The document outlines a mobile application monetization framework that includes various revenue streams such as advertising (pay-per-click and pay-per-impression), premium sales, freemium models, subscriptions, and direct or indirect sales of goods and services. Each model is analyzed for its advantages and disadvantages, providing developers insights into generating revenue from their apps. It emphasizes the importance of understanding target demographics and technological appropriateness in effectively implementing these monetization strategies.

1. Mobile Application Monetisation
A Revenue Stream Framework
By Keegan Ziady and Steve Vosloo
19 July 2011

2. THE REVENUE STREAM
MONETISATION
FRAMEWORK
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3. Caveats
 Revenue streams not limited to smart- or
feature-phone apps.
 Includes all mobile apps and content
services.
 Revenue streams are analysed from the
developers or entrepreneurs perspective.
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4. THE FRAMEWORK
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5. ADVERTISING | PPM
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6. ADVERTISING | PPM
How It Works
 The application (app) or content service is freely available.
 Advertising is displayed in the app or content service to
generate revenue.
 Advertising can be self-sourced by the developer, or it can
be done through an ad provider.
 In this revenue stream the developer is paid per impression
(PPM) or ad that is displayed in the app or content service.
 Ad providers generally have a PPM rate for every thousand
views of the ad.
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7. ADVERTISING | PPM
Advantages Disadvantages
 It is easier to tally up  If an ad provider is used
views than clicks-through‟s they take a share of the
(Pay-Per-Click). advertising revenue.
 If an ad provider is used it  The app or content service
is easier to fill the ad needs to reach a large
space than it is by self- base of users to generate
sourcing. significant revenue.
 Ads are easy to set up and  Users may be discouraged
can be used on a number by ads.
of apps or content
services.
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8. ADVERTISING | PPM
Examples
 Tag-line adverts in bulk SMS and
 “Please Call Me” messages.
 Splash screen ads when opening smartphone applications.
 Ad banners in .mobi websites.
South • ZestADZ
African • Google AdMob
• InMobi
mobile ad • BuzzCity
providers • NAVTEQ
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9. ADVERTISING | PPC
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10. ADVERTISING | PPC
How It Works
 In this revenue stream the app or content service is
freely available and advertising is displayed in the app
or content service.
 The developer is paid per click-through (PPC) that
each ad receives.
 Advertising can be self-sourced by the developer, or it
can be done through an ad provider.
 Studies have shown that click-through rates are higher
on entertainment orientated apps such as games.
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11. ADVERTISING | PPC
Advantages Disadvantages
 Ad space easily filled with an ad  If users do click-through their
provider. attention is diverted from your app
to what is advertised.
 Ads are easy to set up and can be
used on multiple apps and content  The risk of occupying ad space with
services. an ad that generates no clicks and
subsequently no revenue.
 More revenue is generated per click
than per view.  No guarantee that traffic or usage
will result in click-trough‟s.
 It may be possible to specify a
minimum amount to be paid for  If an ad provider is used they take a
each impression (ad) irrespective of share of the advertising revenue.
the number of clicks.
 Users may be discouraged by ads.
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12. ADVERTISING | PPC
Examples
 Ads on .mobi sites that redirect the user to a
different site.
 Ads embedded in smart- or feature-phone apps
that when clicked take the user to a .mobi site
in their mobile phone browser.
 Ads in SMS or USSD taglines that include a link
to a .mobi site, which will be opened in the
user‟s mobile phone browser.
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13. SALES | PREMIUM
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14. SALES | PREMIUM
How It Works
 Revenue is generated by selling the app or content
service.
 This includes apps for smartphones and feature phones
that operate on Android, Windows 7, Symbian and iOS
operating systems.
 Apps can be sold through their respective app stores.
 The app store keeps approximately 30% of the
purchase price.
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15. SALES | PREMIUM
Advantages Disadvantages
 24/7 access to global markets.  Hundreds of thousands of apps are
available making competition
incredibly stiff.
 Large potential sales volumes.
 Attracting awareness to an app is
 An app store acts as a marketing, difficult.
distribution, and payment agent.
 Encouraging first time use amidst
user fears of wasting money in
purchasing a dissatisfying
application is difficult.
