July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

While most consumers aren’t directly taking advantage of RSS feeds — they’ve mostly been supplanted by social media and mobile news reading apps –  they’re still an important way for publishers to get their content distributed and discovered.

For London-based Mediafed, that means big business.

How big? The company announced today that its platform for news feed discovery has powered 30 billion article views in the last 12 months and 89 billion news feed requests. Additionally, Mediafed has driven 6.4 billion clicks back to publisher sites and has seen its mobile views increase by 83 percent.

With most online publishers struggling to maintain decent ad rates, Mediafed’s explosive performance could be a rare bit of relief.

Launched in 2007, the company has built a platform to help publishers distribute, monetize, and analyze their news feeds. Its business has steadily risen over the past few years, following the rise of social media, smartphones, and tablets. Mediafed isn’t talking about its revenues yet, but it boasts that it’s been profitable since its first day in business.

“One of the advantages we had was the fact that Google hasn’t really been doing much with Feedburner,” said Ashley Harrison, the company’s chief executive, in an interview with VentureBeat. Google bought the RSS feed manager Feedburner in 2007, but after struggling to figure out how to properly make money off of RSS feeds, it ended up shutting down its “AdSense with Feeds” product late last year.

“From April [2012] to April [2013] we’ve doubled monthly article visits,” Harrison said. “A large percentage of that growth has been from the concentrated strategy of working with U.S. publishers.”

Indeed, looking at the company’s monthly article stats is telling: It jumped from 14 million monthly views in January 2010 to 47 million in 2011. Since then, the figure has doubled every year — in January 2011 it was 100 million monthly visits, and this year that increased to 200 million. Harrison tells me he expects to reach 300 million monthly views by next January.

Mediafed monetizes news feeds for more than 2,000 publishers, including heavy-hitters like NBC, the New York Times, and Reuters (which make up its highest daily article views).  The company has also partnered with more than 1,200 major advertisers.

Looking forward, Harrison tells me Mediafed is going to build on Taptu’s technology (Mediafed acquired the news DJ app last year) to help its users more easily discover content they’ll like. Specifically, the company will integrate Taptu’s tech into its Feedsportal offering, which offers anonymous statistical information about RSS feed usage.

“At the moment our strategy is to try and make RSS more available now that there are so many popular newsreaders out there,” Harrison said. “We think we can help build the RSS ecosystem rapidly by piggy-backing [on] the newsreaders people want to use.”

RSS photo via Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Today, 89 million people in the U.S. will watch 1.2 billion online videos.

By 2016, online video viewers are expected to double to 1.5 billion. Naturally, companies are looking for a way to monetize this influx of activity.

The New York Times recently announced plans to allow non-subscribers to view its online video content. The 10-articles-per-month limit still stands, but videos don’t count.

Contrariwise, YouTube, according to a number of reports, may begin charging $1.99 to $5.00 per month to view some channels.

The New York Times and YouTube seem to be heading in opposite directions, with one favoring free content and the other getting set for paywalls. These developments leave more questions than answers for the future of online video monetization.  

Plenty of organizations favor free, ad-sponsored video content –- an approach widely popularized by YouTube. Essentially, this model is reminiscent of the traditional TV model of free content supported by advertising.

The New York Times and Hulu have favored the free strategy, but it comes with pros and cons. While free content is great for the consumer, the viewing experience is significantly reduced. Ad personalization, which allows advertisers to target content to users based on their interests, is still developing. Plenty of users say targeted ads make them uncomfortable, and others note they see the same ads over and over.

Other organizations, like Netflix, Amazon Prime, and Quello, are turning to flat fee and à la carte services. This approach allows users to access exclusive content without having to view advertisements, but content selection is often limited (remember when Netflix cut 1,800 titles from its streaming library?). This approach also creates high barriers to entry for newcomers to the market.

A pay-as-you-go approach, favored by iTunes, Amazon, Vimeo, Chill.com, Vudu, and others, has also grown in popularity. With new video platforms entering the market, it’s become easier than ever for organizations to set up paid content sites. DRM (digital rights management) technologies like Widevine ensure the content is protected and can be streamed securely. This is an affordable model for both consumers and companies; most companies collect 10 to 30 percent of the transaction fee.

Pay-as-you-go models have a slew of benefits. Premium content, easy downloading for offline viewing, and low barriers to content entry make this an attractive option. The downside? Pay-as-you-go is more expensive for companies than other business models.

While all these monetization options are viable and evolving, YouTube stands to shake up the industry significantly if it does decide to roll out its paid subscription channels. Much like the pay-as-you-go model pioneered by iTunes, consumers will likely find it appealing to pay $1.99 to $5.00 per month for an online channel. Currently, a satellite or cable TV subscription in the U.S. runs at $75 per month. If consumers flock to online content, it may drive basic TV channels to offer more content on the Web.

It’s worth noting there are already plenty of devices in the works that have not enticed Americans to ditch the traditional cable subscription.

For example, consumers were excited about Apple TV, but it hasn’t caught on in the mainstream. Boxee, a cloud DVR, brings streamed content to our living rooms’ big screens. It’s generated a lot of buzz, but many have doubts about how far it will go. By the end of the year, Boxee plans to serve only a fraction of the market, and it may not be able to compete with market leaders like TiVo.

We may continue to see a blend of online video services that allow users to access free, à la carte, and paid subscription services. But in the coming years, the industry will likely begin to consolidate in such a way that one of these models reigns supreme: only time will tell which model users (and businesses) come to prefer.

For now, there’s room for competition. Producers will likely continue to favor the option of having complete control over their content, perhaps choosing video solutions that they deploy on their own over huge platforms like YouTube. But free content models will continue to have a place for startups and content producers looking to gain a following.

The online TV revolution is coming, and both consumers and businesses should keep a close eye on the industry as it hashes out the best monetization model. As new models are introduced and key players continue to adopt different strategies, it is certain that the entire industry will look much different in the coming years.

Iddo Shai is a video producer specializing in broadcast journalism and online video platforms. He is currently director of video production at open-source video platform Kaltura.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

No matter how great your your business is, monetization can be frustratingly elusive. But Skimlinks has raised a round of growth financing from Greycroft Partners to help you get there.

The technology converts digital content into affiliate links. Brands or publishers can then earn money through affiliate marketing without making much of an effort. The company’s SkimLinks product turns normal links into affiliate links, while SkimWords uses natural language processing to detect product references in the text and direct people to where they can buy them.

“We are the only technology in the world that can detect granular product references in content, in real time across multiple verticals, and link them accurately to the most relevant retailer of that product,” the company said on its site.

Skimlinks has a network of 140,000 active publishers and 17,000 affiliate programs. According to a statement issued this morning, Skimlinks generates seven-figure revenues each month from its network and processes 300 million clicks per month. Clients include Conde Nast, Gawker, AOL Europe, WordPress, Hearst Digital, Amazon, and eBay. The company anticipates it will drive $500 million of e-commerce sales globally in 2013.

The amount of this round is undisclosed, but the company says it will use the funds to build out its products and expand into Asia. Along with the funding announcement, SkimLinks’ Japanese-language website went live this morning.

Greycroft Partners led this round — its portfolio includes other ad tech and online publishing startups including Buddy Media, Klout, and the Huffington Post. A group of Japanese angel investors also participated, along with Forum Foundry and existing investors. Skimlinks previously raised $7.02 million, closing its second round of institutional financing in November 2011.

SkimLinks was founded in 2007. It has 55 employees, with headquarters in London and offices in San Francisco and New York. It will open operations in Asia this year.

Photo Credit: Shiraz Chakera/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Tumblr’s CEO David Karp has been in the spotlight as of late, especially in the blogosphere. A little over a week ago, he published a blog post announcing the killing of Tumblr’s Storyboard, and subsequently, the end of the only 1 year old Tumblr editorial team.

There was clear backlash in the media world, including a certain piece satirizing Karp’s post. Today was the first time he has been able to speak freely and publicly.

Speaking at GigaOm’s paidContent Live conference in New York City, Karp said the following regarding the Storyboard team: “It’s not a knock on that team. We hired a team of journalists as an experimental marketing initiative to report on our community. It wasn’t the right tool in our toolbox.”

When pushed further on why exactly it wasn’t the right tool, he said frankly, “It wasn’t working in the ways we had intended for it to work. My hope was that we were going to surface the incredible stuff that’s going on on Tumblr, stuff you had no idea existed. Storyboard was our take on the Tumblr beat. Like many creative ambitions, this didn’t work the way we wanted.”

In a bit of a contrast to Karp, Aria Haghighi, CEO of Prismatic, and Zite CEO Mark Johnson sang the praises of personalization in content consumption, and how their services are helping users and readers curate and expand the content they are recommended. It seems that Karp has killed the first product to help readers curate the massive Tumblr ecosystem (as of today, the platform has 90 million posts created/day by 100 millions bloggers, totaling at 45 billion posts), but this doesn’t mean it’s Tumblr’s last attempt.

He then spoke about Tumblr’s view on monetization for its creators, making some contentious (although brave) comments, this time against Google and YouTube’s model.

We’ve left the thing wide open. Compare that to a YouTube and their partner program. They’ve built a brilliant, but single model for some creators. My concern is that it reminds me of what Google did with the blogosphere–it was wide open with a huge diversity of stuff that people were creating in the blogosphere.

If you remember when AdSense came along, the blogosphere started to homogenize to get a buck. In the same way that AdSense had a strong effect on the originality, creativity and diversity of the blogosphere, my concern is that with networks like YouTube that are big and wide open, when you look at the tools, already you can see the YouTube creators lining up behind the one business model.

At Tumblr, we want to keep the network wide open and never prescribe anything.

But what does an open, non-prescriptive network mean?

Karp thinks it means success through other platforms. He announced that by today, there have been 70 book deals, and by two months ago, the platform had 3 creators get TV deals.

He’s also keen to see what some of the emerging platforms are allowing. Using self-publishing, how can Tumblr users monetize their audiences? Or for performers, who are building audiences through Tumblr, how they are selling out shows through the likes of products like Songkick?

Clearly, Karp has a long road ahead of him. What we do know is that he’s not afraid to experiment, and he’s not afraid to stick by his decisions. What we don’t know is where Tumblr will be in a year, or even six months.

What we bet we can expect is the continued growth of the platform, and hopefully more of its users being able to monetize their audiences and their creativity.

