How to monetize mobile apps

How To Market an App And Make Some Serious Money With Mobile Apps

Internet marketers can no longer ignore the mobile revolution. Perhaps no other technological trend will impact our chose profession as much as the proliferation of mobile devices. Functions that used to be relegated to home computers and PCs are now being performed exclusively on mobile devices, and people now rely on mobile apps to synchronize virtually every aspect of their mobile lives.

Mobile applications essentially perform the functions of mobile websites, but in a native environment that allows programmers access to the many unique functions of mobile devices. Mobile applications can utilize GPS signatures, cameras, accelerometers, and a host of tracking and user identification features that are inherent to the mobile platform. Most of all, mobile applications occupy a casual space on mobile devices where they can encourage in-app purchases and can serve advertisements, providing an avenue for revenue for crafty app makers.

Unfortunately, however, mobile apps are not the guaranteed gold mine that many people make them out to be. Mobile apps require a great deal of work to produce, and they can be difficult to differentiate themselves in the crowded app marketplace. The vast majority of apps never turn a profit for their creators, and many apps are only downloaded a handful of times before they are relegated to the depths of the app-store. Mobile app makers must also work in the confines of the app-stores that they rely on for making their apps accessible, so app marketing is a constant balancing act between the rules and regulations of many larger companies. If done correctly, app development can enhance your current internet marketing revenues.  The following tips will help you take charge of your app development and marketing, whether you are creating an app purely for profit or an app that will add value to your other marketing opportunities.

What Type of Mobile App are you creating?

How to market an app
The most expensive option for app development, but also the most flexible, is custom app development.

The type of app that you want to create will determine the way that you are able to market your app, and it will set the initial budget for you app development. At their most basic level, apps are split into internal and external categories. Is your app designed to be used primarily by members of the public, or will it be sent to people that are already within your organization (such as your affiliates or your direct employees)? If you are creating an app for public consumption, you are doing so to generate profit either directly or by increasing traffic and sales into your main business. Apps for internal use are designed to solve some type of business problem or make processes more efficient to decrease labor requirements while increasing revenue. For example, the types of apps that McDonalds creates for its employees (with time tracking, scheduling, etc.) are very different than the apps that are created for potential customers (with coupons, location information, nutritional facts, etc.)

Even public-facing mobile apps are divided into several different types:

1. Apps that are designed to drive traffic to a website or landing page

These apps might include information about your products and services, and they might include some kind of fun features or coupon codes, but the goal of these apps is to drive traffic to your main website or business in order to drive conversions. Almost all modern companies have some variation on this type of app – whether they attempt to drive traffic to their e-commerce sites or to their brick and mortar stores. You probably don’t want to actually sell your product or service directly through your mobile app, because even though it might be convenient for your customers it can cause you to pay relatively large portions of each sale to the app-stores as a commission.

2. Apps that are designed to bring in a profit on their own.

These apps include everything from games with in-app purchases to free apps that are created for the sole purpose of displaying advertisements to their loyal users. You don’t have to decide on exactly how you are going to monetize your app in the early stages of your app development, but if profit is your goal – you will need to justify all of your app development expenses with how many those expenses can eventually bring your in increased sales and downloads.

Creating a Profitable Mobile App

In my years as the marketing consultant for a successful mobile development firm, I have found that there are generally three approaches that people take when they are creating a mobile app. Your own journey towards a mobile app will be dependent on your budget, as well as your familiarity with programming. Even if you are a high-quality programmer, you might want to outsource some aspects of your app development (or use a platform) if you want your app to run on multiple platforms (Android, iOs, Windows Phone) rather than just the platform you are most comfortable programming for.

Custom Development

The most expensive option for app development, but also the most flexible, is custom app development. In custom app development, you can either send your app for production by an outsourced team or firm, or you can produce the app with your own in-house programmers. Either way, you are paying a great deal upfront for the development of your app – and there will be ongoing expenses in maintenance, hosting, and updating the app as necessary. Something as simple as an operating system update might necessitate wholesale changes in your app itself, so reserve part of your app development budget for the eventuality of continued spending.