 Many free apps exist in app stores,
limiting saleability.
 Apps need to be approved before
they can be put into an app store
which can take time.
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16. SALES | PREMIUM
Examples
 iPhone‟s Skee-Ball game that sells for
$0.99.
 Android‟s Quask app that allows one to
type and ask (using speech) general
questions and get answers that sells for
$3.99.
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17. SALES | FREEMIUM
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18. SALES | FREEMIUM
How It Works
 Two approaches to generating revenue with Freemium apps.
 (1) Create an app with simplified features and market it as a
„Lite‟ version.
 Another application which is like the first but has more
advanced features is then purchasable.
 (2) Allow users to freely download and trial the app for a
limited period of time, after which they need to purchase it
to continue use.
Developing an app that has limited features,
with a purchasable upgrade option to enable
all of the features, is not recommended as it
is not accepted by the Apple app store.
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19. SALES | FREEMIUM
Advantages Disadvantages
 Users get to try the „Lite‟ version  Very attractive features need to be
for free, eliminating the fear of offered to encourage users to
wasting money when purchasing the purchase the full version.
full version that proves to be
dissatisfactory.
 Hundreds of thousands of apps are
available making competition
 Users will more readily download incredibly stiff.
free apps increasing user awareness
of the app.
 Apps need to be approved before
they can be put into an app store
 24/7 access to global markets. which can impose time delays.
 Large potential sales volumes.
 An app store can act as a
marketing, distribution, and
payment agent.
 Freemium apps are becoming
increasingly popular.
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20. SALES | FREEMIUM
Examples
 An iPhone app called Twitterrific that
encourages people to upgrade to Twitterrific
Premium for $2.99.
 Mahala mobile banking which is aiming to
offer free peer-to-peer money transfer,
money deposits or withdrawals and retail
payments, and expects to generate revenue
by selling additional services to users.
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21. SALES | SUBSCRIPTIONS
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22. SALES | SUBSCRIPTIONS
How It Works
 Users download the app for free and are
charged a small monthly or yearly subscription
fee in order to use the app, which generates
revenue.
 Alternatively, users can subscribe to a content
service and are charged for receiving
information (e.g. when an SMS/MMS is sent to
them).
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23. SALES | SUBSCRIPTIONS
Advantages Disadvantages
 A small monthly subscription fee  App stores take a percentage
can be more attractive than a (approximately 30%) of the revenue
larger initial payment for the app or generated from subscriptions.
content service.
 Users in South Africa have been
 24/7 access to global markets. notably put-off by SMS subscriptions
that have been unexpectedly costly.
 An app store can act as a
marketing, distribution, and  Apps need to be approved before
payment agent. they can be put into an app store
which can impose time delays.
 Mobile operators or content
aggregators have existing payment  Negotiating required with mobile
mechanisms in place. operators and content aggregators.
 Users may perceive that they are
being locked into a long term
expense.
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24. SALES | SUBSCRIPTIONS
Examples
 Mobile TV applications which users subscribes to and
pay for monthly.
 Mogasm (a subscription-based mobile dating website).
 Ringtones.co.za (a subscription service that offers
media content such as ringtones, wallpapers etc…).
 DStv‟s mobile USB TV decoder, Drifta.
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25. SALES | DIRECT GOODS/SERVICES
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26. SALES | DIRECT GOODS/SERVICES
How It Works
 With this approach the app or content service is
available for free and revenue is generated from the
direct (in-app) sale of goods and/or services.
 Here users use the app or content service to purchase
either virtual or real goods and services.
 These include items such as movie and concert tickets,
virtual gifts, virtual currency (mobile money), m-
banking and airtime top-ups.
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27. SALES | DIRECT GOODS/SERVICES
Advantages Disadvantages
 Users are not discouraged  Revenue may not be
or irritated by ads. generated from the app
itself but rather from the
sale of goods and services
 Users are able to download via the app.
and use the app or content
service for free.
 Attractive goods and
services must be available
 Enterprises gain access to to encourage users to
a global 24/7 virtual store- make purchases.
front.
 An app store can act as a
marketing, distribution,
and payment agent.
