Monetizing mobile applications (Presentation)

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Presented at CASE25 developer conference. …

Presented at CASE25 developer conference.
Abstract: Although the mobile applications are everywhere and even if you have a brilliant idea, the monetization of a mobile application is not an easy task. On the other side, there are examples of companies and individuals which make an enormous amount of money on their free apps. How is that possible? Well, obviously, they have chosen the successful business model/s. Thus, this paper will present trends and possible models in monetization along with the practical insights in implementation in Android and Windows Phone mobile applications. Having the broad and complete picture of different possibilities, it should be easier to define and choose an appropriate business model for any specific mobile application.

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  • 1. Monetizing mobile applications Zlatko Stapić, Marko Mijač, Boris Tomaš University of Zagreb Faculty of Organization and Informatics Pavlinska 2, 42000 Varaždin, Croatia http://www.foi.unizg.hr/ CASE25 – Developers conference - 11.06.2013. – Zagreb, Croatia
  • 2. Agenda Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20132 Introduction Major objectives Distribution channels Business models Implementation example Discussion
  • 3. Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 2013 Introduction • Monetizing mobile apps is not an easy task • Ability to create good app ≠ ability to sell app • Success stories (Rovio Mobile) • Two main approaches:  Make money by selling the app  Make money after the user has installed the app • Payment methods should not be neglected 3
  • 4. Major objectives • Regarding their mobile applications, developers and businesses have four major objectives: Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20134
  • 5. Distribution channels • Currently, app stores are the most common way of app distribution:  Platform specific (iPhone App Store, Google Play, Market Place…)  Operator owned (Sprint App Store, VZAppZone…)  Independent (GetJar, Opera Mobile Store, Handango…) Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20135
  • 6. Business models: pay per download, B2B • Pay per download model  Simple, frequently used model  The user is charged before the app is installed  App store takes it’s share • B2B Sales Model  Traditional software sales model  Selling mobile apps directly to the customers  Suitable when making mobile apps for a specific customer  Open vs closed platforms Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20136
  • 7. Business models: freemium • Freemium model  Distribute basic functionalities for free  Charge the users for the additional functionalities  Example 1: Games (additional levels, maps, weapons…)  Example 2: Dictionaries (additional words, languages…)  Predecessor of in-app billing model Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20137
  • 8. Business models: Advertising based revenue model • Advertising based revenue model  Creating revenue from ads within applications  Enabling in-app advertising using 3rd party SDK’s (share revenue)  When placing ads keep in mind user experience  Mobile advertising should reach 3.1 billion $ in 2013. Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20138
  • 9. Business models: Advertising based revenue model • Displaying 3rd party apps  Visual ads (impressions)  Click ads (clicks)  Install ads (installs) • Client campaigns • House ads • Advertising mechanisms  Implementation approaches: notification, roll, display Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 20139
  • 10. Business models: In-app purchasing • In-app purchasing  Potentially the best way to earn money through app stores  Offer free application, earn from in-app purchases of upgrades, additional services and functionalities  Platform APIs usually have built-in functionalities for fast and secure in-app purchase  Android example Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201310
  • 11. Business models: In-app purchasing • Various in-app models:  One time purchasing  Micro transactions (example: buying poker chips)  Subscriptions (example: Skype, news apps, science journal apps)  Applications for shopping (users use application to buy other products) Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201311
  • 12. Implementation example • Existing advertising platforms and SDK’s simplify advertising process • Example: AdMob (Google) – monetizing Android, iOS, Windows Phone applications by adding ads (banners) • XML – prevailing approach Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201312
  • 13. Summary of monetization models Model Downloads Income rate Income volume Revenue User experience Free Large None None Shared Positive Ads Large Continous Small Shared Negative Paid Small One time Large Shared Positive In - app Large Multiple Large Shared Positive Subscription Large Continous Medium Not shared Indifferent Proprietary in - app Medium Multiple Medium Not shared Negative Proprietary ads Large Continous Medium Not shared Negative Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201313
  • 14. Model combination matrix Free Ads Paid In - app Subscription Free x x x x Ads x x x Paid x In -app x x x Subscription x x x Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201314
