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.