Recap from tonight’s Mobile Monday on monetization
I attended tonight’s Mobile Monday at the Sir Francis Drake Hotel in San Francisco. It was totally packed and a seriously classy affair this time around. (Not to say that it’s not always classy, but this time the sponsors Quattro and GetJar chipped in for an open bar. ) Huge props to the organizer Kate for hosting such a smoothly-run event! It was great seeing MoMo founder Mike Rowehl and the rest of the mobile contingent.
I posted a short video clip of the panel here.
A lot of discussion about iPhone and other client platforms. When I asked the panelists what their thoughts were on SMS, seeing as it’s, you know, the biggest thing in mobile, and Ali Diab from AdMob said “SMS is like the fax… it’ll be dead in 5 years!”. That got quite a reaction from the audience members (90% of whom raised their hand to indicate they had an iPhone). I think SMS as a platform will die out eventually, but to quote my buddy Mark Slee (PM and original mobile guy at Facebook):
“The UI and the underlying technology might change — we might even stop referring to it as SMS — but will people continue sending and receiving short, asynchronous communications on mobile devices? Uh, yeah.”
I’m pasting my raw notes from the event below, hopefully they’ll be of value to anyone who was unable to attend.
- Lars Albright – Quattro
- Patrick Mork – GetJar
- David Katz – Yahoo! Mobile
- Ali Diab – AdMob
- Andrew Lacy – Tapulous
Who’s making money and how?
- Production values going up —> plays to strengths of bigger developers
- iPhone ad market embryonic
- Freemium model most successful on iPhone
- Conversion from free to premium higher than web world (up to 10%, vs 3% web)
- All GetJar apps are free
- Demo conversions as high as 10%
- Highest conversion ever from preloaded apps: 15-25%
- Emergence of virtual currency
- Allow customers to send virtual ice cubes to friends for 20p on a hot London day
- Free to customer is the way to go, but that doesn’t mean nobody is getting paid
- Nascent iPhone market: what are models that get weeded out as platform matures?
- If people won’t pay for it on the web, need to convince them to pay for it on mobile
- iPhone developers need to go cross-platform to go big – necessary for viral marketing
- Need to widen the market
- New mobile-specific brands are being created (Tapulous, Urbanspoon) that may start to supplant web brands
- Average web consumer, no matter how many sites they visit, come back to a small number of sites month after month
Why not start with iPhone? How to prioritize platforms?
- 40M iPhones
- and, iPhone users are 10x as active
- “iPhone” is two platforms (iPhone + iPod touch) and two customer bases
- They are profitable, there are several profitable companies
- Other companies that have played in “old school” mobile say iPhone platform is phenomenal
- Ability to monetize through advertising should double
- Apple reducing friction to allow in-app sales, virtual goods
- iPhone won’t necessarily win, but 2-3 platforms will win out over next three years
- “Easier to acquire 1M users on iPhone than 100k on other platforms”
- Yahoo is as platform-agnostic as possible, be where users are
- iPhone and Blackberry have huge penetration, so they think a lot about it
- What type of developer are you? The richer the app, the more you have to decide.
If you were going to fund someone, ask them to build apps for brands or build their own?
- Both are challenging
- Mobile studios would now rather do integrated campaigns inside existing apps than build their own apps
- To sell tickets, go where the eyeballs are
Volume or targeting?
- Just like web: both
- These are ads served inside native apps
- Cost to developer is higher than in web
- Mobile requires more trust and track record – not as easy to switch out ad networks as on web
- Something needs to change – more ad networks, more SDKs, taking up more space than your app
- Trying to get more efficient
- Don’t lock yourself into one revenue stream
How to decide how much to charge?
- Experience (trial and error)
- Easy decision to be free, because loyalty to web product has huge value
Freemium vs ads. Any other opportunities?
- 1000s of apps, avg app suffers 50% churn —> can’t calculate ARPU
- Gotta keep users coming back – fresh content
- Putting out app is 10% of effort – 90% is delighting people on daily basis
How to promote apps given saturated markets?
- Distribution of traffic will change: some apps getting ton of traffic and then long tail (see web)
- Ad networks will play huge role selling distribution through advertising
- 200k apps out now across all mobile platforms
- Better search, CRM needed
- Lifecycle of individual apps shortening
- Avg lifecycle on GetJar = 3-4 weeks
- Recommend blowing ad budget (say $5k) upfront quickly in hopes of getting some momentum early
Why not SMS?
- SMS will be gone in 5 years!