If your app is especially complex, custom app development might be the only way to go. For example, if you require your app to integrate with one of your other software projects, or if you require your app to do things that other apps on the market aren’t capable of, you will have to create a custom solution from scratch. On the other hand, this development process gives you the most input into what your app will become, and you can carefully monitor every aspect of your app’s development process.

Custom development has a couple downsides other than budget. Custom development requires multiple teams of programmers working “in parallel” to ensure that a single app concept is executed well across multiple platforms. As an app developer, you don’t want to reduce the size of your market by cutting out one or more of the major mobile device manufacturers, but you also don’t want to spend more time than necessary developing your app with returns that aren’t guaranteed.

Platform Development

A couple years ago, custom development was the only way that you could create an app and take it to market. However, with the growing popularity of mobile apps, there are a number of platform solutions that have popped up in the last couple years to give app marketers and developers a bit more flexibility. App platforms provide some degree of interface and short-code support for developers that allow them to create apps for multiple different use environments on the same framework! Basically, instead of doing the same amount of work for three different apps, you can create one version of the app and have it automatically exported to all three different app environments with the click of a button!

App platforms are not cheap though – especially if you want more extensive features like the ability to send push notifications. You either pay for a platform with an upfront licensing fee (in which case you might find yourself struggling to meet the licensing fee with your app revenue) or with a monthly payment model. Either way, this can be a substantial cost up-front, or it can eat into your monthly revenue. On the other hand, using an app-platform can substantially decrease your development costs if you are able to cut your coding team. Since app platforms speed development, and require less in the way of custom coding, you can trim your development team down and you can put out more apps. In addition, updates to your app take only a couple changes in the platform and they can be pushed to the app-store easily without requiring you to resubmit your app every time something changes. This can be ideal for a company that makes frequent app updates (like a newsletter) or a company that wants to keep their app “fresh” so users are compelled to check it more frequently.

Templated Development

On the opposite end of the complexity scale are template-based apps. Basically, these apps offer a minimal degree of customization to users, allowing them to input basic information like their business location and products, and they output apps that have basic functionality for a select few purposes. Obviously, if your goal is to create a unique app that people will purchase, a template-based app is not for you. On the other hand, if you are creating an app to serve as your mobile storefront, or if you want to create an app to add value to other internet marketing endeavors that are the focus of your attention, this can be a cheap way to enter into the mobile world. Template-based mobile apps can be very cheap, allowing you to launch an app for as little as $500. On the other hand, template-based apps can sometimes be difficult to get approved in the app stores, since they are basically slightly altered versions of existing apps.

How to monetize mobile appsMonetizing Mobile Apps

There are many different choices when it comes to monetizing your mobile app. The most obvious choice is obviously creating an app and then charging people to download it. On the other hand, this “direct sale” model is one of the least effective on the app store. Why is that?

Charging up front for an app turns off a lot of customers because they can’t see the functionality of your app without shelling out money for it. While this works for most computer based software, mobile applications are supposed to be more “casual” and people expect some level of trial or free service without immediately charging. The only software that does well with the up-front cost model seems to be B2B software and productivity suites, and even these benefit from some level of user demo.

Much more common is the “freemium” model of app monetization. In this model, the initial app is offered on the app store for free – with a limited set of features available until the user upgrades. This can be effective because it gives you a chance to “hook” users before demanding money. If you are able to convince your users that they cannot live without your app, or you have features that make the upgrade seem worth it, then you can successfully use the “freemium” model to slowly build your revenue base. Not all of your customers will be willing to spend money for your product, but even the “free” customers have value in this model because they can be served advertisements and occasional upsells from your app, and they provide a large pool of customers that you can harvest data from and target future marketing towards.

Finally, plenty of apps get by with a completely “free” model of monetization. The vast majority of corporate apps and enterprise apps are free because the value of the app to the company is the data that they can collect from customers and the ability to create brand loyalty among app users. For free apps, the value proposition for the internet marketer is all about the number of downloads. Almost all games on the app store are free (because people don’t like to pay money for casual games) but they can make tons of money through advertisements and in-app purchases. For example, Flappy Bird was making well over $50k per day at the height of its success, despite being an extremely simple app with virtually no complexity behind its marketing message.

