A suitable monetization strategy is paramount to the long term success of an app. A really creative way to source income can be what guides an app to green fields of fruitfulness, and an irritating one can completely devastate it.
I’m sure there are hundreds, nay thousands of revenue models. I’m going to scratch at the few that are most commonly seen pertaining to mobile apps and such.
I touched on some of these in my recent post about SnapChat and there seems to be some interest in it, so I will delve a bit deeper.
Example: Casino slots app (such as DoubleDown Casino) and other games (such as Candy Crush) that are free to play but require purchases for extras, like additional coins or moves on a certain level. They start out free with the option to be a premium level baller.
This model is surprisingly successful. I for one refuse to pay for this kind of thing, but someone is! It’s a known fact in the industry that less that 1% of a freemium app’s users will pump money into it for virtual tokens or whatnot, yet the two apps I mentioned are some of the highest revenue producing gaming apps out there.
According to ThinkGaming, Candy Crush Saga brings in about $780,000 a DAY just on the iOS platform, and it isn’t even the top grossing game anymore (although, hats off to how long it held the position… years.)
Ad Supported Model
Example: EvilApples, Where’s My Head? – games that are free to play but often victimize users with a barrage of unwanted spam-like advertisements that interrupt game play and sometimes crash the app completely. I call this ad abuse.
This is the lease creative and the most annoying revenue model. When overdone, which is almost always, it renders the app basically unusable.
I chose the two games listed in the example because they are each apps that I have recently downloaded and played with great disappointment. Both have the potential to be very entertainment, but they get in their own ways in terms of usability.
A few years ago, I recall my first days playing Candy Crush. One night I stayed up so late cracking out with the old mantra “one more level… okay, one more… seriously, last one…” that I could barely keep my eyes open the next day. This started to happen last night with My Head, which is a version of Cut the Rope that features a cute little skeleton trying to catch his skull, but the cycle of addiction was interrupted by one of many obtrusive ads that provided me with the perfect opportunity to close it and drift off to sleep.
Evil Apples has no excuse. They have every opportunity to move to the next type of model I will cover by letting corporations advertise through the cards in the game.
Virtual Product Placement Model
Example: Sims FreePlay – This game has a mixed model, as many do, but it has the best product placement I’ve yet seen in a mobile game. One example that comes to mind is an item available available to users who wish to decorate their Sims’ homes on a virtual budget: a cute poster about an auto insurance agency, which I believe was Esurance. They have a lot of product placement, and although it’s clearly not the main cash source, I think it’s pretty slick.
Personally, I’m a big fan of product placement in TV and film. My favorite would be a plug for Netflix that appeared on The Unbreakable Kimmie Schmidt – an original Netflix series. Clever! It’s especially amusing to me when the product placement is humorous, such as what Arby’s did with Reno 911.
Generally I find product placement a lot less distracting than seeing a Smickers bar in the background of a shot, but even an app like Sims Freeplay, which draws over a million users into game play each day, would not survive based solely on this model. It would make a lot more sense for a game like Evil Apples which has significantly lower operating costs.
Subscription Based Model
Example: YouTube Red
Often offered as an alternative to an ad-supported model, this is a good option for people with a little extra cheese who don’t appreciate ad abuse. Pandora adopted this model in the long, long ago and YouTube has recently followed suit.
This has generated some backlash, with users claiming conspiracy, that YouTube has been increasing video advertisements to annoy them into paying for a subscription. Well guess what users, YouTube doesn’t choose which videos play ads – the people who upload the videos do. YouTube is simply offering you another option to its advertisements. Try not to hate it for being more popular than you.
What I don’t understand is how platforms like Hulu get away with charging customers for subscriptions while still running advertisements during the programs. But it seems many products have undergone that transition. I’m sure at one point people couldn’t understand why someone would pay for cable to sit through commercials.
Data Mining Model
Example: Brightest Flashlight
I’m not going to say much about this one. I think we’re all pretty familiar with it. Basically you download a free app and it accesses all the data on your phone it possibly can (like email addresses of all your friends on Facebook) and then sells that information to a third party.
You can read more about how the app in the example was used as a “stalking device disguised as a flashlight” on this post from Gigaom Research.
Those are the mainstays of revenue models, although as I said, there are many, many more. I am eager to see what other methods of monetization within apps and technology emerge in the coming days.