Erica Berger is a Brooklyn based media creative and writer, working at the intersection of tech, international issues, and social good. She builds digital products that make people happy, and can be found @GoodBerger.

Photo: Satya Murthy/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Source: Hipset's Facebook page

Hipset cofounder Mazy Kazerooni with Justin Bieber and Lil Twist.

Celebrities may have goods looks, money, the spotlight, and a fan base, but they don’t always know how to make money off their popularity. Today, Y Combinator company Hipset introduced a multichannel YouTube network that helps musicians grow and make money off their online audience.

CEO Matt Schlicht said that while many artists may have a strong presence on Facebook, Twitter, and Instagram, they are “shockingly small” on YouTube. Hipset develops these artists by optimizing their metadata, defining their video strategy, scheduling their uploads, setting up collaborations with top YouTubers, and using technology to develop and retain their YouTube audience.

Hipset works with record labels and artist management companies, who use their technology to distribute content and increase their clients’ reach on Facebook. Hipset celebrities include Tyga, Souljaboy, Lil Twist, Daughtry, 3 Doors Down, Rob Zombie, and Ryan Leslie. Schlict said these celebrities have a combined 1 billion views on YouTube and distribution channels to over 35 million fans.

The Y Combinator-backed company first launched as Tracks.by in 2012. Back then, the site was a place where artists could showcase their new work, and Tracks.by helped campaigns “go viral.” It also connected brands with celebrities to facilitate for celebrity endorsements.

As Hipset, the goal is to “hack through the world of online monetization” to optimize the Internet for musicians. In addition to the YouTube network, Hipset offers Hipset Boost, a suite of promotion tools to help artists grow their online audience. In addition to announcing the YouTube network, Hipset also announced adding new features into Boost that enable artists to require fans to follow them on social networks, in order to access exclusive videos.

Hipset has received backing from Menlo Ventures, Y Combinator, Venture51, Matt Mullenweg, Alexis Ohanian, Justin Kan, Brad Hunstable, Josh Elman, Alex Le, Garry Tan, Nils Johnson, David Wu, Harj Taggar, Michael Weiksner, Erik Moore, and Apu Gupta.

Image credit: Hipset Facebook page

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Jan Beckers is founder and CEO of HitFox Group.

Monetization is survival.

If free-to-play game publishers have made it to the top of the app stores’ grossing charts, it’s for one good reason: Monetizing efficiently was not a choice. Indeed, the free-to-play business model forced publishers to develop and implement the mechanics allowing for successful monetization right from the start.

The good news is, in the process they developed some great practices for the mobile industry as a whole.

As competition continues to heat up in the mobile space, with close to 800,000 apps available on the App Store and as many on Google Play, here’s how all app marketers can learn from them.

Changing the Game

Free-to-play has revolutionized the monetization model in gaming by charging players based on their willingness to pay, instead of displaying one set price for all. Indeed, through a dynamic pricing scheme for in-app purchase items, free-to-play has enabled game publishers to monetize the whole of the price/demand curve.

By removing the lower price limit and allowing a vast majority of users to play the game entirely for free, it has triggered two positive effects:  On the one hand, it enabled the generation of high volumes of players, and on the other, it made it possible to monetize part of the long tail of users, either because they are ready to pay smaller amounts, or by showing them ad offers.

By removing the upper price limit, it also made it possible for the most committed players to spend an unlimited amount of money in the game, therefore unleashing an enormous monetization potential. Aeria Games, for example, the publisher of the card-battle game Monster Paradise, recently reported that its ARPPU (Average Revenue Per Paying User) had seen peaks of $90 and above over the holiday season.

Understanding mobile

The most striking realization of Free-to-Play’s potential on mobile is the rise of mid-core games, such as Supercell’s Clash of Clans (which is reported to make $1 million a day, along with the company’s other title, Hay Day). The success of the mid-core genre stands as a strong example of how mobile audiences should be approached: by addressing as many users as possible, but also by understanding and taking advantage of the great variety of mobile usage patterns.

Whether your app is used a couple minutes here and there, 30 minutes during the daily commute, or the whole weekend long, it should be structured in a way that offers (at least) the value that every user expects from it.

Learning from the challenges of free

The free-to-play model, while offering a whole new perspective on monetization, also brought along some major challenges.

First, acquiring users was no longer synonymous with monetizing them. For players to be converted into payers, they also had to be retained and engaged. So publishers had to develop a thorough understanding of the behaviors and usage patterns at play within their game. This was achieved through the implementation of in-app analytics.

For instance, Struan Robertson of NaturalMotion, the successful publisher of free-to-play hits MyHorse and CSR Racing, explained that you should spend time each day looking at your dashboard of stats.

Then, as the cost of acquiring users kept soaring, it became vital for game publishers to know at which price they could buy additional players in order to remain profitable. Sho Masuda, the VP of user acquisition at Japanese publisher Gree, reported that the company used the large amount of data collected over time to forecast what the value of an install for a particular game is going to be.

Finally, quality of players can vary greatly across the traffic sources employed for user acquisition. This in turn strongly enforced the need to accurately track in-app user activity to determine which sources perform best so you can fine-tune the ad spend and optimize the marketing budgets.

Calling all app marketers

To make the most out of their monetization potential — even if survival is not immediately at stake — all app marketers can benefit from the lessons of free:

1. Understand, consider and engage all your users.
2. Unleash the monetization potential of your biggest fans.
3. Understand and take advantage of mobile behaviors and usage patterns through in-app analytics.
4. Continuously track your promotion channels’ performance and optimize your advertising spend.

Game on!

photo credit: E-Plus Gruppe Fotostream via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Diana LaGattuta is vice president of marketing at NativeX.

On March 20, we rebranded our company to NativeX, a name that reflects the type of native in-app advertising we provide. As I expected, the evening of our launch, I received a message from a friend who works for a mobile ad technology firm.

It went something like this: “Congrats! But you know native doesn’t scale, right?”

I’ve spent the past eight years of my career trying to make mobile advertising work. I’ve watched the industry grasp at many paradigms while searching for the one that would finally work for mobile advertising, the solution that would elevate mobile to the level of the web.

During this search, the mobile industry has looked jut about everywhere for the answer: in carrier-grade media, algorithmic targeting, expensive ads with flashy landing pages for big brands, location awareness, and programmatic media buying platforms. Companies have tried to figure out how to make a buck by scaling the hell out of mobile.

During this, they’ve churned more standard banners through exchanges, which are bid down to the penny to compensate for puny click-through rates. This is good for ad tech companies, but not so good for indie developers who don’t generate billions of impressions but still need to run a business.

Meanwhile, mobile gaming apps have been quietly reinventing mobile advertising and out-monetizing even the large, well-established publishers. Here are a few things the mobile games companies have worked out along the way:

Nobody likes banner ads

Apart from ad technology companies that are built from standard display ad, nobody appreciates that little rectangle at the bottom of the screen: the banner ad. The problem is that people just don’t click.

It’s safe to say we can attribute more of that 0.5 percent click-through rate (and that’s generous) to fat thumbs than to consumer interest. Additionally, app developers hate ruining their beautiful products with what has become a necessary evil. There’s a better way to monetize an app than with that small banner our eyes have been trained to overlook — and game developers have found it.

Mobile game developers have integrated advertising seamlessly into the user experience through native ad mechanics like app discovery walls, product placement, and incorporating game characters into the offer experience with native interstitials. With these more innovative methods, the consumers not only click, but they act.

They download promoted apps and engage with native ads at a rate that’s often more than 350 percent higher than engagement with nonnative ads.

Freemium changes everything

Nobody wants to pay for apps anymore.

Seeing this trend, gaming companies were the first to master the art of making money from free apps with the freemium business model. By offering their games for free and then offering in-app purchases with virtual currency, which players can use to buy bigger barns or weapons, game developers have circumvented the need for pay to play. With a rewarded ad unit, the consumer engages with an ad to earn virtual currency rather than buying it. For example, a consumer can earn virtual goods by viewing an ad, signing up for a free trial, downloading a mobile coupon, or downloading an app.

This leaves us asking: Is a customer who is rewarded to engage with an ad as valuable as one who is not? I would say that rewarding consumers for sampling your product is a proven marketing tactic both online and offline.

Another benefit of rewarded ad units is that consumers more readily accept them. This is because the consumer can see the financial benefit of advertiser-sponsored content, and it feels like a win-win. Customers often do not draw the connection that someone else is paying the bill for the free content they’re enjoying, and they see advertising as an intrusion. Yet who can forget the outrage Facebook users expressed when rumors flew around that they might be asked to pay a subscription fee?

With rewarded ad units, the transaction of advertising for content is more apparent.

The brands will come, but direct-response advertisers are key

The average American spends 10,000 hours playing digital games before they turn 21. Anyone familiar with The New Yorker‘s Malcolm Gladwell and his work knows that 10,000 hours (five years of a 40-hour work week) is the required time it takes to master anything. By this logic, we might be seeing the first generation of teenage gaming experts. It is no surprise that a cottage industry has emerged around designing behavioral changing games.

And mobile games and other entertainment apps are just beginning to become a powerful ad engagement tool for big brands.

Big brands want to reach this affluent young audience of gaming masters when they’re at the point of deciding which credit card to get, car to buy, or razor to use. The brands are already creating tailor-made branded games as a means of reaching this desirable segment, like Teen Vogue’s game Teen Vogue Me Girl and Disney’s Brave-branded version of Temple Run or McDonald’s Mouth Off game.

As big brands continue to infiltrate mobile gaming, most cross-promotion is still done between app developers. Other apps with a vested interest in building an audience quickly include mobile-first apps in travel, dating and commerce.

Advertising has always required the right mix of art and science. We have made huge strides in predictive analytics for better targeting on the back end. Now it is time to elevate the craftsmanship on the front end to design native ad experiences that become part of the flow of the app. The mobile game industry is driving this creative innovation and scaling it.

The lesson to be learned is that we, as an industry, can do better than banners. We have to do better than banners. Native promises to improve value for the advertiser and also turns mobile into a successful business channel for app developers.

photo credit: E-Plus Gruppe Fotostream via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Robin Thurston is CEO of MapMyFitness

You’ve already beaten the odds — your app is successfully gaining adoption. But now a more difficult challenge looms: You need to parlay that app success into a viable business.

