Thursday, April 22, 2010

Mobile Web and Mobile Apps Monetization Strategies

Faced with a prevailing culture where consumers expect web services and digital content to be free, mobile app and mobile web developers need to adopt the right strategy in order to monetize their efforts.

The Freemium model is a classic marketing tool available to mobile app developers to maintain the perception of a free service, while attempting to lock-in customers into some type of charging mechanism. (And I recommend reading Chris Anderson's 'Free: The Future of a Radical Price' book for further insights into this).

But many of the decisions around charging will stem from a look at the value that the mobile consumer perceives he/she is getting from the app in question. Apps with a low perceived value will struggle to charge anything at all, no matter the charging mechanism.

I presented a basic introduction to monetization of mobile apps to the EAE Business School this week. This intro is based on a wider discussion included in the chapter of the same name in my new book on Location Based Services (for early access to the book, click here). In the same chapter, I include a toolkit for deciding how and what to charge for mobile apps and present some success examples of companies that cracked the key to generating recurring revenues.

I took a quick survey of the class (highly educated, international, 20-25 year olds) to see how many had smartphones and what type. About 25% had a smartphone, equally split between iphone and Blackberry. 0% had an Android device (which goes to show that Android still has some way to go in Europe...)

As part of the Q&A, one of the questions that struck me the most was along these lines:

"We hear a lot about mobile apps and the gold rush taking place, but is any app developer actually turning a profit from this activity?"

The answer is, of course, yes, though only those developers with the right combination of an attractive value proposition and the right charging mechanisms are able to succeed in an increasingly crowded marketplace. The potential, with 500+ million apps downloaded to date from the iTunes Store, remains huge. But it pays to have the right monetization strategy in place.

You can see the presentation below: