs (Data Management Platforms) such as Lotame, BlueKai (Oracle) and eXelate (Neilsen) are huge repositories of users likes and interests that drive much of the targeting (and re-targeting) that takes place daily. DMPs and their affiliates are increasingly eager to purchase user data (eg. location) direct from apps to help enrich their targeting products.
Pro: principally there is no need for apps themselves to carry advertising to participate in ad targeting or re-targeting – so it can be ad-free
Con: re-targeting often relies on ‘advertising identifiers’ to connect users across apps, and its use is heavily restricted on iOS and Android
3. Out-of-App Sales
Plenty of apps don’t sell content at all – think Uber, Booking.com, Zoopla – pretty much anything that relates to anything other than, well, mobile. Understandably, selling out-of-app products or services is a very different business to running a game studio or being a content publisher – but it does bring upsides. There is 0% ‘Apple Tax’ on sales of physical or out-of-app products and services. And if you’re careful, there are ways to benefit from this policy. Ever used Audible (Amazon)? They make their users purchase audiobooks on mobile web to redeem in-app, saving 30% 😉
Pro: there’s no real need for in-app monetization (ad-based or not), as the aim of the app is to drive business that’s based elsewhere
Con: no good to pure-play content owners like game studios, news and entertainment as it is a pretty different kind of business really
4. In-app Purchases
The in-app purchase mechanic – and its cousin, the subscription charge – are popular and well-documented ways to earn new and recurring revenues from mobile. Many impressive case-studies can be found online that describe how carefully planned in-app payments around app content can result in the $1.3bn≈ box office sales of 101 Dalmatians, 1961
“>[≈ box office sales of The Sound of Music, 1965] successes enjoyed by King and its clan. But the talent and grasp of tactics that delivers a sustainable revenue stream from in-app up-sales is a skill app owners need to cultivate, as no platform can do that for you.
Pro: in-app purchases can play a natural part of the app experience that, crucially, users both understand and have some control over
Con: the challenge of designing and implementing an in-app purchase strategy lies wholly with the app owner, and is hard to get right
Is it possible to monetise apps without ads, interruptions or re-thinking the whole app?
Mobile is mobile. It goes wherever consumers go – the shops and stores they visit; their offices, cab-rides, holidays and homes. From this vantage point mobile offers a unique opportunity to quantity real-world retail market trends and behaviours with the same scale and integrity as exists online. Mobile apps represent an invaluable source of privileged market data. Decision-makers and analysts working in sectors from Finance to Retail, Property and Media are vying for access it.
Conrad Poulson is the CEO of Huq Industries. It operates a network of footfall measurement SDKs currently embedded on 0.5M mobile devices – delivering 10M anonymised store-visit events monthly across supermarkets, workplaces, fashion outlets and transport modes in 70 countries worldwide. Its aggregate, trend-level reports are respectful of user privacy and it compliments both iTunes and Play Store T&Cs. Learn more at https://huq.io