A successful apps-based business will demand many of the easy-to-overlook (but crucial) conventional business functions that go beyond pure app development and software maintenance such as customer service, PR and marketing, finance, operations, etc.

But let’s put those things aside for a moment and focus in on the biggest single challenge facing the developer of a successful app: Generating a sustainable revenue base from which to grow a business.

Here are three ways to do that:

#1 – Paid apps

Paid apps are an indispensable component to any revenue-generating efforts in the current app store environments.  Any developer offering a free app should strongly consider offering a paid version as well (and vice versa), even if alternate revenue generation strategies are in play.

There are a few reasons for this:

• There is a large class of consumers who simply prefer paid apps. They directly seek paid apps via the app store categories and will download a paid app over an identical free one.
• Paid apps can easily and effectively be directly promoted by the developer.  E-mail blasts to the free app user base, and interstitial notices within free apps can be a highly effective way to boost revenues and better, boost paid apps high in the rankings of the app stores. By utilizing these tools in bursts. developers can maximize organic revenue lift from the rankings jump as well.
• App stores treat paid apps differently.  There are times when the app store editorial teams are looking for a paid app to promote (over a free one).
• Temporary price drop promotions are easy to execute, and very effective.

Important points to consider with paid apps:

• Consumer expectation of lifetime support: Even at a $.99 price point, consumers have come to expect a lifetime of value and support from an app developer.  Carefully consider what upgrades you are offering and how these are messaged to the consumer.  Paid apps are a one-time charge only, and consumers rarely expect to have to pay more to unlock additional value from a paid app or have a feature set change down the road.
• App store dynamics favor lower price points.  If you have high-cost content or expensive features, figure out how to break them up into bite-sized chunks to keep prices low and revenues aligned with costs.
• Free app downloads tend to be the best source of leads for paid app upgrades.  Make sure you can reach your free app users effectively and convert them to the paid app.  Do so in strategic bursts with other marketing initiatives for maximum efficacy.

#2 – In-App purchase

In-app purchases can be a great way to generate revenues from both free and paid apps.  Moreover, they can be used to effectively gather information on price and feature combinations that will sell most effectively, since product pricing and descriptive information can be modified on the fly if implemented properly.

Both one-time and subscription models can be realized via in-app purchase — although on certain platforms, auto-renewing subscriptions are only approved for use by certain types of applications.

For one-time in-app purchases, many of the same guidelines apply as with paid apps, although typically the promotional tactics that are used for paid apps are less effective when applied to in-app purchase (due to the limited number of ways to drive users to in-app purchase checkout flows).

Subscription models via In-App purchase represent a sustainable, renewable revenue stream for developers.  By building in time or usage-based product expiration, developers can build repeat business from customers over a longer time period.

This model requires intensive focus on repeat usage and conversion — without auto-renewal, the customer has to re-purchase the service at regular intervals, and achieving solid renewal rates can be difficult for even the most popular apps.

#3 – Advertising and sponsorships

Much has been written about the challenging state of mobile advertising. Inventory is outpacing demand, ad units are highly commoditized, and the upside for developers via indirect ad sales (ad networks) remains bleak as mobile eCPMs (effective cost per thousand impressions) have remained flat.

There are, however, some developers experiencing great success with mobile advertising, who tend to employ a combination of three key ingredients:

• A unique and desirable audience
  If your app users are distinctive in some way versus typical smartphone users, they become more desirable for direct advertising or sponsorships.
• Differentiated and targeted native ad “experiences”
  Due to the proliferation of banner advertising, distinctive ad experiences offer unique opportunities for brands and agencies, coupled with much higher response rates from consumers.  These can include rich media ads (i.e. audio/video), however, targeted “experiential” customized ad units that are unique to your app’s user experience offer a high value engagement vehicle not available elsewhere.  One great example is audio ads for apps with a strong audio oriented experience.  Additionally, full app takeover sponsorships provide brands a high degree of exposure and offer a more memorable experience than traditional banner campaigns.
• Direct sales
  A high performance direct ad sales team that knows how to demonstrate the unique value of mobile advertising can be a major benefit. This is difficult to build, however, and requires a certain scale before it’s even feasible.

Generating a sustainable revenue stream is by far the biggest challenge when trying to make the leap from building apps to building a business based on them. Through a savvy and thorough consideration of all the options and app store dynamics, developers can maximize their chances for success.

photo credit: brandon shigeta via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Foursquare wants to topple Yelp to become your go-to local search app, but something’s holding it back: Foursquare itself.

For most people, Foursquare is still that semi-creepy app that gives you badges when you check into places. But that’s the old Foursquare. Developed over the last year, the new Foursquare has quietly evolved into one of most effective and elegant local search tools out there — only no one knows it yet.

This is a problem that Foursquare CEO Dennis Crowley is well-aware of. “Foursquare is much more than mayorships and badges. It’s a perception issue. We’ve definitely been phasing a lot of that stuff out,” he said while on stage at SXSW last week.

Why the shift in emphasis? Because there’s just not that much money in mayorships and check-ins. At the core of the new Foursquare is Explore, Foursquare’s local search service. Foursquare Explore is powerful and robust — so much so that I don’t even think of using services like Yelp or Google+ Local when I’m trying to find somewhere new to go. Looking for a bar that’s nearby and similar to the ones you already like? Explore shows you the way. (Explore is also very good at pointing out places even when it has no user data to go on. Just try out its new-ish log-in free web interface.)

Explore is one of the best things that’s ever happened to Foursquare.

As I noted when the app added reviews to its venue listings, Foursquare was once the app that people used when they got somewhere. Now, Foursquare wants to be the app that sends them there in the first place.

This is where the money ties in. Much of Foursquare’s revenue comes from targeted coupons, which are tied into Foursquare’s now-massive trove of location data and preferences. All those check-ins you did back in 2009 didn’t just disappear — they’re making Foursquare what is today.

With the check-in data, combined with deals with local merchants (and credit card companies like American Express, Mastercard, and Visa), Foursquare is setting the stage for its inevitable rebirth. Now it just needs get its users back.

As of last November, only about 8 million of Foursquare’s then-25 million registered members used the app once a month, according to the Wall Street Journal. That’s 32 percent — not a great number, and probably not one that’s changed all that much now that Foursquare has crossed the 30 million-user threshold.

Most friends I asked still think Foursquare is about stalking their friends, collecting badges, and being the Mayor of the local Burger King — but that couldn’t be further from reality. Foursquare is different! It’s changed! It wants you back!

And that’s the real tragedy here. While making money has traditionally been Foursquare’s biggest challenge, the more pressing one going forward is going to be shifting the perception of the service that Foursquare itself so effectively created.

Photo: Box dudes/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

There are too many reasons to doubt that mobile monetization will work in the long run — disparity in media consumption and ad dollars, innovation in handsets and applications driving changing customer behavior, publishers facing the mobile cliff.

And there may be many paths to extracting economics — advertising, payments, location services, etc. I know advertising the best, so I’ll focus on that.

Google and its $8 billion in ad dollars would suggest mobile advertising is working today. However, if you don’t enjoy Google’s monopoly in mobile search and its oligopolistic position in Android distribution, you’re resigned to hacking it out with the rest of us in mobile display and in-app monetization. This appears to be a much smaller (~$2 billion outside of Google) and earlier market, comprised primarily of endemic categories (gaming and other mobile apps) and recycled venture money chasing install numbers.

As a later stage growth equity investor, I find the early momentum in mobile advertising intriguing. In particular, I’m waiting for mobile budgets to mature from experimental spend to a core channel in the overall marketing mix.

Here are a few mobile monetization areas I’m keeping an eye on:

“Does it Work?” — Direct Response

While many point out that brand budgets are much larger than those of direct response, shifting offline brand dollars online has been much more difficult than direct response dollars. Even large online channels, such as display and Facebook, can be too small to show up in the media mix models, let alone tiny mobile campaigns. So you’re constantly trying to appeal to intuition and one-off data points, which to a disinterested media buyer compensated on campaign scale may not be enough — despite mobile’s current shiny appeal.

I’m more focused on direct response attribution because if marketers “know it works,” budgets will flow. For this to occur, there must be more powerful instrumenting and analytics. There’s a lot of attention being applied to this space, and a number of interesting startups seem positioned to solve this problem over time, assuming the platform players are willing (Google seems to be, Apple not so much).

In addition there needs to be a “response” that is economically valuable and comparable to media spend to calculate ROI. Some response signals that appear to be growing:

Endemic mobile commerce: The most direct economic signal is transaction dollars. Ebay, Gilt and Fab all report high mobile commerce numbers showing that this segment is growing quickly. Further, as uniquely mobile endemic subscription and transactional services, such as Uber, HotelsTonight, etc., continue to explode and become economically viable (i.e., generate cash flow), they add to the value of mobile inventory and a set of mid-market advertisers.

CRM: Marketers who have a strong understanding of lifetime value, such as Netflix and Geico, enjoy well-proven models to relate the value of an email address to transaction values and contribution margin over time. It’s a short leap in my opinion for these marketers to correlate the value of app installs, extraction of email addresses, and mobile engagement to real transaction values and therefore ROI.

Alternatively, for marketers who may not have as strong an understanding of their customer — offline retailers, restaurants, consumer packaged goods companies, for example — mobile may offer a way of capturing customer email addresses and phone numbers. On its own, this has value to a marketer seeking to understand its customer segments and behavior. In addition to providing a permissioned channel to message to the customer base directly.

“Can I get it to work?” — System Friction

If Google Adwords is the bar on easy to use, mobile has a long way to go. Numerous infrastructure and standardization advancements will be required to make it easier for an average marketer.

Just building a mobile presence requires a fair amount of thought given the fragmentation: App vs. mobile Web vs. hybrid? Apple iOS, Android, or both? What about Firefox? How do I render my site to thousands of distinct devices? How do I measure the results?

Compounding those challenges, advertisers need to figure out ad formats, aggregate inventory across multiple ad networks and publishers, hack various forms of user identification/targeting/data appending, optimize creative, and measure success. It’s just a very big effort in what is primarily an experimental channel.

