This document provides a framework for monetizing mobile apps and content through various revenue streams. It outlines 12 potential revenue streams including advertising models like pay-per-click and pay-per-impression, sales models like premium apps, freemium, subscriptions and direct/indirect sales of goods and services, and sponsorship. Each revenue stream is defined and examples are provided. The document stresses the importance of understanding the target market demographics and technological capabilities when selecting appropriate monetization strategies.

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

2. Caveats Revenue stream framework not limited to smart- or feature-phone apps. All mobile apps and content services. Analysed from the developer, or entrepreneurs (owners) perspective. 2

3. The Revenue Stream Monetisation Framework 3

4. SHOE-BOX ANALOGY 4 IN = REVENUE OUT

5. THE FRAMEWORK 5

6. ADVERTISING | PPM 6

7. ADVERTISING | PPM How It Works Revenue generated from in-app or in-content advertising. Advertising can be self-sourced by the developer, or it can be done through an ad provider. App or content service owner paid per impression (PPM) or ad that is displayed. 7

8. ADVERTISING | PPM Examples Tag-line adverts in bulk SMS’s and “Please Call Me” messages. Splash screen ads when opening smartphone applications. 8

9. ADVERTISING | PPM Examples – ad banner in .mobi website 9

10. ADVERTISING | PPM Advantages Easier to tally up views than clicks-through’s (Pay-Per-Click). If an ad provider is used it is easier to fill the ad space than it is by self-sourcing. Ads provide a source of continued revenue. Disadvantages Ad providers take a share of the advertising revenue. App or content service needs to reach a large base of users to generate significant revenue. Users may be discouraged by ads. 10

11. ADVERTISING | PPC 11

12. ADVERTISING | PPC How It Works Same as PPM (free app download & in-app ads) But, app owner is paid per click-through (PPC) that each ad receives. 12

13. 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. 13

14. ADVERTISING | PPC Advantages More revenue is generated per click than per view. Disadvantages User attention diversion with click-through. Risk of occupying ad space with an ad that generates no clicks and revenue. No guarantee that traffic or usage will result in click-trough’s. 14

15. SALES | PREMIUM 15

16. SALES | PREMIUM How It Works Revenue is generated by selling the app or content service. Android, Windows 7, Symbian, and iOS nuances. Apps can be sold through their respective app stores or generic app stores. The app store keeps approximately 30% of the purchase price. 16

17. SALES | PREMIUM Examples: Freeverse’s iPhone ‘Skee Ball’ game that sells for $0.99 17

18. SALES | PREMIUM Examples: Android’s Quask app that allows one to type and ask (using speech) general questions and get answers that sells for $3.99. 18

19. SALES | PREMIUM Advantages 24/7 access to global markets. App store acts as a marketing, distribution, and payment agent. Disadvantages Hundreds of thousands of apps are available making competition incredibly stiff. App stores take a percentage (30%) of sales revenue. Free apps limit saleability. App store approval can be timeous or not possible. 19

20. SALES vs. ADVERTISING 20

21. SALES | FREEMIUM 21

22. SALES | FREEMIUM How It Works 22

23. SALES | FREEMIUM Examples: Twitterrific iPhone app that encourages people to upgrade to Twitterrific Premium for $2.99. 23

24. SALES | FREEMIUM Examples: Mahalafree mobile banking free peer-to-peer money transfer, money deposits or withdrawals and retail payments generate revenue by selling additional services to users. 24

25. SALES | FREEMIUM Advantages Users get to try the ‘Lite’ version for free – no fear of wasting money when purchasing the dissatisfactory full version. Freemiumapps becoming increasingly popular. Disadvantages Very attractive features need to be offered to encourage users to purchase the full version. 25

26. SALES | SUBSCRIPTIONS 26

27. SALES | SUBSCRIPTIONS How It Works 27

28. SALES | SUBSCRIPTIONS Examples Ringtones.co.za (a subscription service that offers media content such as ringtones, wallpapers etc…). 28

