While in Barcelona at Mobile World Congress I was fortunate to attend the WIPJam conference and participate in a round table discussion on app monetization. The discussion was lively, with nearly a dozen developers tossing out their ideas, perspectives and experiences. While I learned a lot, I was unsure if the experiences would hold true outside the session. I decided to run the same discussion with 6 cross platform AppUp developers. The findings were consistent. Below is a summary of what we discussed and discovered based on notes from both sessions.
Note - In full transparency the quotes are not exact and based on notes and recollection. Also I have not identified the developers with each quote to keep their anonymity. This is my personal impression of the discussion with approximately 20 developers.
Where and how are developers finding monetization success
Both groups discussed success, "is anyone making money" was quickly tossed out at WIPJam. In response many developers expressed they are having success, but that it is work. "We are making money, as long as we price the app right and can be found. We do a lot of work get listed and reviewed by sites like Touch Arcade and that helps" said one developer. However concerns were expressed that the average price is being dropped significantly. "Price is an issue, top quality apps are being sold at a sub $5 price." said one developer. The sentiment is its getting harder to make money by monetizing the download. All agreed they are increasingly looking toward additional revenue models such as In-App purchase features and In-App advertising. There is a strong belief by some that apps are moving to a free model and that you have to monetize in the cloud.
Regardless of what monetization model is deployed, developers agree that a "build it and they will come" is not enough anymore. Developers said they have to be shrewd and responsive marketers. During the WIPJam round table there was a lot of discussion on technologies and services that enable real time feedback from users within the app, allowing developers to then target updates, roadmaps and features that have a greater chance of being monetized.
Where and how are things difficult for app monetization
While many have success with large app stores the worry is discoverability is getting harder, gamed by a few, and a challenge for most. "Publishers who pay for downloads to increase their ranking is a real concern, while it's not allowed, and you will get booted, it seems to be going on". Also there is a general consensus that not all stores are equal in terms of monetization. "Is anybody actually making money outside iOS" asked one developer in the WIPJam session. Those who raised their hand explained advertising and In-App purchases were making some headway for them, but in general they are still not where they'd like it to be. However one developer ran against that thinking. "We're seeing a lot of success with Kindle. We put our app there because we felt the Amazon model lent itself to more of purchase behavior. We are looking to add more monetization and purchase features for our Amazon version because of this"
What alternative means are you taking to monetize apps
Developers are looking beyond pay to download and In-App purchases. Some developers expressed success in all stores by leveraging existing or traditional transaction channels. "We are making money on all platforms by monetizing SMS features our app and splitting the revenue with the carrier" explained one developer suggesting there is a way to make money if you monetize and existing transaction channels. Another alternative model has been to monetize outside the store. "We are also doing very well across platforms but our model is to use apps as a lead generator to send users to ecommerce websites for purchases." As with SMS the solution here is to monetize a captive audience by leveraging an external and possibly more palatable transaction channel.
Insights and conclusions
The conclusion by these developers is the store perception and OS brands are factors for monetization. "Apple has captured a user who likes premium products and is willing to pay for them" said one developer, and another explained that Apple is reaping the benefit of its well established iTunes store, where many consumers already perceive Apple as a marketplace. Developers also expressed store requirements for credit cards are a factor. "If you keep getting that credit card request in front of you each time you want to download an app you are less likely to compete the purchase. Apple has reduced that purchase friction." A contrast was made against other stores that have captured a more frugal audience, not willing to give hand over purchasing power to a store. "I'm not sure many folks especially in Europe or Asia feel comfortable handing their credit card over"
Interestingly, both groups believed the Amazon Kindle model, is more like iOS, than Android marketplace, believing there is existing trust in the Amazon and Apple stores. As one developer put it, "The store is more important than the device" when it comes to monetization. The belief here is the brand that manages that transaction is a bigger part of the equation than they had thought. Thus they need consider these things in terms of planning their apps for distribution. When looking to monetize they suggest putting premium purchases at stores that have an established transactions system with the customer. For stores that are perceived as a "free zone" the recommendation is to leverage advertising, In-App solutions or direct your user to external and more tradition commerce sites that have a purchasing relationship with the user.
Looking forward to Ultrabooks
In the smaller group session we discussed Ultrabook. It was discussed as we look toward Ultrabook apps, developers will have multiple store solutions. On the OS side Microsoft will have a Metro app store. While this will be the best store to get metro apps, it will not be the only way to get content and applications for Ultrabooks. The Intel AppUp Center will also be a solution for Win8 Desktop and Legacy Windows applications, providing another channel for discoverability across a family of Windows devices. As well AppUp as an affiliate store enables retailers, OEMs and services providers to create store-fronts powered by AppUp. One developer expressed his enthusiasm here. "Discoverability is a huge problem for us, we'd love to see Intel solve this with curation, specialization, or differentiation of apps via AppUp." Another developer expressed interest in the affiliate model. “The Metro looks to be right up front and center for Win8, so I’d like to see service providers and manufactures preinstall an AppUp affiliate store” The sentiment from this small group is that preinstalled affiliate stores could provide that curation and differentiation of apps to give them exposure on Ultrabooks.
Either way developers seem to agree they need to look at the various store solutions and determine the right monetization model for each store. The belief is not every distribution system is perceived by the customer the same way. It is very possible that distinct and discreet monetization models, app marketing, and discoverability plans may need to be deployed in order to maximize a capital return on apps.
If you have additional thoughts and experiences please reach out to me on Twitter @bobduffy and or share them by responding in our comments section.
For more information on developing Ultrabook apps for distribution and monetization via Intel AppUp, visit our Ultrabook Community