There are a lot of brain cells, sweat, and venture capital money trying to create point solutions today, so I’m watching how these segments mature and consolidate into more holistic platforms. Beyond that, I am monitoring real-time bidding (RTB) and retargeting. RTB is critical infrastructure that will help marketers aggregate across multiple publishers and ad networks to easily achieve campaign scale. For publishers and ad networks, RTB unlocks large pools of demand which can increase fill rates. By automating the buying and selling process, RTB will also free ad networks and agencies to focus on optimizing creative, and developing targeting algorithms and data strategies—innovation that truly provides lift and value to both buyer and seller.

As a corollary, retargeting in my opinion marks a point of arrival. In the desktop display world, retargeting has increased click-through rates and therefore the economic value of the underlying media by 10x. I don’t see why it wouldn’t be similar in mobile. While it’s hard in desktop display, it’s twice as hard in a mobile environment given the current infrastructure. So retargeting marks a point of arrival both for lifting the value of mobile inventory and simplifying the adtech stack itself.

“Does it Matter?” — Scale

Half of advertising spend flows through the agency holding companies, and the media buying units of these companies are compensated on a percentage of spend. Therefore a key metric of profitability is the campaign size. (It may take the same head count to run a small campaign as a big campaign.)

While mobile can be the sizzle of an agency pitch today, the real way these folks will ultimately get paid is campaign scale. Marketers face similar challenges and are strapped, both in terms of headcount and development resources, to optimize core online and offline channels. They need to balance mobile priorities with the general media fragmentation and growing number of experimental channels such as Facebook, Twitter and Pinterest, to name a few.

Agency margin pressure, marketer headcount, and time constraints all will continue, so for them to engage real thought and attention, mobile needs to offer the buy-side scale. Scale is about showing quantified performance and getting to direct response, always-on budgets. It is also about ease and efficiency, getting RTB beyond 20% to make inventory aggregation programmatic, and offering higher fill rates and monetization to publishers.

And the rest

What makes mobile fun and frustrating is that there’s a long list of other players and factors that can move the market. The big “other” is the three elephants in the room: Apple, Google, and Facebook — each with distinct agendas, who can and have shifted the market with relatively small moves. A long list of “others” also will shape the market. In no particular order Samsung, Amazon, privacy, network infrastructure, desktop/mobile bundling, and competing business models.

David Yuan is a general partner at Technology Crossover Ventures (TCV), a leading provider of capital to growth-stage technology companies, providing funds to later-stage private and public companies. He currently sits on the boards of AppNexus, ExactTarget, Merkle, and Sitecore, and he is active in TCV’s investment in Facebook.

Photo: Devindra Hardawar/VentureBeat

July 9-10, 2013
San Francisco, CA

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Google had its first $50 billion year in 2012. But with its massive investments in mobile, someday it might make that much just on the little plastic and metal devices we carry in our pockets.

In fact, digital ad company WordStream has counted no fewer than 21 ways that Google is monetizing mobile, from good-old-fashioned Google AdWords to Groupon-light Offers to augmented reality assistant Google Goggles and, someday, Google Glass.

Google even wants to replace your dead-cow wallet with a shiny digital one. But if you won’t buy what you want with Google Wallet, it hopes to at least guide you to your next purchase with Google Shopper.

Here’s the full list, in visual form, along with WordStream’s perception of how well Google is using its mobile tools to generate mobile money:

photo credit: Louish Pixel via photopin cc

Scopely is building what it calls a “next-generation consumer entertainment games network.” That’s a fancy name for its platform for monetizing mobile games, distributing them, and getting them noticed.

But the Los Angeles company is drawing a number of marquee developers into its network. Today, Scopely is announcing that its first five partners for its Developer Network include the well-known indie studios Double Fine Productions, Big Cave Games, High Line Games, Rocket Jump Games, and Zupcat Games.

“We are creating a defensible, sustainable model in this space,” Walter Driver, the chief executive of Scopely, told GamesBeat. “We are doing everything other than making the game.”

Scopely has created a mobile-game platform that helps developers on a variety of fronts, including back-end infrastructure, centralized services, community management, distribution, marketing, cross-platform publishing, and monetization. In the past year, Scopely released three mobile games (such as Bubble Galaxy With Buddies) that have all been top-five titles. Driver said that shows that the company knows how to launch a mobile game properly. With any given launch, it works with 75 different partners — all in the hope of leveling the playing field for indie game companies as they square off against big brands and huge rivals.

Scopely is one of many firms in mobile gaming that do the work that traditional publishers once controlled in retail games. In mobile, firms such as ad networks, analytics firms, publishers, distributors, discovery firms, and monetization firms are all trying to provide vital services to game creators. But Scopely isn’t a publisher, and it is only publishing its own mobile games so that it can prove itself to the third-party developers.

“Our first-party games are in the service of the third parties,” Driver said.

The company is competing with a lot of players, including Electronic Arts’ Chillingo, which publishes a large number of mobile games. It also competes with Zynga, which has its own huge social and mobile-game business but recently began signing up third-party developers. Driver believes his firm can be a high-touch, trusted partner.

He believes Scopely can help the mobile-game companies that can make hits and are just starting to hit dozens of employees. Those companies have talent, but they still need help achieving the scope and scale necessary to compete with the big players. Scopely makes four to eight times as much revenue for a non-paying user compared to before. That’s because it has relationships with brands and embeds advertising inside its platform. It also integrates social mechanics into each game and helps the titles get discovered despite all of the noise in the app stores.

Some of these major indie studios release a game or two a year. That means they have no idea about the baseline performance for mobile games when it comes to retention in the first five days or percentage of the total audience that is monetized. Scopely, on the other hand, will have that kind of data and will help the studio hit its targets and scale its games as needed.

“We’re closer to a television network’s relationship, with the companies creating the content for that network,” Driver said. “We’re a new kind of entertainment company.”

Andy Kleinman, a former Zynga veteran and co-founder of Vostu, joined Scopely recently as chief business officer.

Driver said that his company will work with the best teams and launch only about six to 12 games a year. Scopely will make money via a share of the revenues. The first games from partners will launch this spring.

“We work with them from the beginning to make our partners successful,” Driver said. “We don’t want to just work with them at the end, when the game is finished.”

San Francisco-based Double Fine is famous for titles such as Psychonauts and for raising more than $3.3 million on Kickstarter, validating the crowdfunding alternative. Big Cave Games, based in Dallas, created Orc: Vengeance on iOS. High Line Games in Brooklyn, N.Y., includes former Rockstar Games developers who created the popular word game W.E.L.D.E.R. Rocket Jump Games, based in Wellington, New Zealand, created Major Mayhem; and Zupcat Games, based in Buenos Aires, made Race Town on Facebook. All of the developers have millions of fans.

Founded in 2011, Scopely has raised $8.5 million from Anthem Venture Partners, The Chernin Group, Felicis Ventures, Greycroft Venture Partners, Lerer Ventures, New Enterprise Associates (NEA), and Red Swan Ventures. Driver previously founded O Negative Media and Ignition Interactive while his co-founder, Eyatan Elbaz, was also co-founder of Applied Semantics. Scopely has 50 employees. Other co-founders include Ankur Bulsara and Eric Futoran.

“You can’t build a factory around these experiences,” Driver said. “We’re not building tires here. These are very nuanced, artistic, creative experiences. You don’t want them all to be the same. We are building a configurable factory that lets people build all kinds of different vehicles.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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The new SDK adds better mobile analytics that will help developers get metrics on sharing events and actual usage: what people are actually doing in their apps. In addition, the new tools will enable conversion logging from ads running in Facebook-connected iOS apps, and — currently in beta — logging of in-app purchases. Both of which, of course, will help Facebook-connected apps monetize better.

In addition, the new Facebook SDK adds better — and simpler — error handling.

“The SDK will now automatically categorize errors by common application handling behavior and provide helpers to simplify some common error response cases,” Facebook engineer Jason Clark posted today. ”In addition, the SDK will automatically handle a larger number of error cases including various iOS 6 cases such as password changes and expired tokens.”

It sounds like developers who have heard about the update are happy, so far, as the update is solving annoying problems. One, Jack Tihon from Endorse, said “It’s about time. I was living in a world of pain trying to unstick users with expired tokens due to various reasons (change password, sign out of devices, etc.”

With better tracking and analytics capabilities, the new SDK is almost starting to impinge on some of the functions of dedicated app analytics solutions like App Annie and Flurry, but of course in a purely Facebook-focused manner.

The update also includes bugfixes, is backwards compatible, and is available here.

photo credit: Steel Wool via photopin cc

July 9-10, 2013
San Francisco, CA

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Monetization isn’t a simple process for us mobile developers. Advertisements, paid installs, in-app purchases — these all can generate revenue for mobile app developers, but they aren’t the only methods available.

Our friends in the industry have taught us a number of other innovative strategies to monetize mobile apps. Here are seven of our favorites.

1. Expand to Gaming

LINE is the most popular mobile messaging app in Japan with over 80 million users. It’s also completely free.

To maintain its massive user base, LINE turned to gaming to cash in on its existing user base. It launched a puzzle game called LINE Pop, which garnered more than one million installs in one day and 10 million installs and $1 million in revenue in less than two weeks.

The success of LINE Pop is definitely a wake up call for many productivity apps (especially messaging apps like Whatsapp) to think about new ways to capitalize on their user base.

2. Internationalization: Go Where the Money Is

Not all users are created equal; some citizens in some countries are more willing to pay for apps than others. Smartphones help to speed up globalization, but not all developers think globally, and most Silicon Valley app developers tend to focus mainly on the US market. This makes sense as long as you have enough run rate.

But it doesn’t make sense when considering this: In October 2012, Japan claimed the number one spot as the country with the highest revenue generated in Google Play, claiming 29 percent of the app store’s total global revenue. The U.S. followed close behind with 26 percent, and Korea stood at 18 percent.

According to Distimo’s report on the fastest-growing countries for App Store revenue, countries like Japan, Russia, China, Taiwan, Thailand, Brazil, Mexico, and Korea all showed a higher year-over-year growth in revenue than the U.S., which ranked 13th with a growth rate of 44 percent. Forget about these countries, and you’re missing enormous revenue potential.

3. Drive Installs for Other Mobile Apps

Dolphin Browser generates revenue by driving installs for other mobile developers. On our browser’s “Speed Dial” page, we display a list of apps we recommend. We don’t do any traditional banner ads or push notifications advertising (we hate those as individuals), and our users really seem to like our recommendations. Plus, we make good money with it.