29. SALES | SUBSCRIPTIONS Examples: DStv mobile: Praekelt’sPanya & Drifter 29

30. SALES | SUBSCRIPTIONS Advantages Small monthly subscription fee can be more attractive than a larger initial payment. Mobile operators or content aggregators have existing payment mechanisms in place. Disadvantages Users in South Africa have been notably put-off by SMS subscriptions that have been unexpectedly costly. Negotiating required with mobile operators and content aggregators. 30

31. SALES | DIRECT GOODS/SERVICES 31

32. SALES | DIRECT GOODS/SERVICES How It Works Revenue generated from the direct (in-app) sale of goods and/or services. The app or content service is used to purchase either virtual or real goods and services. Include items such as movie and concert tickets, virtual gifts, virtual currency (mobile money), m-banking and airtime top-ups. 32

33. SALES | DIRECT GOODS/SERVICES Examples: Vodacom’s USSD airtime top-up service - *111#. 33 111# *

34. SALES | DIRECT GOODS/SERVICES Examples: Safaricom’s M-PESA mobile money service where revenue is generated by levying service fees on transactions. Not for Mahala. 34

35. 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. 35

36. SALES | DIRECT GOODS/SERVICES Examples: MXitLifestyle’s introduction of MXitmoola (virtual currency) which allows users to purchase MXit wallpapers and skins, download music, etc… 36

37. SALES | DIRECT GOODS/SERVICES Advantages Free download and use of app or content service. Enterprises gain access to a global 24/7 virtual store-front. Disadvantages Revenue not be generated from the app itself but the sale of goods and services in the app. Attractive goods and services needed to encourage users to make purchases. 37

38. SALES | INDIRECT GOODS/SERVICES 38

39. SALES | INDIRECT GOODS/SERVICES How It Works Revenue generated indirectly by complementing existing purchasable goods and services. Real/virtual good or service. Predominantly works 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. 39

40. SALES | INDIRECT GOODS/SERVICES Examples A print store app that allows users to create a digital photo-album on their mobile phone which can then be printed in the store. An app that allows clients to monitor their investment performance with a particular firm in real-time. 40

41. 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 41

42. SALES | INDIRECT GOODS/SERVICES Advantages Generates awareness of the complementary good or service. Sales (revenue)boosted by the app or content service. Can enhances customer/user convenience and experience. Disadvantages Revenue not generated from the app itself but rather from the sale of a complementary good or service. The app needs to be particularly useful and improve customer convenience in order to be successful. 42

43. SPONSORSHIP 43

44. SPONSORSHIP How It Works An 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. 44

45. 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. 45

46. SPONSORSHIP Examples: 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. 46

47. SPONSORSHIP Examples: Gavisconbranded London Tube "Journey Planner" mobile application 47

48. SPONSORSHIP Advantages Developers get access to revenue that might not have been otherwise available. A sponsorship contract can guarantee revenue for a specified period. Sponsors may be willing to fund additional application R&D, enhancements and improvements. Disadvantages Application features, design, and development may be limited by the sponsors requirements, agenda, and budget. Sponsorship is usually a once-off agreement, and may not generate on-going revenue. 48

49. You’re almost ready to make those millions… A Revenue Stream Monetisation Framework Copyright © 2011 49

50. But … A Revenue Stream Monetisation Framework Copyright © 2011 50

51. You need to understand … Demographics of your target market: Who is your target market? How old is your target market? Are they mostly male/female? How many handsets are there in the market? What are the handsets mostly used for? What cost are users able to incur for your application? Is the application adding value? Etc… Technological possibilities and appropriateness: What type of handsets does your target market possess? What are the lowest common denominator technical features and functions? What technology is appropriate for this handset? What technology is appropriate for your service/innovation? Are users familiar with the technology? Etc… 51

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53. Thank you and good luck! www.mlab.co.za steve@mlab.co.za twitter.com/mlabsa 53