The app life cycle is short – developers need new ways to generate revenue (part two)
In the last post (part one) we discussed how despite higher user engagement with apps, the reality is that developer revenues often disappoint. Here we discuss monetization options, looking more closely at a new alternative to the four main paths to revenue: paid, freemium, in-app advertising and paidmium, namely call triggered advertising and how it can provide a much needed incremental revenue stream – for any app, whether its in use or not.
More detail can be found in the Calldorado White Paper – Monetizing and Extending the App Lifecycle. Download it here for free.
There are four main options; paid, freemium, in-app advertising and paidmium. App analytics firm, App Annie’s most recent research (March 2015), found that the most popular monetization route was freemium. In fact, an overwhelming 70 per cent of developers are primarily seeking to fund app businesses through the freemium model, while nearly half are looking at in-app advertising.
In terms of returns, in-app advertising and freemium revenues show the greatest health, leaping 71 per cent and 72 per cent in 2014 compared to the year before.
Conversely, revenue from paid apps has seen a decline of 19 per cent and shows no sign of improving with the paidmium model showing the biggest decline in revenue, down 24 per cent, over the same period.
Unsurprising, then, that in-app advertising and freemium (supported by in-app purchases) are the two main options developers are pursuing. It follows that on-going user engagement is absolutely critical – no usage, no revenue.
Yet, in all but a handful of cases, usage will drop to such extent that it joins the ranks of ‘zombie’ apps, which remain unused and ready for deletion next time the user needs to free-up memory on the device itself.
Mobile analytics firm, Flurry, conceptualises the decline as the ‘half-life’ of the app as it goes from peak usage to unused and awaiting deletion. The research suggests that half of all apps will be used half as much three months after they hit peak usage. This decline continues steadily until ten months after hitting a peak, where the average app has less than a quarter of the use it once enjoyed.
More than ever publishers and developers need to focus on app reengagement. The standard approach is to drive that reengagement through more mobile marketing techniques – usually increased ad-spend and push notifications – which of course both extend and increase the cost and acquisition process of any given user.
Mobile marketing firm Fiksu has a useful index that measures the cost per loyal user (for the initial period of engagement) – the price of acquiring a user who opens an app at least three times. The bad news is that this cost is rising. Last year the cost-per-loyal-user index increased 21 per cent to $2.25 in September, from $1.86 in August.
In other words, there is increasing cost and growing competition to capture the attention of customers.
Its clear that developers and publishers need to consider alternative models for driving revenue throughout the lifecycle of an app’s use. A relatively new approach uses one of the primary functions of any smartphone – voice calls – to trigger a Post Call Ad Unit that displays ads on the smartphone screen at the end of a phone call.
Because the service is embedded in an app by the developer in the build, any impression that is generated is associated with that app – whether that’s a game, a utility app or a messaging app.
According to the GSMA, we make an average of 150 voice calls per month. When multiplied across an entire app installed user-base, that’s a significant amount of impressions and builds a much needed incremental revenue stream – whether the app is in use or not.