Another great example of this monetization model is Appsfire, a popular app discovery tool that tracks free or temporarily discounted apps.  Its developers were able to build a big following and drive revenue from other developers who want to market to Appfire’s users.

4. Employ the Freemium Model

Noom is a weight loss coaching app that gives users daily tasks and helps them with long-term weight loss.

Instead of charging for installs and selling advertising, Noom was successfully able to bridge the gap and charge for monthly subscription to its premium coaching services.

Its basic app is free, but for those users who want a bit more, they need to fork over a few bucks. It’s a win for everyone, the casual users who get smaller benefits free of charge, the company that makes money for its work, and the serious users who have the option to get high-quality content.

5. Licensing & Merch

Not something every mobile app developer has what it takes to be able to pull off licensing and merchandizing as a monetization strategy. Only those with significant traction, a substantial user base, and a marketable brand can do this.

The prime example of this is Rovio, makers of Angry Birds, which has very successfully marketed its brand with its more than 200 licensing partners selling T-shirts, plush toys, phone cases, water bottles, pens, bed sheets, snacks, drinks, and a theme park in the works.

Merchandise sales made up about 30 percent of Rovio’s sales in 2011, and the company estimates physical goods made up 50 percent of its business in 2012.

6. Go Enterprise

Box is the most successful and classic example of this method of app monetization. Instead of charging consumers and competing head-to-head against Dropbox, cloud storage provider Box jumped the consumer ship and changed its monetization course to focus on the enterprise, where it saw a lucrative and untapped market.

Evernote is also following a similar route with the recent launch of Evernote Business.

7. Turn Advertising Into Entertainment

This is not ordinary advertising. No banner, interstitial, cross-promotion, or offer walls in the game. Outfit7 (creator of Talking Tomcat, which has 600 million installs) has mastered the art of turning advertising into entertainment. Here’s how:

DreamWorks approached Outfit7’s chief revenue office, Narry Singh, last year wanting to integrate DreamWorks’ film Madagascar into the Talking Tomcat experience. Singh knew his clients would not settle for a simple banner ad, so instead, he designed interactive, nine-second applets. A user could activate the Madagascar experience by beating Talking Tomcat five times. Once activated, a Madagascar dream cloud would appear and the game background would change completely.

“We want to integrate Madagascar as part of the game.” Singh said. “Your customers don’t buy your app, they buy your story.”

This strategy of turning advertising into entertainment scored Singh and the Outfit7 team a click-through rate higher than 9 percent.

If your app is not making money right now, don’t panic. Focus on building up your install and active user base then focus on monetization.

If you have users, money will come.

Edith Yeung is chief of corporate strategy for Dolphin Browser and a founding partner at RightVentures. Her focus is on mobile and consumer Internet companies. Prior to her current role, Edith founded BizTechDay, a voice of news, events & research for small business, mobile and Chinese technology. She previously worked with AT&T Wireless, Oracle, Siebel, Autodesk, Cisco, Telstra and Hungary Telecom. Edith has appeared on CBS, NPR and in the Wall Street Journal and is frequently quoted in ReadWriteWeb, Small Business Trends and other tech and SMB publications. She also often speaks on mobile, women and international entrepreneurship.

Playnomics has figured out how to predict which monetization or retention schemes work best with online and social-game players via its PlayRM service. And today it announced that it is now able to extend that service to mobile with the launch of its PlayRM Mobile platform.

With this technology, mobile gamemakers will be able to target consumers with special offers when they are likely to stop playing a game, much like enterprises do via their customer relationship management software. In short, it’s tool that can help gamemakers design their apps and promotions so that companies can retain users and make more money.

In an interview with GamesBeat at the Casual Connect Europe show in Hamburg, Ian Atkinson (pictured right), the vice president of business development at Playnomics, said that early results from beta partners show a 150 percent increase in player retention during the first week of using the platform.

“We’ve spent the last few months adapting our algorithms to mobile and fine-tuning our engagement scores from the online version,” Atkinson said. “You can track engagement metrics for mobile users just as easily as with Facebook or web users.”

With PlayRM Mobile, customers can segment their audiences by different game behaviors and then target those players with custom in-game messages on an individual basis. Developers can also re-target people to bring back valuable players who have stopped playing. They can also cross-promote games to prequalified players.

“We’re trying to democratize the process for as many companies as possible,” Atkinson said.

While other analytics packages help explain why someone left the platform, Playnomics wants to help companies predict which players are toying with quitting a game.

Playnomics was founded in 2009 and was the winner of VentureBeat’s Who’s Got Game contest at GamesBeat 2010. Playnomics is used in dozens of brands and games with more than 35 million monthly active players.

Backers include FirstMark Capital, Accelerator Ventures, and TriplePoint Capital.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Fashion startup Polyvore is in an enviable position: it has an army of dedicated users importing 2 million items to the site each month, a new iPhone app, and the site pulled in 20 million unique visitors in 2012.

It’s about time they started generating some serious revenue. To help with this goal, the company has brought on a chief revenue officer,  Arnie Gullov-Singh (pictured, above). Prior to joining Polyvore, Singh was the CEO of Adly, an influencer marketing platform for Twitter, and an EVP of Product, Technology and Operations at Fox Audience Network.

“Polyvore’s traffic has grown tremendously over the last year. It’s been all organic growth, fueled mainly by our users sharing their content to social networks like Facebook and Pinterest,” said Jess Lee, the company’s cofounder. Polyvore is an addictive shopping experience that lets budding fashionistas mix and match outfit ideas, browse items by theme or clothing type, and directly purchase items from mainstream brands like H&M or Tory Burch.

Related: Read about the company’s recent launch of its iOS opp

Cofounders Lee and Pasha Sadri would not disclose their monetization plans, but told me recently they see strong opportunities to mine their data. Since I met with them two weeks ago, the site has attracted an additional million users. Needless to say, they have a wealth of knowledge at their fingertips about how we shop, and the reasons why we choose to spend money. This would be extremely valuable to both advertisers and brands.

Polyvore is one of the fastest growing e-commerce startups, and unlike Pinterest, its users are buying as well as browsing. The average basket size is $220. For this reason, the startup has more in common with flash sale retailer Fab.com, which is experiencing skyrocketing growth and expects to surpass $100 million in revenues this year.

What stands out about Polyvore is that seven of its top 10 retailers are in the luxury space, and it’s most popular with the wealthiest segment of online shoppers. 33 percent of visitors make over $100,000, and the average household income of users is $77,000. In future, the company plans to take advantage of this fact by expanding to home-ware, kids and men’s clothing.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Apple’s App Store is still the king of mobile apps stores, with four times the revenue of Google Play, but Google Play is growing much, much faster than the App Store.

Those are just a few of the insights from app analytics company App Annie’s new report on global app store download trends.

“While iOS took home more of the global revenue pie in October, the rising adoption of Google Play in developing markets, including South Korea, India, and Japan is already driving major revenue growth opportunities,” App Annie CEO Bertrand Schmitt said in a statement.

UPDATES: Apple disputes the App Annie report and  App Annie clarifies its numbers

While the iOS app store revenues grew 12.9 percent in 2012, Google Play grew an astonishing 313 percent. That’s something I wondered about in July when Apple’s third quarter sales results showed a $100 million drop in iTunes store revenues, but I lacked data at the time to make a full case. The same trend was visible in free downloads, where even though iOS users download 10 apps for every 9 apps Android users download, Google Play grew 47 percent to iOS’s 4.5 percent.

Interestingly, Japan’s Google Play store outsold all others in October 2012 — the first time a non-U.S. country has led in revenues on a major app store. That’s particularly amazing since Japanese users download at a rate that’s one-fourth the rate of U.S. user downloads.

“This represents a major tectonic shift in the international app store economy and one that I’m sure publishers will be looking to take advantage of,” said Schmitt.

In addition to the global data, App Annie was able to determine the top publishers by revenue. For October the top 10 iOS publishers, 80 percent of which are from the U.S. or Japan, were:

1. Electronic Arts
2. Supercell
3. Zynga
4. Gameloft
5. Apple
6. Applibot Inc.
7. SQUARE ENIX
8. GungHo Online Entertainment, Inc.,
9. Kabam
10. GREE, Inc.

There’s a very different set of publishers leading Google Play in revenue, partially because Android is very strong in Korea — now there’s a shocker — as well as Japan and India. Eight of the top 10 publishers by revenue on Google Play are from Korea or Japan:

1. DeNA Co., Ltd.
2. COLOPL, Inc.
3. GungHoOnlineEntertainment
4. WeMade Entertainment CO., LTD
5. Zynga
6. GAMEVIL Inc.
7. GREE, Inc.
8. NAVER
9. Gameloft
10. NextFloor

photo credit: coreythrace via photopin cc, stitchohana via photopin cc

While the average app store developer might make under $10K a year from his or her apps, Joe Kaufman has managed to generate millions of downloads on iOS and Android of his hit Lost City and Secret of Grisly Manor apps, generating massive revenue and making him a self-made millionaire.

Kaufman is a true indie — with only one partner, he handles all the design, art, and animation for his apps. And the success has been remarkable.

Source: Fire Maple Games

A scene in the The Lost City

Grisly Manor has been downloaded 4 million times, and Lost City has been downloaded well over 3.5 million times, reaching #1 paid game status in over 30 countries … without ads, and without in-app purchases.

It’s probably fair to say Kaufman is right where a lot of other app developers want to be. I wanted to chat with him to learn how he’s done it.

VentureBeat: You’re a super-successful indie app developer. How’d you get there?

Kaufman: I started out in the mid-1990s as an artist/animator for a popular screensaver software called After Dark. From there I became a Flash animator working on various CD-ROMs and websites. I started Fire Maple Games five years ago so I could focus on making games exclusively.

In 2010 I hired my friend to help me start making classic point-and-click adventure games. I have been playing adventure games since the late-1970s, and they are my all-time favorite genre of games. At the time, there weren’t any adventure games made specifically for mobile devices. Some of the larger companies were porting over their mouse-based computer games to the mobile market, but they always felt a little forced to me. I wanted to create an adventure game that was specifically designed from the ground up for touch interfaces and the smaller screen sizes. That game is called The Secret of Grisly Manor and it has since been downloaded over 4 million times.