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28. SALES | DIRECT GOODS/SERVICES
Examples
 Happy Theme Park iPhone game that facilitates the
purchase of virtual currency (as well as earnable in-game
currency) in quantities ranging from $0.99 to $99.99.
 Vodacom‟s USSD airtime top-up service.
 MXit Lifestyle‟s introduction of MXit moola (virtual currency)
which allows users to purchase MXit wallpapers and skins,
download music, etc…
 Safaricom‟s M-PESA mobile money service where revenue is
generated by levying service fees on transactions.
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29. SALES | INDIRECT GOODS/SERVICES
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30. SALES | INDIRECT GOODS/SERVICES
How It Works
 The app or content service is free to download and use.
 Revenue is generated indirectly by complementing existing
purchasable goods and services.
 The respective good or service can be real or virtual.
 An app or content service of this sort can predominantly
work in two ways:
◦ (1) as an advertising tool to generate awareness for the
complementary product or service, or
◦ (2) as a tool that makes it easier for people to use the
complementary product or service.
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31. SALES | INDIRECT GOODS/SERVICES
Advantages Disadvantages
 Users are not discouraged or  Revenue is not generated from the
irritated by ads. app itself but rather from the sale
of a complementary good or
service.
 Users are able to download and use
the app or content service for free.
 The app needs to be particularly
useful and improve customer
 An app store can act as a convenience in order to be
marketing, distribution, and successful.
payment agent.
 Awareness of the good or service
can be generated if the app is
downloaded or the content service
is used.
 Sales, and ultimately revenue, can
be boosted by the app or content
service.
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32. SALES | INDIRECT GOODS/SERVICES
Examples
 Dunkin‟ Run (an app from Dunkin‟ Donuts) allows you
to easily jot down your friends‟ coffee orders so you
don‟t forget them when you get to the drive-through
 A print store that develops an application that allows
users to create a digital photo-album on their mobile
phone which can then be printed at the print store
 An application that allows clients to monitor their
investment performance with a particular firm in real-
time
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33. SPONSORSHIP
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34. SPONSORSHIP
How It Works
 Sponsorship is where a specific enterprise
agrees to sponsor (fund) an app or content
service that has some degree of affiliation
and direct (or indirect) benefit to the
enterprise.
 The app or content service is freely
available and the developer is paid by the
sponsor for development of the app or
content service.
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35. SPONSORSHIP
Advantages Disadvantages
 Developers get access to  Application features,
revenue that might not design, and
have been otherwise development may be
available. limited by the sponsors
requirements, agenda,
and budget.
 A sponsorship contract
can guarantee revenue
for a specified period.  Sponsorship is usually a
once-off agreement,
and may not generate
 Sponsors may be willing on-going revenue.
to fund additional
application R&D,
enhancements and
improvements.
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36. SPONSORSHIP
Examples
 Coca-Cola sponsoring an iPhone or Android (smart-phone)
game that promotes the brand.
 A government health department sponsoring an m-Health
application that allows clinics in rural locations to quickly
access patient medical history.
 The Deutsche Bahn (German national railway company)
procuring and sponsoring the development of the DB
Navigator app which calculates the optimal trips for users by
train, bus, tram, subway and ship. It also includes a .mobi
site that allows users to pay for and book transport tickets.
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37. But!
A monetisation
model alone is not
sufficient to make
those millions!
A Revenue Stream
Monetisation Framework Copyright © 2011 37

38. You need to at least understand
and evaluate
The Mobile Demographics of the Technological Possibilities &
m-Ecosystem Appropriateness
 Who is your target market?  What type of handsets does
 How old is your target your target market possess?
market?  What are the lowest common
 Are they mostly male/female? denominator technical
features and functions?
 How many handsets are there
in the market?  What technology is
appropriate for this handset?
 What are the handsets mostly
used for?  What technology is
appropriate for your
 What cost are users able to service/innovation?
incur for your application?
 Are users familiar with the
 Is the application adding technology?
value?
 Etc…
 Etc…
A Revenue Stream
Monetisation Framework Copyright © 2011 38

39. Thank
You!
Good
Luck!
www.mlab.co.za
steve@mlab.co.za
twitter.com/mlabsa
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