Mobile App Marketing

Marketing your mobile app can be tricky, since there are so many apps on the marketplace and since paid app marketing can decrease your marginal benefit per download to the point that you are actually losing money.

Instead of using PPC traffic to drive my conversions for mobile app downloads, I usually take a three-fold approach starting with content marketing to relevant tech blogs and blogs that are frequented by people in my industry. I give review copies of my app to prominent experts in exchange for reviews, and I make sure to convert all of my website traffic into mobile downloads by prompting people who visit my mobile site to download the app from the app store (using a conditional redirect that targets only people who are browsing with their mobile devices)

My next marketing step for mobile apps is to capture traffic from some similar mobile apps that have been downloaded by my target market. For example, if I am trying to sell copies of my productivity software, I will sign advertisement contracts that display my ads on similar mobile applications like business apps and invoicing apps, since these people are in my target market and they have already displayed a willingness to pay money for mobile apps. Display advertising on mobile apps is also relatively cheap, and it can be a great value over time.

For your own mobile app project, your marketing method will depend on the audience that your app was designed to appeal to. For example, an app that is intended for internal use within a corporation or organization will have a very different marketing process (driven by face to face interactions and internal emails) than an app that is designed to appeal to the public. Games will also have a very different marketing process, one that is highly reliant on “demos” and tests of the product before consumers make the decision to download the full version.

Mobile Marketing Tips:

  • App.io live previewsApp.io is a relatively new company in the mobile space, but they bring a potential game-changer to the marketing space for games. Basically, App.io allows games to place advertisements in other apps and on mobile websites. The advertisements occupy the entire screen of the mobile device for a certain period of time, and they actually allow people to play demo versions of the game for a very brief period of time (while other content is loading, for example). Not only does this greatly increase the number of conversions for the game maker, since they are able to demonstrate their game in front of a captive audience, but the website/app owners that allow the advertisements like them because they keep visitors entertained during interstitial space or during the time it takes for the primary app to load.
  • Mobile-Friendly Display Ads – There is no hard and fast rule about displaying ads for apps on websites, but you generally want to keep those ads targeted only to people that are visiting the sites on their mobile devices. Obviously, displaying expensive CPM ads to people on desktop browsers is a waste of your marketing budget, since it would be a three step process for those consumers to find and download your app. With that being said, you can always use display ads on websites to drive traffic to your mobile app’s landing page if there is some kind of desktop component of your application. Evernote does this very successfully, getting people ‘hooked’ on a desktop version of their platform when the mobile platform (the one with the most desirable features) is a premium upgrade.
  • Creating Mobile Ads that “Pop” – If your mobile ads are destined for banners on mobile applications and mobile websites (as they should be) the next step is to create mobile ads that drive conversions with a direct messages and a call to action. You have a very limited amount of screen space to make claims about your product, so keep your brand message simple. One of the most effective tools to use for your mobile ads is the drop-quote, especially if you can get a review from a source that your target audience would trust. Something as simple as, “Five out of five stars, great game” and a large button that says “Download Now” or “Free Download” can have higher conversions than a much larger ad that attempts to explain the purpose and the mechanisms of the game. For mobile apps other than games, your marketing message should make it clear what broad sector your app falls under, along with one claim. For example, a productivity app could have a picture of a tired student with the claim “Make your morning routine 40% faster with this free app” and a download button leading to your app’s download page.

Optimizing your Download Space

While you might see a little bit of success distributing your mobile app directly to consumers (over the air) or through third-party app stores, the vast majority of your sales will be directly through the Google Play store and Itunes. The device manufacturers have a monopoly on the distribution of apps through their respective platforms, and something like 99.5% of all apps go through the major stores to reach consumers.