My latest game, The Lost City, was released in February 2012 and has received over 3.5 million downloads to date. I was able to build The Lost City 10 times faster using Corona SDK, an awesome cross-platform tool for mobile development. Corona uses a lightning-fast scripting language called Lua that is really fun to use and lets me focus all my energy on the game play — without having to deal with all the inconsistencies between devices.

Source: Fire Maple Games

Inside the Grisly Manor

VentureBeat: When you’re looking for a new game or app idea, where do you get your inspiration?

Kaufman: We generally try to think of a few fun objects and game mechanics, and then try to build an interesting theme around them. The game is constantly shifting as we rip out different ideas and try to replace them with stronger ones, which in turn changes the game’s map and locations around. It is a pretty intense juggling act!

Another answer to that question is that I really don’t know! I have no idea where ideas come from — or where they are going to come from — a pretty daunting notion to build a business around.

VentureBeat: What are the factors that make up a successful app (if you need a specific category, let’s do games)?

Kaufman: It sounds a little cheesy, but I would say love. I can usually tell if the developer loves what they have made and want to share it with others. I think it shines through every aspect of a game. On the other hand, I can usually tell if an app was made just to try and get a quick buck, designed for some marketing campaign, or trying to rip off kids with a zillion micro-transactions.

VentureBeat: What do you do for marketing? What should a newbie developer do for marketing?

Source: Fire Maple Games

Once more in the Grisly Manor, this time outside

Kaufman: I don’t really do any marketing. I don’t submit the games to review sites or anything like that. The only money I spend is for a $20 press release. I have been lucky that my games spread by word of mouth, good reviews, etc. I think that is a more powerful way to learn about apps anyway. It is how I buy all of my apps. If a friend recommends it, I buy it. I generally don’t believe television commercials, magazine ads, banner ads, etc., and I don’t know how effective they are. I think the main thing is just to keep making games. If people enjoy one of your games, they will generally enjoy the others too. Building up a nice collection of games is critical for this.

VentureBeat: Freemium, paid, advertising … what’s your favorite monetization model and why?

Kaufman: The only model I kinda like is the original one — make games that people actually would want to pay for. Video games are an art form to me, I don’t like to be distracted by advertising of any kind when I am immersed in a game. This goes for movies, TV shows, books, etc.

VentureBeat: Do you need to be on the top 20 list in your category to make any significant money? 

Kaufman: Yes, I would say so. You at least need to be visible on the App Store of the device itself. The higher up the better. It’s an incredibly steep exponential curve. The difference between the Top 10 and the Top 50 is pretty staggering.

VentureBeat: Are you an artist/designer as well? If not, how did you get the graphics for your game done?

Kaufman: Yes, I do all of the design, art, and animation for the games. In addition to being a great game designer, the friend I work with is also an amazing photographer. He takes thousands of photos for each game, which I then build upon to create the final graphics.

I also do all of the programming with Corona SDK. It was through working with Flash that I gradually started learning game programming and interactivity. I really enjoy working on the art, animation, and programming at the same time. It gives me greater control of the overall feel of the games.

VentureBeat: Have you had any offers to buy the rights to your apps?

Kaufman: I have, yes. Not really interested. In addition to being our livelihood, this company is my special place to be creative. From the art, animation, programming, and business side as well, it is our place to create anything we want and to nurture those creations. I’m very protective of it.

VentureBeat: Anything else that you think is important for indie app developers to know?

Kaufman: I recommend checking out software that makes development easier, quicker, and more fun. For me personally, I love working with Corona SDK because I believe it’s important to reach as many people and devices as possible. Corona has allowed me to build for the App Store, Google Play, NOOK Apps, and Amazon Appstore, so lots of people get to enjoy my games. But basically just make great things that you love. And work with people you respect and enjoy working with. You will never burn out and will always enjoy your work! Plus, I want people to make me more great games to play!

photo credit: Jorge Quinteros via photopin cc

New allegations surfaced today that Facebook and the Securities and Exchange Commission fought over ad effectiveness data, including mobile monetization, in the months preceding Facebook’s initial public offering.

As Bloomberg reports, the SEC was skeptical of some of Facebook’s social ad claims, which were apparently based on Nielsen data, and asked for backup documentation. For example, this is one of the claims in Facebook’s original S-1 registration statement (emphasis added):

Social Ads. We offer tools to advertisers to display social context alongside their ads. As a result, advertisers are able to differentiate their products and complement their marketing messages with trusted recommendations from users’ friends. A recent Nielsen study of 79 advertising campaigns on Facebook demonstrated a greater than 50% increase in ad recall for Facebook ads with social context as compared to Facebook ads that did not have social context.

Source: Google Finance

Facebook stock since the IPO

After back-and-forth conversations with the SEC’s Barbara Jacobs, that paragraph changed in an amended statement to eliminate the Nielsen reference:

Social Ads. We offer tools to advertisers to display social context alongside their ads. As a result, advertisers are able to differentiate their products and complement their marketing messages with trusted recommendations from users’ friends. Our recent analysis of 79 advertising campaigns on Facebook demonstrated a greater than 50% increase in ad recall for Facebook ads with social context as compared to Facebook ads that did not have social context.

In addition, it was only in May, days before the actual IPO, that Facebook added additional cautions about mobile monetization after requests from the SEC.

All of this contributed to almost the worst IPO of any company in a decade, a stock that is still down almost 50 percent since May, and one that may bottom out as low as $15, and a lull in IPOs that is only now starting to reverse.

“Facebook’s disputes with the SEC over pre-IPO discloses does not put its management in a good light,” says Anthony Michael Sabino, a professor at John’s University’s Peter J. Tobin College of Business. In addition, he adds, the new revelations “will fuel pending shareholder litigation.”

Sabino says that some wrangling between the SEC and a pre-IPO company is normal and to be expected, but that this degree of conflict is indicative of a “pretty serious dispute.”

It is worth noting in Facebook’s defense that this language appeared in the risks portion of the original S-1 filing, detailing that mobile was a challenge:

[advertising revenue could be adversely affected by] …

increased user access to and engagement with Facebook through our mobile products, where we do not currently directly generate meaningful revenue

Investors, of course, are responsible for their own investment decisions. Facebook was responsible for providing relevant information in a timely way so that investors could make informed choices.

Clearly, the company could have done that better.

VentureBeat contacted Facebook for comment on this story and will add any new information we receive.

photo credit: MailChimp® via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Many content publishers looking for new revenue streams have experimented with paywalls, with mixed success.

But if you’ve got content that people are willing to pay for, paywalls and other registration gateways can work very well indeed.

“The first challenge is to build premium content … it has to be very unique,” says Gilles Domartini, chief executive and founder of Amsterdam-based Cleeng, a web service provider that helps publishers put up paywalls or registration gateways around their content. “The reason publishers today are struggling is that news is very much a commodity.”

VentureBeat worked with Cleeng early in 2012 to present a five-question registration form to readers before letting them watch a live video webinar. (Disclosure: Cleeng provided the service to us for free so that we could review it.) “By deploying the Cleeng solution, the conversion rates from the webinar were much higher than normal, and completion rates for the registration form were close to 100 percent,” VentureBeat’s director of marketing and ad operations Garrett McCullum told me.

In addition to video, Cleeng can also provide paywall-restricted access to HTML pages, PDF files, and a variety of other content — and it can do so on a wide range of platforms, including HTML5-based mobile websites.

One of Cleeng’s selling points is the simplicity of its user interface, a design aesthetic that, Domartini says, stems from his experience working for Apple. He ran the Apple Online Store in Europe from 2001-2006.

“I really saw the growth of iTunes,” Domartini said. “We saw how important it was to have a simple and straightforward user experience.”

So when he came to start Cleeng, he said, “we started from the user standpoint and thought, what do we need to do to have a technology that would work on any device, for any content, and it would ‘just work,’ from the user perspective.”

Cleeng integrates with WordPress (as a plugin). Since VentureBeat runs on WordPress.com, which restricts certain plugins, we ran into some technical speedbumps and didn’t have time to integrate the service deeply into our site, but we were able to use the service. Once installed, it makes it possible to restrict access to any page, post, or section of the site. VentureBeat used it to provide gated access to a webinar page with a live video stream.

The company is currently working with hundreds of publishers, including very large ones such as Epicurious, Lucky Magazine, and the iStrategy conference in the U.S., and  LaTribune and GoPress in Europe.

Cleeng also provides content paywall services to video publishing platforms, including Dailymotion, Brightcove, and Livestream.

Cleeng was founded in 2011 and currently has 12 employees. So far it has been funded through investments by the company’s founders.

Paywall photo: Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Google is shuttering its TV ads product in favor of online video ad solutions.

Google started the TV ads division in 2007 when it seemed that any form of advertising might be amenable to AdWords-style pricing mechanics and placement. Even today, the company advertises the capability to “target up to 42 million U.S. households” via networks such as ESPN and CNN.

But Google has never been very successful selling ads outside of its core competency. Newspaper and radio ads sales were killed in 2009, and some speculated that TV ads would be next. The product never reached scale, and networks were somewhat suspicious of the new kid on the block. All of Google’s success stores listed on the Google TV Ads site are small, little-known companies: DynoMighty, SelectQuote, Currituck Visitors Bureau. …

The team working on TV Ads currently will be moved to other areas in YouTube, AdWords for Video, and ad serving tools for web publishers, Google says. The current product will be wound down over the next few months.

Part of this is a somewhat embarrassing failure, to be sure. But a much bigger part of this is that the future of video content is the Internet.

Whether on a small screen, laptop, tablet, or large living room screen, video is increasingly moving towards web models of access and delivery. Currently, Google video sites alone — mostly YouTube — have 157 million unique monthly viewers watching 20 million videos. And on average, each of those viewers is spending over 500 minutes a month on YouTube.

In that sense, it’s no stupid move to jump from that which isn’t growing to that which is.

photo credit: Jonas’ Design via photo pin cc

One thing is certain: The changes will affect some of your favorite apps, such as InstaPaper:

I suspect that I’ll have to remove Twitter from most of Instapaper’s “Liked By Friends” functionality.

—
Marco Arment (@marcoarment) August 16, 2012

First, the key changes:

Authentication
To minimize bots and scraping of Twitter content, authentication will be required for each and every API request. In other words, Twitter needs to know about you — and authorize you — before you can get data from the Twitter API.

