It’s no secret: Smartphones are taking over the mobile industry - largely due to their overwhelming APPeal. The Apple app store has created and developed a platform that has nearly erased all previous boundaries of cell phone capabilities, and in turn, has revolutionized the way we interact with our phones.
Either to help us with our day-to-day tasks help us communicate with others, or simply keep us entertained, applications are now a must for most cell phone users. With this growing demand for application downloads and the massive appeal of Smartphones worldwide, software developers and advertisers alike are quickly learning how to capitalize on this explosive trend.
They have come up with four ways to monetize their applications:
· The app is provided free of charge, with the user agreeing to third-party advertisements.
· The app is provided free of charge, contains limited or no ads, but the app developer profits from micro-transactions within the app.
· The app is sold for a fee, without advertisements.
· The demo version is free, the user is enticed to pay for the full version, and while using the demo version - the user will see ads (the Hybrid model).
In order to determine the best strategy for achieving the highest ROI, developers should answer these questions:
· How much is each user worth to me?
· How many users will I have?
· What markets will my application run in?
· How long will each user interact with my application during each session?
· How often will I serve different ads within my application?
· What will my applications “shelf life” be?
· Will my applications appeal be affected by the presence of advertisements?
So … how can developers get the most out of their software? And how early in the planning process should the developer consider a monetization strategy?
Here are a few pointers:
· It is more important to compare the value of users who purchased the application, than the value of users who downloaded the free version.
· Ratio tables can help analyze the income potential of all versions.
· If, on average, users engage with apps between 8-10 minutes per session, then the ad space, the PRIME real estate alone, of tens of millions of users interacting with the application daily, could potentially be much more valuable than $0.99 per user.
Only through testing can the best strategy be determined. Developers should create at least two versions of the application for A-B testing purposes - a flat-fee version and a free-of-charge version that supports ads. Then, they should monitor the spend vs. the return with each approach, calculate the traffic value in different markets, and analyze the potential of targeted traffic in specific Geos.
Though it’s tempting to go with a paid version only, that route will not usually gain the maximum ROI. So, the ultimate question is: Wouldn’t you prefer to fully capitalize on the investment of so much time and capital with a strategic mix of monetization options?
We find that the most profitable application developers are ones that have a partner that specializes in the gathering of data and forming of a strategic approach for the application. A partner that will take the burden of data analysis and number crunching in each different Geo with enough experience in the mobile arena, and enough market knowledge to make recommendations and formulate the most profitable long term approach for any application. A partner of this caliber can create a lot more time for a software development company to develop software.