  • 15. [1] M. Newlands, “Mobile App Monetization: 4 Hottest Ways To Make Money With Free Apps Today,” Murray Newlands - Marketing Blog, 2011. [Online]. Available: http://www.murraynewlands.com/2011/10/how-to-monetize-mobile-apps/. [Accessed: 03-May-2012]. [2] V. Hirsch, “The joy (and cost) of Freemium,” Volker on Mobile, 2010. . [3] C. Foresman, “Developers still divided on mobile app monetization, but love the cloud,” Ars Technica, 2011. [Online]. Available: http://arstechnica.com/apple/news/2011/08/survey-developers-still-divided-on- mobile-monetization-love-the-cloud.ars. [Accessed: 03-May-2012]. [4] Mobinex, “Monetizing Mobile Applications,” Smartface Developer zone, 2010. [Online]. Available: http://developer.smartface.biz/monetizing-mobile-applications- n86.html. [Accessed: 02-May-2012]. [5] Appcelerator Inc. / IDC, “Q3 2011 Mobile Developer Report: A platform interest survey of 2,012 Appcelerator application developers from July 20-22, 2011.,” 2011. [6] T. Miller, “App Store Tops 40 Billion Downloads with Almost Half in 2012,” Apple Press Info, 07-Jan-2013. [Online]. Available: http://www.apple.com/pr/library/2013/01/07App-Store-Tops-40-Billion-Downloads- with-Almost-Half-in-2012.html. [Accessed: 01-May-2013]. References 15 Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 2013
  • 16. [7] ABI Research, “45 Million Windows Phone and 20 Million BlackBerry 10 Smartphones in Active Use at Year-end; Enough to Keep Developers Interested,” ABI Research technology market intelligence, 31-Jan-2013. [Online]. Available: http://www.abiresearch.com/press/45-million-windows-phone-and-20-million- blackberry. [Accessed: 01-May-2013]. [8] BlackBerry, “Frequently Asked Questions,” BlackBerry Developer. [Online]. Available: http://developer.blackberry.com/devzone/blackberryworld/faq.html. [Accessed: 01-May-2013]. [9] “App Store Frequently Asked Questions,” Support Apple. [Online]. Available: http://support.apple.com/kb/HT2001. [Accessed: 01-May-2013]. [10] “Windows Phone Marketplace,” Windows Phone Marketplace. [Online]. Available: http://www.windowsphone.com/en-us/store/overview. [Accessed: 15-May-2013]. [11] S. Chettri, “Great Ways to Monetize Your Mobile Apps,” NetChunks: Webmaster and Blogging tips, Nov-2011. [Online]. Available: http://www.netchunks.com/great-ways-to-monetize-your-mobile-apps/. [Accessed: 26-Apr-2012]. [12] C. Anderson, “A revizualization of the four kinds of free,” The Long Tail, 2008. . References 16 Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 2013
  • 17. [13] Z. Stapić and O. Ribičić, “Unutar-aplikacijska kupovina uz primjer implementacije na Android platformi,” in Razvoj poslovnih i informacijskih sustava CASE 24, Zagreb, 2012. [14] M. Newlands, “Mobile App Monetization: 3 Great Ways,” Small Biz Bee, 2011. [Online]. Available: http://smallbizbee.com/index/2011/11/11/mobile-app- monetization-3-great-ways/. [Accessed: 03-May-2012]. [15] R. Woodbridge, “9 Mobile Business Models that you can use right now to generate revenue | UNTETHER.tv,” Untether.tv, 2010. [Online]. Available: http://untether.tv/2010/8-mobile-business-models-that-you-can-use-right-now-to- generate-revenue/. [Accessed: 03-May-2012]. [16] “Google Mobile Ads SDK,” Google Developers, 06-May-2013. [Online]. Available: https://developers.google.com/mobile-ads-sdk/docs/admob/fundamentals. [Accessed: 20-May-2013]. References 17 Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 2013
  • 18. Looking forward to your questions  18 Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 2013
  • 19. Information on authors Zlatko Stapić, M.A. zlatko.stapic@foi.hr Faculty of Organization and Informatics Pavlinska 2, 42000 Varaždin tel: +385 42 390 820, fax: +385 42 213 413 Zlatko Stapić, M.A. works from 2006 as a Teaching assistant at the Information Systems Development Department at Faculty of Organization and Informatics in Varaždin, and attends two doctoral programs: Information sciences at the same Faculty and Information and Knowledge Engineering at the Computer Science Department at the University of Alcalá in Spain. Recently, Zlatko is intensively engaged in developing applications for mobile devices, which is also the subject of his research in the dissertation, and it is particularly important to notice that he is developing for multiple mobile platforms, including Android, Symbian, Windows Phone 7, Nokia Qt etc. Zlatko's more detailed resume, a list of all papers, projects and awards, and other important information can be found on his personal website: http://www.foi.unizg.hr/djelatnici/zlatko.stapic. Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201319
  • 20. Information on authors Marko Mijač, M.A. marko.mijac@foi.hr Faculty of Organization and Informatics Pavlinska 2, 42000 Varaždin tel: +385 42 390 853, fax: +385 42 213 413 Marko Mijač, as of July 2011 works at the Faculty of Organization and Informatics in Varaždin as a project KI Expert 2012 associate and as a teaching assistant on courses related to software engineering and information systems. Prior to his current employment he worked as a developer of intranet production planning system at Boxmark Leather d.o.o. He is interested in web, desktop and mobile applications development in various platforms and technologies. Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201320
  • 21. Information on authors Boris Tomaš, M.A. boris.tomas@foi.hr Faculty of Organization and Informatics Pavlinska 2, 42000 Varaždin tel: +385 42 390 853, fax: +385 42 213 413 Borist Tomaš, M.A. is a Junior researcher and Teaching Assistant at the Faculty of Organization and Informatics, University of Zagreb where he works at the Department of Information System Development. Boris' assignments at the Faculty are laboratory sessions delivered on the courses Geography Information Systems and Software Engineering. Fields of interest are: software development, mobile technologies, geoinformatics, bioinformatics, artificial intelligence, application marketing, Internet marketing. During his work career he worked on several projects in various positions. Boris is currently a doctoral student at the Faculty of Organization and Informatics, University of Zagreb. For his academic achievements he received Faculty Dean's award and University Rector's award. Stapić, Mijač, Tomaš: Monetizing mobile applications - CASE25, 11th June 201321