Addressing a session on emerging business models in mobile apps at Ad:Tech Bangalore, Sandeep Amar, Head of Marketing and Audience, at Indiatimes* stated that while the business models for mobile apps has stayed relatively same over the years, the approach towards app monetization is different for different people, which makes some apps stand out from others.
He said that the approach towards app monetization has to be according to the ecosystem of the mobile platform, on which the developer is currently distributing or planning to distribute their apps.
iOS still leader but Android catching up: Amar said that iOS platform is still the leader in revenues but the Android platform is currently winning in numbers and it is coming quite close to the iOS platform in terms of monetization. He claimed that 0.53 million Android phones were sold in India in May 2012, a 19.2% growth from 0.44 million in April 2012, although there was no word on the data source used for this information. He also added that Samsung accounted for 71% of the Android phones sold in May 2012.
Amar said that casual users prefer freemium apps, since they usually use apps for entertainment in short stints, which makes in-app purchases and mobile advertising models quite important for app developers. He also added that developers should formulate monetization strategies right from the beginning of app development and this strategy should be the driver for the app’s future development and design process.
TOI and ET Mobile Apps: Talking about the development that went behind the Times Of India and Economic Times mobile app, Amar said that their key focus was delivering a good product experience in both design and usability-wise. He said that the company intentionally didn’t show any ads in the earlier versions of the mobile apps until they reached a significant user base, following which they set up a dedicated sales team for monetization of these apps. Amar however stated that they would focus more on sponsorships to monetize these apps rather than opting for ad networks.
Amar claimed that the Times of India has clocked 4.5 million total app downloads across all mobile platforms and it has recorded 11 million total unique visitors across all its mobile offerings including its mobile site. Similarly, he claimed that Economic Times has clocked 1.5 million total app downloads across all mobile platforms and it has recorded 3 million unique visitors across all its mobile offerings including its mobile site.
As a side note, Amar also noted that they are going to soon launch Gaana mobile app, and they have taken a different app monetization approach in Gaana’s mobile app, although he didn’t reveal any further details about it.
Case Studies: Amar also talked about various other case studies including:
– Electronic Arts (EA) which uses in-app brand placements in various forms in its mobile game The SIMS to offer virtual goods for free. Amar said that more than one million players redeemed Hair spa virtual goods from Dove and around 50% of the players knowingly liked the brand’s Facebook page. He said that developers can also implement various media integrations in their apps like allowing users to watch a short video ad to unlock a specific virtual good.
– Amazon which recently announced that it will enable app developers to sell physical items in their mobile apps and allow users to buy these goods in a single-click process.
– Zappos which had launched a digital fashion magalog (magazine catalog) app ‘Zappos Now’ and allowed users to buy Zappos products directly from the app.
– Pandora which delivers personalized ads based on the music the user has listened before.
Local Mobile Advertising Ideal But Very Tough: Amar said that local mobile advertising is an ideal monetization strategy for developers but developing a real time highly relevant local advertising and matching relevant offers & deals to customers is very tough.
In a following session on the same topic, Aakrit Vaish, Director, Flurry India stated that users do not usually buy paid apps unless it is from a big brand like EA or Activision, since there is always a free alternative available in the app marketplace. He pointed out that the number of paid apps in the iTunes store’s highest grossing apps list, has significantly dropped from 20 apps in 2009 to only 2-3 apps in 2012, indicating the rise of freemium apps.
Vaish stated that the freemium model was the easiest way for developers to scale their apps and earn revenue, since this model allows them to monetize apps through various modes including in-app purchases, and advertising among others, instead of a single up-front transaction in the case of paid apps. He stated that 50-55% of apps in India are currently generating revenue through advertising, much higher than the global average of 23%.
That being said, he stated that developers should measure every single actionable item possible in their apps, to get a preview of how users are using their apps, which consequentially could lead to newer ways of app monetization.
Disclosure: Indiatimes is an advertiser with Medianama