mobile monetisation

Mobile MonetisationA Revenue Stream Framework

By Keegan Ziady and Steve Vosloo19 July 2011

CaveatsRevenue stream framework not

limited to smart- or feature-phone apps.

All mobile apps and content services.

Analysed from the developer, or entrepreneurs (owners) perspective.

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THE REVENUE STREAM MONETISATION FRAMEWORK

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SHOE-BOX ANALOGY

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IN

OUT

= REVENUE

THE FRAMEWORK

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ADVERTISING | PPM

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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.

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ADVERTISING | PPMExamples

Tag-line adverts in bulk SMS’s and “Please Call Me” messages.

Splash screen ads when opening smartphone applications.

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• InMobi• ZestADZ• Google AdMob• BuzzCity• NAVTEQ

South African

mobile ad providers

ADVERTISING | PPM

Examples – ad banner in .mobi website

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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.

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ADVERTISING | PPC

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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.

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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.

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84% of ads on mobile phones are viewed via SMS, with a distant second of 9% viewed via MMS (Nielsen, 2011)

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.

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SALES | PREMIUM

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SALES | PREMIUMHow 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.

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SALES | PREMIUM

Examples: Freeverse’s iPhone ‘Skee Ball’ game that sells for $0.99

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SALES | PREMIUMExamples: 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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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.

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The Android question?

SALES vs. ADVERTISING

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SALES | FREEMIUM

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SALES | FREEMIUM

How It Works

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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.

(1) Free ‘Lite’ version (simplified features) and purchasable ‘Full’ version (all features).

(2) Free trial app (limited time period) which needs to be purchased to continue use.

SALES | FREEMIUM

Examples: Twitterrific iPhone app that encourages people to upgrade to Twitterrific Premium for $2.99.

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SALES | FREEMIUM

Examples: Mahala free mobile banking free peer-to-peer money transfer,

money deposits or withdrawals and retail payments

generate revenue by selling additional services to users.

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SALES | FREEMIUM

Advantages

Users get to try the ‘Lite’ version for free – no fear of wasting money when purchasing the dissatisfactory full version.

Freemium apps becoming increasingly popular.

Disadvantages

Very attractive features need to be offered to encourage users to purchase the full version.

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SALES | SUBSCRIPTIONS

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How It Works

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(1) Users are charged a small monthly or yearly subscription fee in order to use the app.

(2) Users can subscribe to a content service and are charged for receiving information.


Examples

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

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Examples: DStv mobile: Praekelt’s Panya & Drifter

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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

SALES | DIRECT GOODS/SERVICES

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SALES | DIRECT GOODS/SERVICESHow 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.

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

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111#*

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

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SALES | DIRECT GOODS/SERVICESExamples: 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.

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SALES | DIRECT GOODS/SERVICESExamples: MXit Lifestyle’s introduction of MXit moola (virtual currency) which allows users to purchase MXit wallpapers and skins, download music, etc…

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SALES | DIRECT GOODS/SERVICESAdvantages

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.

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SALES | INDIRECT GOODS/SERVICES

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SALES | INDIRECT GOODS/SERVICESHow 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.

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SALES | INDIRECT GOODS/SERVICESExamples

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.

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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

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SALES | INDIRECT GOODS/SERVICESAdvantages

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.

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SPONSORSHIP

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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.

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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.

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SPONSORSHIPExamples: 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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SPONSORSHIP

Examples: Gaviscon branded London Tube "Journey Planner" mobile application

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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.

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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…

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mobile monetisation

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