Ways to Monetise Apps, Gain Brand Awareness, and New Customers

When Apple launched the iPhone in 2007, Steve Jobs said: "Every once in a while, a revolutionary product comes along that changes everything". The industry shifted, but when Apple opened up the iOS software development kit (SDK) to third-party mobile app developers and introduced the App Store in 2008, it changed forever. Developers started developing mobile apps and exploring commercial opportunities and other manufacturers introduced app stores to the market. As a result, around 1,000,000 iPhone apps and Android apps are now available, but what are the different ways to monetise apps and gain brand awareness and new customers?

Advertising (cost per click, cost per impression, cost per acquisition and partnership)

Banner advertising generates revenue within a mobile app with three different advertising models from mobile advertisers: cost per click (CPC), cost per impression (CPM), and cost per action/acquisition (CPA). In cost per click, the advertiser pays when a user clicks on the banner ad. In cost per impression, the advertiser pays for the number of devices that the advert is seen on. In cost per acquisition, the advertiser only pays if the customer buys or signs up. A fourth adverting option sees a brand partnering directly with an app; such as H&M partnering with MyTown to promote their clothing line through virtual purchases. H&M received 10.6-million branded impressions and users accumulated 700 000 virtual check-ins over the course of the campaign.

Sales (premium)

In premium sales, users make a one-off payment for a mobile app such as £0.69 for the popular game Angry Birds. They are sold through apps stores, who keep approximately 30% of the purchase price and users buy the mobile apps as a once off purchase with an expectation for ongoing support. App stores act as a marketing, distribution and payment agent to a 24/7 global market but with thousands of mobile apps, competition is very stiff to get noticed. For example, the majority of paid mobile apps in the Android Marketplace have been downloaded less than 100 times.

Sales (virtual/actual goods)

Some apps incorporate the purchase of virtual and actual goods as a revenue stream. In Angry Birds, the Mighty Eagle, a super bird that helps users get though difficult levels, generates additional revenue with 40% of users making additional purchases. Actual goods purchased are movie and concert tickets, airtime top-ups etc.

Sales (freemium)

Freemium apps are essentially a free trial of a mobile app. Features or content are simplified and revenue is generated only when users upgrade to the full version, or make in-app purchases (as above).

Sales (subscription)

Like any subscription-based model, users pay a small monthly or annual subscription fee to use the mobile app. Publishers such as The Economist and The FT have subscription-based mobile apps and the content must be compelling enough for users to pay a monthly subscription.

Sales (brand extension for in-store purchase)

Some mobile apps are created by a brand to generate awareness for the complementary products/services and in-store purchase. An example is Dominos Pizza, who created an iPhone app for mobile purchases which increased sales to £10-million in eight months. Revenue is generated when the customer makes an in-store purchase, but not directly from within the mobile app.

Sponsorship

Large corporate brands sponsor the development of mobile apps to gain brand awareness and be affiliated with the app. An example is Smirnoff's sponsorship of Time Out London's app, although the sponsor's budget and requirements can limit features and design.

The total global mobile applications market is forecast to continue to growth from US$6.8-billion in 2010 to US$25-billion by 2015. And, with the advent of new technology like HTML5 and web apps, the mobile landscape is changing rapidly. To exploit this opportunity, we believe that brands should not concentrate on ways to engage with existing customers through mobile, but how to attract new customers and how to maximize revenue by considering one or a combination of these different revenue streams.

RoqSTA Developers are mobile app developers based in Leeds, West Yorkshire. We specialise in building mobile apps for all platforms, including iPhone apps, iPad apps, Android apps, Blackberry apps, HTML5 web applications and mobile web development. For native apps, web apps and hybrid app in Leeds, contact RoqSTA.