Fewer retweets and fewer followers, but more datapoints
Currently Twitter limits the number of free accesses to its API to 350 calls per hour, whether the requesting site is looking for a tweet, a profile, a user, or a search. In the future, Twitter will implement per-endpoint rate limiting: 60 calls per hour.

If I’m understanding that right, you can get only 60 calls for certain API functions that take more system resources. Twitter’s post does not specify, but it seems that calls like getting the status of retweets on a post, or getting a list of followers for a particular user, would fall into this category.

For those high volume endpoints, such as tweets, profiles, user lookups, and user searches, Twitter will allow up to a maximum of 720 calls per hour.

Full details on these rate limits will be announced later, but it seems clear that Twitter is giving with one hand and taking back with the other. You can have more simple calls; you will presumably need to pay for complex API calls if you want more than 60 an hour.

Display guidelines: Before it was please, now it’s Thou Shalt
Twitter has had display guidelines in place for some time. Now, they’re not guidelines anymore … they are requirements.

Examples include linking @usernames to Twitter profiles and showing standard Twitter actions such as retweet, reply, and favorite. If you fail to comply, Twitter may just revoke your application key.

It’s the C-word: Certification
No more Wild Wild West with Twitter clients. If you want to build a Twitter client for a mobile platform or any other electronic device (such as a smart TV), you’ll need to have your application certified by Twitter. The goal is quality. “We want to make sure that the developer is providing the best Twitter experience possible.” But the result is lockdown.

If Twitter doesn’t like you, tough nuts. And if you do not certify your embedded software, Twitter “reserves the right” to revoke your application key.

Big boys: Talk to the hand
If you have a big app that wants big data, Twitter wants to talk to you. You’ll need permission to access the streams and messages of more than 100,000 individual Twitter users. If you are already doing so, having jumped the queue and built your application when Twitter was more concerned with growth than with control, you may continue, but the cut-off point is 200 percent more users than you currently have.

It’s the classic “them that has, gets,” but at least it’s similar runway for all third-party developers on a percentage basis.

But if you’re just accessing users for data purposes and not providing an application that enables Twitter-like interactions in a third-party app, you’ll be able to access up to 1,000,000 individual users.

Want more? Talk to Twitter, who will guide you “toward areas of value for users and their businesses.”

You’ve got six months
The API migration period is six months, during which time developers will need to migrate their applications from version 1.0. to the new version, 1.1. If you’re already a good boy and only making authenticated calls, this will be simple, says Twitter.

If not, good luck. You will need to start making authenticated calls, and since you probably have a reason for not doing so in the first place, your content-scraping business may be toast. Or your extremely legit app that Twitter just doesn’t like.

And what’s the goal, you ask?
Twitter wants to encourage innovation in the business and analytics side of the business. That’s one of the reasons for the 1 million user rate limit for apps that are not accessing the actual streams of individual users for content creation as well as consumption purposes.

Here’s how Twitter views the third-party app industry:

Twitter wants innovation from others on the left side of the entire chart: business analytics tools like DataMinr, and business engagement apps like HootSuite. And it wants innovation from others on the bottom right quadrant: consumer analytics like Klout.

But consumer engagement — the quadrant where people interact with their interest graph — that is sacred Twitter territory. That is the public face of Twitter to its hundreds of millions of users, and that is Twitter’s brand. Venture there with caution, because Twitter claims that space:

That upper-right quadrant also includes, of course, “traditional” Twitter clients like Tweetbot and Echofon. Nearly 18 months ago, we gave developers guidance that they should not build client apps that mimic or reproduce the mainstream Twitter consumer client experience.” And to reiterate what I wrote in my last post, that guidance continues to apply today.

Which all gives a pretty big clue to how Twitter is planning to monetize.

Data in the three green-light-go quadrants is metered and controlled and can easily be charged for per 1,000 API calls or whatever. And consumer attention will be monetized with native ads, promoted tweets, and the like.

It’s all in the map.

photo credits: CarbonNYC/Flickr,  ~Ilse via photo pin cc

YoYo Games hopes to revolutionize the way that game developers make money from their games by making it easy to tap monetization and analytics services from within its cross-platform game development tools.

The integration of new services is part of a plan to promote GameMaker: Studio, the company’s cross-platform development tool which it sells to developers, as a lingua franca for making games. Those tools make it easy to publish games on any system and have them run at native performance speeds as if they were authored specifically to run on that particular platform. On top of this advantage, Dundee, Scotland-based YoYo Games also says it has taken the hassle out of adopting monetization and analytics services.

Now it’s a simple matter for developers to choose different monetization options and publish their games in a variety of app stores. That makes the process of making money from games more accessible, efficient, and scalable than ever before. It effectively lowers the barriers that stand in the way of making money on games.

“The challenge associated with monetizing games is one of the biggest concerns facing developers,” said Sandy Duncan, chief executive officer at YoYo Games. “In GameMaker: Studio, we’ve removed the technical limitations so that games developers can focus on creating great games and selecting the best monetization strategy with no additional resources required. It’s a win-win situation for developers as well as service providers who now have access to GameMaker: Studio’s large and rapidly growing community and the treasure trove of new intellectual properties they are creating.”

YoYo Games launched GameMaker: Studio as a $99 package for professional game developers in May. The tools are based on free versions of the GameMaker, which were originally released in 1999 by game creator Mark Overmars and have been downloaded more than 10 million times. For the past six years, YoYo Games has been working on beefed-up versions of the development tools so that they can be used to make games that can easily run across many different platforms, including Windows, Mac, Facebook, Android, iOS, HTML5, and Chrome. GameMaker has a community of half a million registered users and is offered in more than 5,000 schools.

YoYo Games has around 20 or so employees, including a number of people who previously worked at Realtime Worlds, creator of All Points Bulletin. Duncan said recently that the company would begin a new round of fundraising soon. Rivals include Spaceport.io, Z2Live, and Unity Technologies.

The free services upgrade will be available in GameMaker: Studio’s 1.1 Update coming in September. The company is showing the service at the Game Developers Conference Europe this week in Cologne, Germany.

Services integrated into GameMaker: Studio include AdColony, AdMob, Google Analytics, Google Play Licensing,  iAds, MoPub, and SupersonicAds. More services are on the way.

“The integration of MoPub Marketplace into GameMaker: Studio is groundbreaking in that it gives thousands of developers easy access to the critical resources needed to successfully monetize their apps,” said Jim Payne, CEO and co-founder of MoPub. “Our real-time bidding exchange and scalable ad-serving platform are designed to give publishers the ultimate in control and transparency while tapping into new sources of demand which can ultimately result in more ad revenue from games.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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“The site actually springs out of our own needs in prior publishing startups,” co-founder Paul Burger told me yesterday. “We were trying to monetize through advertising — our own direct-sale advertising.”

But the creation of media kits, management of inventory, and billing/collection were simply too onerous. Realizing that this was a problem for most small and medium-sized bloggers who don’t want to just collect AdSense pennies, they built the ad-management and optimization solution they wanted for themselves.

“Out of the gate we’re focusing on three things: placement, management, and the actual sale,” sad Burger.

Placement is simple: after signing up and entering the site, publishers are presented with a framed view of their site. They simply drag and drop ads right where they want them.

I tried it on my own personal blog … the grey block at left under my tag cloud is an ad unit — a skyscraper, ironically — that I simply dragged into my sidebar:

Source: John Koetsier

Skyscrpr: drag & drop ad placement

After setting up ads exactly where you want them, you simply include one line of Javascript code into your site to activate the ads … which means the solution works with any blogging platform, including WordPress, tumblr, SquareSpace, and even venerable old Blogger.

To manage ads, publishers log in to a dashboard and review sales, performance of existing ads, and suggestions for improvement. Currently, the suggestions are just that, but soon Burger expects to have a more sophisticated solution:

“We’re getting to a point where soon we’ll be able to auto-optimize ad placement and mix,” he told VentureBeat.

That means that, after initial set-up, Skyscrpr would vary ad selection, placement, and frequency to maximize blogger revenue. This feature will not be available at launch tomorrow, but Burger expects it within a few months.

Source: Skyscrpr

An infographic-style media kit

The sale itself is, of course, the most critical component: nothing else matters without it.

“Tomorrow we’re also launching automated media kits,” Burger said. “We create a beautiful infographic-style media kit automatically based on your Klout, Compete.com, and Twitter information.”

Then Skyscrpr allows advertisers to purchase inventory right there on the publisher’s own blog, and handles all the payment details. The company will be taking a cut of the proceeds, of course, but it’s not yet disclosing the exact percentage.

At launch, only direct on-site sales will be enabled, but an ad marketplace that will aggregate all participating bloggers’ inventory and will allow advertisers to purchase audiences and demographics is forthcoming.

“[Advertisers will] be able to slice and dice and pick exactly what [they] want,” says Burger.

Skyscrpr is funded with angel and founder money, plus $20,000 from the GrowLab accelerator/incubator program. The company is currently raising a seed round, which it anticipates closing in late August.

Here’s the publisher or blogger on-boarding process:

Image credit: Jorge Salcedo/ShutterStock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Mobile app monetization is hot, hot, hot.

Last month at MobileBeat Flurry, TapJoy, and Apsalar were only three of the firms that were cozying up to developers. Google’s AdMob is also in the hunt for both developers and advertisers, and dozens of others provide advertising and other monetization opportunities for mobile apps.

But today, Inneractive closed a $3.5 million financing round led by Evergreen Venture Partners, which also invested in the company’s first round back in 2010. The app monetization firm plans to use the funds to accelerate global expansion and double down on its private ad exchange strategy.

The reason for the noise in the app monetization space is clear: huge need, and huge opportunity.

In 2010, 71 percent of the top 100 grossing apps in mobile marketplaces were paid apps. In 2012, app analytics company Distimo reports an almost complete reversal: 68 percent of the top 100 most lucrative apps are free applications.

Source: Distimo

Top-grossing apps are all going to free

Those free applications need monetization strategies, and while in-app purchases is one of them, so is advertising.

That’s where Inneractive comes in, with two innovations: real-time bidding, and private ad exchanges. Real-time bidding (RTB) allows advertisers to vary their purchasing and pricing in real-time, while private ad exchanges allow developer communities such as Corona Labs, StackMob, and LiveCode to offer their own almost white-label advertising solutions.

Inneractive is expanding, and chief executive Ziv Elul says that this new round of financing will help the company “open new offices in NYC, India, and Singapore in addition to the ones in London, Tel Aviv, and the Silicon Valley.”

