Monitize 5

In this series of posts we will be investigating the reasons to use the freemium app model, how to earn money from your free apps and the obstacles you might face if you go free.
Part 1 – Monetize Your App – Free
Part 2 – Monetize Your App: Ad Supported
Part 3 – Monetize Your App: Sponsorships
Part 4 – Monetize Your App: Affiliate Sales
Part 5 – Monetize Your App – In-App Purchases

So you’ve picked your strategy, you’re going Freemium! The trick is to give people a robust enough free app to get them to download it in the first place – but still find a way to convince enough of those downloaders to part with their hard earned dollars? Do it wrong and you’ve just given away something for nothing. Do it right and it can be a lot more lucrative than charging everyone $.99 upfront.

There are three main strategies to using In-App Purchases in your app.

In-App Purchase Upgrades

You could offer the basic version free with the possibility of upgrading to a paid version with additional features. This might induce more customers to download and try the app, thereby earning a larger fan base and increasing its prospects of earning revenue. However, this strategy is more likely to work with social apps where word of mouth within friends circles result in single users upgrading to the paid group version. “Words with Friends”, is a good example of an app, which had a free version that sustained itself with ad revenue, while the paid version (where players compete with each other online) resulted in additional revenue from app sales.

In-App Purchase Consumables

IAP can also be used to provide in app virtual (consumable) goods such as coins or gems, bullets, special powers, additional costumes and customizations for your characters etc. Games such as The Simpsons Tapped Out and Jetpack Joyride are common examples of this. This works really really well if it is acceptable for your app’s genre. While becoming more common in games, the use of IAP consumables has been limited in business and utility apps.

In-App Purchase Subscriptions

Auto-Renewable subscriptions are mainly used in Newsstand applications. They represent a product that grants the user access to dynamic content for a given period of time, which is configured in iTunes Connect (set periods ranging from 7 days to 1 year). Subscriptions renew automatically, charging the users Apple ID at the end of each subscription period, unless the user opts-out. This product type works well for magazine or news subscriptions, where the user gets access to each issue published while their subscription is valid
Flurry has released statistics that confirm in-app purchasers spend on average $14 per transaction, which is why freemium has become the dominant means of monetizing apps. That’s 14x the revenue that most developers get with a Lite + Premium strategy, and is based on an analysis of how 3.5 million consumers spend their money in games.

In this five part series of posts we will be investigating the reasons to use the freemium app model, how to earn money from your free apps and the obstacles you might face if you go free.
Part 1 – Monetize Your App – Free
Part 2 – Monetize Your App: Ad Supported
Part 3 – Monetize Your App: Sponsorships
Part 4 – Monetize Your App: Affiliate Sales
Part 5 – Monetize Your App – In-App Purchases

Another great approach to making money in your app is an affiliate sales relationship where a third party pays the developer each time they bring a user to the third party product or service. The most popular affiliate for iOS is leveraging LinkShare. Rakuten LinkShare is a leading provider of full-service online marketing solutions specializing in the areas of Affiliate Marketing, Search Marketing, and Lead Generation.

LinkShare manages affiliate programs for just about all of the major brands, but the one that we want to focus on is the “Apple US iTunes, App Store, iBookstore, and Mac App Store” program. This affiliate program offers a 72-hour window and a 5 percent commission on the largest catalog of digital products in the world. Songs, albums, TV shows and episodes, movies, music videos, ebooks, iOS apps, and Mac apps from the U.S. stores are all commission-able. The affiliate program works with both desktop and laptop computers as well as iOS devices (iPhone, iPad, and iPod touch) and from websites, mobile websites, and from within apps.

Here’s what you need to do to get started:
1. Signup as a Publisher for LinkShare.
2. Create an HTML redirect that includes your affiliate link and host it on your web server.
[syntax_prettify linenums=””]
<html>
<head>
<title>App Name – App Store Redirect</title>
<meta http-equiv=”REFRESH” content=”0;url=YOUR LINKSHARE LINK GOES HERE”>
</head>
<body>
You are being redirected to the App Store…
<script type=”text/javascript”>
var gaJsHost = ((“https:” == document.location.protocol) ? “https://ssl.” : “http://www.”);
document.write(unescape(“%3Cscript src='” + gaJsHost + “google-analytics.com/ga.js’ type=’text/javascript’%3E%3C/script%3E”));
</script>
<script type=”text/javascript”>
var pageTracker = _gat._getTracker(“YOUR GOOGLE ANALYTICS ACCOUNT #”);
pageTracker._initData();
pageTracker._trackPageview();
</script>
</body>
</html>
[/syntax_prettify]
3. Create a bit.ly link for your redirect page above. You don’t want users to see the link that you’re sending them too.
4. Every time you link your app to the App Store (i.e. banners, twitter & facebook posts, emails, etc..) include your new bit.ly link.