Every app developer, after getting an app approved in the app store, gets a limited amount of space in which to convince people to purchase their apps. Once someone lands on your app store page, the page needs to satisfy any lingering objections that they might have after passing through your other marketing messages, but it also needs to be optimized to pull in organic traffic from people who may have stumbled upon your app while searching broad keywords. According to Kissmetrics, one of the leading sources for mobile app statistics and data, almost 63% of all app downloaders said that they find apps regularly by browsing through the app store without a particular app in mind. Your app store page needs to convert these casual browsers, showing them that your app is the destination that their browsing has led them to.

In general, the title is the most important factor in your app store optimization, followed by the keywords content of your description and app store information. You need to figure out what people are searching for when they download apps, so don’t be afraid to mirror (but not copy) the keywords that are used by the more successful apps in your niche. You can always change and update your description on the app store later on in your app’s life as you make changes and updates. In fact, you want to schedule regular updates to your app (even if they are small bug fixes) because an active developer with updates listed on the app page helps reassure downloaders that there is someone standing behind the quality and functionality of their app.

Of course, don’t obsess too much over keywords since there are plenty of other factors at play in your app store optimization. For example, apps with a higher number of total downloads are given precedence over other apps, and newer apps are given a slight boost in ranking to help them gain traction the first week or so that they are released. If you are able to break into the top ten list of the genre that you are publishing In, the majority of your traffic will be so-called “momentum downloads” where people download your app based mostly on its popularity and reputation. When this happens, your ratings and reviews will become the most important factor in your rankings.

Ratings and Reviews

Obviously, the ratings and reviews of your app are absolutely critical to your app gaining traction.

In the early stages of your app’s life, the first few reviews and ratings can literally kill your app if they are negative. This is why it is so important to make sure that there are no bugs upon the launch of your app that could completely ruin its reputation. You might want to consider launching as a free app since the reviews of free apps are usually more forgiving (and this can give you momentum as you get downloads initially)

After your app passes the initial “hump” (usually around 200-300 downloads) then the most important factor is your aggregate rating, or the average of the number of stars that your consumers award you. This aggregate rating is another way that potential consumers sort apps. Apps from major brands might be downloaded even if they have relatively low ratings (since the utility of the app is tied intrinsically to the brand) but apps from smaller producers need to have ratings of four stars or more to gain traction.

Mobile app Ratings and Reviews
The first few reviews and ratings can literally kill your app if they are negative

While you can’t really control your reviews and ratings, since manipulating these numbers is strictly against the app store policies, you can incentivize your consumers to leave good ratings in a number of ways. For example, after one of your consumers is active in your app for some time, consider showing a prompt that asks them how they like the app thus far. If they select the “Yes, I like this app” then take them directly to the app store rating screen with a link, while your “It needs improvement” link can take them to a secondary screen where they can send comments directly to your development team (thus keeping the negative comments off of the public app store)

You may also wish to find like-minded developers to do review swaps, where in the early days of your app you agree to review each other’s app on the app store to seed it with some initial reviews. People are very reluctant to download (or purchase) something that hasn’t already gotten a little bit of traction among their peers.

Keeping your App Relevant After the Download

Did you know that only 10% of people who download an app use it more than once? For free apps, this is a very real danger. People often download free apps to test them out, but then they never use them again – and the app stays on the phone until it is either deleted or it eventually is forgotten about. This can hurt the monetization strategies of app developers, since advertisements (and premium content) are only served to people that are actively using the app.

1) Require an initial investment of time or money

One of the reasons that so many apps are disused is because the users don’t have any investment in the app, so they don’t have any compelling reason to go back to the same app over and over again. Requiring some form of investment, even if it is something like character creation that takes a few minutes, is a good way of forcing your users to add value to your app.

2) Constantly Update your App

One of the best ways to bring people back to your app is by updating your app on a regular basis. Updating your app through the app store pushes a notification to your users, and they will typically log into your app to find out if the updates upgraded their user experience.

3) Care about your Customers

A survey by Kissmetrics revealed that the main reason for abandonment of mobile apps for most users was that they were testing out multiple apps and they only intended on using the one that did the function the best. This means that the features of your app are absolutely critical, and they are growing even more important as the app marketplace grows more crowded over time. While you don’t necessarily need to have the best app on the market, you need to have an app that offers features that people can’t get anywhere else.

A guest post by Robert Gurley.

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