Inneractive consolidates over 120 ad providers that offer ads in 200 countries and can be integrated into apps via one line of code. It supports  iOS, Android, Ovi, Windows Phone, or “any other platform.”

Image credit: Zurbaggen/ShutterStock

This sponsored post is brought to you by Tapjoy.

You might not know what Tapjoy does, but if you’re a heavy mobile gamer, you’ve probably seen ads running on its network.

Tapjoy is a big player in app monetization, though it has had some ups and downs. A year ago, the company was rapidly growing with successful pay-per-install marketing programs (where a user was rewarded for downloading apps) on Apple’s iOS platform (iPad, iPod Touch, iPhone). But Apple cracked down on that program, arguing that it led to manipulation of the iTunes App Store’s top-rankings charts. Tapjoy protested, but it fell back to non-incentivized installs on iOS. The company also moved as quickly as it could to Android.

Today, the company is offering a mobile ad network and monetization platform for developers that promotes apps to consumers of mobile content. Mihir Shah, chief executive of the San Francisco-based company, is in charge of making the platform grow to encompass even more users. Shah refers to the platform as the Mobile Value Exchange, which allows uses to select personalized ads with which to engage for virtual rewards or premium content. Through its app developer customers, Tapjoy reaches more than 700 million mobile users across 20,000 apps. Those users choose to watch videos, subscribe to services, or install apps in exchange for virtual rewards they can use in games.

“We understood very early in the mobile app market that users don’t like display advertising,” says Shah, “especially in games where you might click on an ad. So we created our Mobile Value Exchange that allows consumers to discover, engage, and share their mobile app experiences.”

To stoke the app market (and eventually get more business), Tapjoy has started funding game developers all around the world. Shah said the company has backed a number of Southeast Asia game developers making content for their own local market.

The company recently announced at our GamesBeat 2012 conference that it had struck a partnership with analytics firm Kontagent. Tapjoy is backed by J.P. Morgan Asset Management, Rho Ventures, North Bridge Venture Partners, InterWest Partners, and D.E. Shaw Ventures.

Shah spoke on a panel at GamesBeat 2012, and he also did a video interview with Dan “Shoe” Hsu, editor-in-chief of GamesBeat. The video interview is below.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Apsalar started out with an analytics business and it is gradually adding more services that take advantage of its data mining capabilities. And that’s going to make a lot more money for mobile app makers, the company says.

Today, Apsalar is introducing its “behavioral advertising solution,” called ApEngage. It allows developers to look at a dashboard application and then figure out which users are worth the extra effort and are most likely to spend money on an app by buying virtual goods. Apsalar enables developers to target highly engaged users or big spends and then hit them with tailored marketing messages such as offers for reactivation, completion, or promos. This kind of personalized targeting is important in an age of too many apps.

“We saw a need in the mobile market from our many conversations with customers, and we are excited to be able to offer an intelligent solution for better acquisition and monetization of engaged users with the launch of ApEngage,” says Michael Oiknine, chief executive of Apsalar.  “We strive to continually innovate in order to better help mobile app marketers find the best, most profitable customers for their apps.”

Apsalar already keeps tables 225 million users and records more than 100 billion user events (such as opening an app). It can analyze the data from those users and generate predictions that are useful for marketers or developers. It allows marketers to find users who match the profile of the app equivalent of a Las Vegas high roller. Then it lets them communicate with those users and drive them to become more engaged. The users may spend more money and help to improve the overall monetization for the app.

ApEngage targets only the right users, the company says, or those who have shown a liking for specific types of apps. It also finds users who buy a lot of stuff when they play an app or stay engaged with it for a long time. And the tool allows marketers to target users on a large-scale in real-time, while the users are in the midst of using an app within a larger third-party network of apps.

The company designed ApEngage to let marketers do different types of campaigns. They can acquire new users, hunt for users who have certain characteristics or tastes, or find the ones with the high-purchasing behavior. App marketers can also re-target users who have become inactive and try to entice them to come back.

In the current saturated app market, marketers are all struggling with user engagement. As you can see from the chart at the bottom, as users download more apps, they use each individual one for a shorter period of time. So more and more apps are fighting for a thinner slice of the consumer’s attention. Focusing on mass downloads isn’t enough, particularly as user acquisition costs rise.

“We are excited to be one of Apsalar’s inaugural partners for ApEngage and have a variety of audience segments we wish to test out as part of our user acquisition strategy.  As the first true data driven solution that offers the ability to target the right type of high value users for our apps, Apsalar continues to push the envelope for the mobile advertising industry,” says Christophe Bach, founder & chief executive officer of TextMe.

ApEngage is available today in a private beta test with certain partners. Those include TextMe and Midverse Studios.

Apsalar was founded in 2010 and is based in San Francisco. Investors include Thomvest Ventures, Battery Ventures, and DN Capital. The company has raised $5.8 million and has less than 30 employees.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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The games sphere is an incredibly competitive space. There are over 660,000 games in the app store. Many of these apps are free, and those that charge a fee often struggle to gain traction. Successfully monetizing mobile games is an issue that everyone in the industry faces.

Just hours after major mobile players Tapjoy and Kontangent announced a partnership, their leaders, Mihir Shah and Josh Williams, came together to impart insider insight on what creates a lucrative game. Both emphasized the changing scope of the gaming industry and the importance of focusing on the player and applying analytical data to product development.

This GamesBeat 2012 session, “Overcoming Hurdles in Monetization Distribution and Discovery,” also included ICS Mobile CEO Joe Bayan, Playhaven CEO Andy Yang, and Mark Friedler (pictured right), managing partner of Worlds & Games and moderator.

“The days of getting lucky, only thinking about gameplay and worrying about monetization later, are gone,” said Williams. “The sophistication of the market has increased, and it is a lot more competitive now. Developers have to be more scientific and rigorous about the way they design, acquire users, promote, and operate.”

As the market grows more saturated, companies must continue to innovate across the board, adapting to new technology, introducing more advanced marketing methods, and making the most of analytical tools.

“A lot of people are basing monetization on hopes and dreams, hoping to make top 25, when it should be map- and science-based,” Yang said. ” You have to understand traffic sources, the bio of the users, and the user base.

While leveraging “big data” and applying business strategy can lead to success, creating an appealing, easy to use, and creative product is equally as important.

“I am a firm believer in strong user experience and strong user engagement,” Shah said. “Games and apps that bring joy to consumers will generate significant economics over time. When I think of our partnership and things we are doing, there will be a laser-beam focus on what a user wants and what are they getting out of it.”

However, small, independent developers without a publisher or significant investment can struggle to keep up in a world of gaming giants, no matter how great their product is.

“I am much more pessimistic,” Bayen said.  “The app store market is becoming more and more difficult for developers. They need serious funding and good partnerships, like Gree and Tapjoy. They need to team up with experts, because with 660,000 apps, you might as well go to Vegas and gamble.”

The chances of striking it big may be slim, particularly with major content players dominating the field, but that does not mean it is impossible. Room is still there for upstart companies and the elusive X-factor.

“There are countless examples of apps with great social viral features,” said Shah, giving hope to aspiring game startups everywhere. “The takeaway is in cases when we see independent developers doing well, they have a maniacal focus on user behavior early on, not monetization. If you can’t outbid Zynga, you gotta do it another way, with constant iteration and partnerships.”

There is, of course, no exact formula for success, nor is there a simple, clear-cut formula for monetization or distribution. The good news is that in this evolving industry, there is plenty of room for creativity, and you never know when an unknown will hit it the jackpot. It all goes back to a classic piece of American wisdom: The customer is always right.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Like how Facebook beat MySpace in the first place.

MySpace ran huge numbers of display ads — 51 billion in June 2008. So many, in fact, that users started building up immunity — what we now call adblindness. As the site was pressed to make higher and higher revenue goals for then-parent-company News Corp, however, MySpace showed more and more ads.

The result was predictable.

Source: John Koetsier

Facebook – I’m seeing 7 ads per page

Revenue per page went down as the number of ads went up. Clickthroughs went from one in a hundred to one in a thousand in a single year — 2006 to 2007 – and even worse thereafter, to four in 10,000 in 2010.

Facebook learned from those and other MySpace mistakes, and started out with only one ad per page.

That’s right: one ad per page.

There are many reasons why Facebook won and MySpace lost, and the ad story is only one of them. But now Facebook, under pressure after a lackluster IPO and poor mobile monetization, may not only be compromising some of its principles and surrendering to the need to drive cash flow but also starting to follow the path of its failed competitor.

Ten ads from one is an order of magnitude change, and it has happened in just a few short years. While you could argue that some ads are beneficial to the user experience if they’re relevant and timely, more is not necessarily better.

And Facebook might want to remember why it won, before it starts to lose.

Ten ads per Facebook page, courtesy Inside Facebook:

Source: Inside Facebook

10 ads per page on Facebook

Image credit: Andrey Bayda/ShutterStock

31 percent of US internet users now use a tablet in 2012, up from just 12 percent last year. That’s 74 million tablet users: a significant slice of consumers. And, the magic that marketers are always looking for, they trend higher income. The highest penetration of tablet use is in the $50,000-and-up income categories.

The gap between iOS and Android shrank, largely due to the Amazon Kindle Fire:

The most common uses of tablets are much as you’d expect: watching videos, getting news, and checking the sports scores:

The market for paid apps is getting bigger: Even though only 23 percent of all apps were paid apps, 72 percent of all tablet owners had paid for at least one app. Tablet owners did, however, show an increased preference for apps with advertising versus paid apps, so there remain multiple monetization options.

The researchers estimated that the total market for paid tablet apps in 2012 will be $2.6 billion.

And in good news for Android tablet developers, the gap between iOS owners and Android owners buying apps seems to be shrinking: 79 percent of iPad owners have bought apps, versus 66 percent of Android owners. iOS owners still spent more, however:

Of particular interest to content creators and distributors is the finding that 61 percent of tablet owners have purchased at least one piece of content for their tablet. Most of that is in magazines and digital books, with only 15% of that in newspapers.

Movies, however, are a surging category, with TV shows not far behind:

And in worse news for newspapers, when researchers calculated the total dollars spent on content, news came out far behind magazines, entertainment, and sport:

See more details in the gallery:

Image credit: ShutterStock