This redirect link will tell LinkShare that you are sending this user to the App Store. It will leave a cookie on the users iOS device for the next 3 days. Every purchase that the user makes in the App Store or iTunes you will receive a 5% commission for referring them. This is a good idea because you are directing users to the App Store anyway to buy your app so why not get an additional 5% back and for any other apps they buy!

This is a surefire way to make some easy money. This is a proven tactic that worked for Temple Run. Imagine the number of links they have back to the App Store, each one is making them even more money. If you want poof, check out their bit.ly link here: http://bit.ly/TempleRunGame

In this five part series of posts we will be investigating the reasons to use the freemium app model, how to earn money from your free apps and the obstacles you might face if you go free.
Part 1 – Monetize Your App: Free
Part 2 – Monetize Your App: Ad Supported
Part 3 – Monetize Your App: Sponsorships
Part 4 – Monetize Your App: Affiliate Sales
Part 5 – Monetize Your App – In-App Purchases

You don’t see many sponsorship supported apps in the App store but I have worked with a couple clients that use this approach. The idea is very similar to ad-supported, but instead of going with an ad network, you sell your own sponsorships and have more control over ad topic, kind, size, placement and frequency.

This would work well in apps based around a hobby or special interest. For example, one might develop a cooking app and get a sponsor for each section, such as a baking sponsor for the baking section or a pasta sponsor for the pasta section. A related approach would be to have one company sponsor the entire app so their branding is displayed when the app launches, targeted ads for each section and a video ad before playing any video content.

The following strategies are ways to incorporate a sponsorship into an app:

Launch Sponsorship – Sponsoring the launch of an app can give brands exclusive access to the app’s audience for a specific period of time. Brands can also benefit from any launch marketing efforts for the app. Every time the new app is mentioned, the sponsor would be mentioned as well – typically as ‘Disney and Imangi Studios present Temple Run: Oz’
Branded Content – Marketers often get a chance to work more closely with developers to integrate their brand into the app in a more meaningful way. This gives brands an opportunity to engage app users every time they interact with an app. For example, in Temple Run, we’ve seen a brand (the movie OZ) leverage their characters and environment to deliver its messaging versus merely serving an ad in a rectangular space that could be viewed as disruptive to game play.
The Right Audience – The sponsorship opportunities extend beyond to a wide array of app categories. The key is finding an app that provides content a brand’s targeted audience might be interested in. It is important for marketers to insure that any integration with an app is organic and authentic or run the risk of users having a negative association with the brand.

Marketers are hot for mobile because it is measurable and at the end of your event they are going to want to see those numbers. Set expectations from the start and create a partnership that shares the risk evenly, so neither party feels they were taken advantage of or got the short end of the sponsorship stick.

In this five part series of posts we will be investigating the reasons to use the freemium app model, how to earn money from your free apps and the obstacles you might face if you go free.
Part 1 – Monetize Your App: Free
Part 2 – Monetize Your App: Ad Supported
Part 3 – Monetize Your App: Sponsorships
Part 4 – Monetize Your App: Affiliate Sales
Part 5 – Monetize Your App – In-App Purchases

A lot of apps are released for free but make money from ads. An ad-supported lite version of an app can serve to promote a paid version, another service or product. If you have a large user base this could be a good way to go, the more impressions means the more clicks you’ll receive. You should expect around 4% of impressions will deliver a click-thru, so you’ll need a lot of impressions to make money. The most popular ad networks for iOS is iAds (owned by Apple), Google’s Ad Mob or one that I’ve trying out lately named RevMob. RevMob has the largest eCPM of any ad network I’ve looked into. Make sure your ads don’t get too much in the way of the user experience but strategically place them in your app to catch the users eye. There are a lot of factors that determine if your app will benefit from being free, but here are some of the major ones to consider:

App pricing – If your app is legitimately a high-ticket item, you may not be able to recover the loss of sales from ads alone. A combination of ads and/or in-app purchases, may work.

App usage – The more you can get users to come back to your app, the better. More usage = more ad impressions & more ad revenue. If your app is something users would likely only use once, you may be better off getting the money up front.

Real estate for ad placement – Can you sacrifice the screen real estate needed for ads without severely affecting the user experience? Some apps lend themselves better to ads than others. Don’t try to cram ads where they do not belong, it will lead to negative reviews and a serious impact on usage.
If your app meets the criteria for successful ad placement, free can be a very profitable way to go. Not only can it increase your user-base, but your overall revenue as well. Free does not mean the end of paid app sales, and you may very well find yourself bringing in more revenue from your free app than your paid app.

Below are a couple of tips on how to integrate ads into your app:
Create Specific Ad Screen: Placing a banner at the bottom of an app when the user is focused on the middle of the screen, is ineffective. If, however, during a transition of the app, you offer the user a unique screen with the relevant ad, you have increased the chance of generating a click significantly.

Be Transparent to the User: Most apps with integrated ads are offered for free, which is only possible thanks to the ads. Make this clear to the user. Don’t ask them to click, but explaining to the user that the app is free because of the ad they are seeing, and a click will help it continue to be free is a clear and logical argument that most users will understand and implement.

Delay the Skip Option Slightly: While banner advertising has proven itself as an effective method of promoting a product or a service, the fact remains that if you provide a user the ability to skip an ad, most people will take advantage of it. One method of making sure the user sees your ad is by offering the Skip option with a delay of a few seconds. That way, the user has the ability to ignore the ad, but that ability only becomes available after a few seconds, in which the user is exposed to your message.

Animate your Ad: Just like on the Web, animated ads and rich media in general yield better results than text-based ads. If you can integrate more dynamic advertising in your app, that will not only increase clicks, but it will engage your audience in a way that text cannot. This will of course lead to higher user satisfaction, which in turn will also lead to more clicks.

In this five part series of posts we will be investigating the reasons to use the freemium app model, how to earn money from your free apps and the obstacles you might face if you go free.
Part 1 – Monetize Your App – Free
Part 2 – Monetize Your App: Ad Supported
Part 3 – Monetize Your App: Sponsorships
Part 4 – Monetize Your App: Affiliate Sales
Part 5 – Monetize Your App – In-App Purchases

One of the advantages of releasing an app in the Apple App Store is the user community is willing to pay for apps and games unlike some of the other App Stores. You’ll notice in the chart below that the Apple App Store contains 70% paid apps compared to the Android store which only contains about 35% paid apps. The main reason is the Apple users are used to paying for quality, they bought the phone for a premium and they are willing to pay for apps.

Back in the day if you were to sell software the only way to release it was in a box on a store shelf. As an independent developer you would need to get published by one of the major studios to release it. The greatest opportunity the App Store gave developers is the ability to cut out the middle man and sell directly to the users, and for only a 30% cut for Apple. That’s not a bad percentage if you are releasing it yourself, but if you do get a publishing deal expect them to take 50% of the 70% you receive leaving you with less than half of the profits of your app.

There are over 800,000 apps in the App Store right now. The market is highly saturated. Just name a potential use and most likely there is already an app for that. So, your app will have to compete with a lot of similar apps, some of which probably come free of charge.
Although apps are rather cheap these days, when a user sees your app, they are likely to go and check whether there are similar (free) apps which do the same thing. If they find it, it is likely that they will try it first. After all, they don’t have to pay anything to test it. But, if they see that you also offer a lite version of the app, your chances of getting them to install either full or lite version grow significantly.

There are many reasons why you may want to release your app for free:

1. You are a brand and you want the most user engagement you can get since the app is more than likely a marketing tool for your company.
2. Your app is used for your portfolio to showcase your talents so you can get a position at a larger company building paid apps.
3. You have a social app that needs as many users as possible, users will try most apps if they are free.
4. You are releasing a Lite Version of your app for users to try, then link to the paid app for all the premium features.
5. Release it as a Freemium app and make money with ads or in-app purchases. (More on these in future posts)

Keep in mind, as an independent developer it is much more powerful to have an app with a lot of downloads and reviews than to have an app that is practically invisible. See this as a marketing expense for future projects (to have a good project which will attract some clients).