Mobile developer roadshow
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Highlights of VB research in ... - Mobile user acquistion - Mobile monetization - Mobile app analytics - Mobile marketing automation
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Mobile developer roadshow
- 1. #vbroadshow
- 3. Roadshows are brought to you by our partner: #vbroadshow
- 4. And thank you to our supporting partner: #vbroadshow
- 5. Event hashtag: #vbroadshow Join the conversation #vbroadshow
- 6. Ian Atkinson VP, Business Development, AdColony #vbroadshows
- 7. John Koetsier VP Research, VentureBeat, @johnkoetsier #vbroadshow
- 13. In other words, mobile is a normal marketplace. The winners win big, and the losers lose big.
- 15. We will not talk about the most important part of mobile tonight
- 16. (you know that already)
- 17. mostly because you’re mostly rock stars
- 18. so you know the only path to success
- 19. here’s the problem …
- 30. So you like CPI, do you? #vbroadshow
- 34. How much to spend #vbroadshow
- 37. Facebook rocks (Twitter mostly sucks) #vbroadshow
- 49. Which solutions are most popular? #vbroadshow
- 56. Beyond GA and flurry #vbroadshow
- 57. #vbroadshow
- 60. Mobile marketing automation Who uses it #vbroadshow
- 75. Top monetization vendors: share across 3 key features Vendor Usage Banner ads Interstitials Video ads (percentage using each feature) Google 43.2 74 32 6 Flurry 33.1 47.1 32.4 32.4 Chartboost 30.9 21.1 76.3 2.6 Tapjoy 27.3 60.6 21. 15.2 AdColony 23 3.3 6.7 96.7 Apple (iAd) 18 94.4 27.8 0 Upsight 16.6 19.9 71.4 4.8 NativeX 15.8 5.9 58.8 23.5
- 79. Mostpopular • Freemium • Interstitials • Video ads • Banner ads Leastpopular • Surveys • Real-world rewards • Lock screen ads • Subscriptions • Paid download • Affiliate/e-commerce • Notification ads • Text ads • Offer walls • App walls Least effective Most effective
- 81. 49
- 87. most effective
- 93. Thanks for your time! #vbroadshow
- 94. Fireside Chat Speakers Ian Jeffrey, VP of product marketing, PasswordBox Stephane Marceau, co-founder and CEO, Omsignal Louis René Auclair, VP and CBO, Hibernum Moderator Jon Cifuentes, Research Analyst, VentureBeat #vbroadshow
- 97. Roadshows are brought to you by our partner: #vbroadshow
- 98. And thank you to our supporting partners: #vbroadshow
- 99. Thank you! Please join us for some cocktails! #vbroadshow
Editor's Notes
- Hello. Today, I want to share what we’re learning from talking to and surveying about 1,500 mobile developers. We asked developers with an aggregate of a billion MAU a ton of questions about what they’re doing, where they’re finding success – and where they’re staring failure head-on – and then we correlated those responses with their actual results. Thanks to them, we think we’ve uncovered some interesting insights about mobile user acquisition, mobile monetization, app analytics, and app engagement or marketing automation, and we want to share them with you tonight. Before we get deep into that … it’s a battle out there.
- There are a LOT of apps out there. Mobile is the fastest-paced and most competitive marketplace ever
- It’s also turning into one of the most lucrative. Data released this morning by eMarketer suggests that mobile ad revenue will hit $39B this year … half of all digital ad spending. And as we spend more and more time on our phones, fablets, and tablets, that’s only growing. So, when success comes, it comes faster in mobile than any other industry we’ve ever seen There are now at least 32 billion-dollar mobile-only or mobile-first companies Many of these are the unicorns you’ve been hearing about … some are the “decacorns” mobile companies with valuations in the 10s of billions
- Shockingly, however, we’re not all in the billion-dollar club. The average iOS app makes between $500 and $1,000 a month The average Android app makes between $100 to $200 That’s one of the reasons why I have this picture hanging in my hall at home.
- Anyone who’s doing a startup can relate, I think But it’s especially painful for many mobile developers … especially those whose grandmas read local newspaper stories about 12-year-old whiz kids who make an app, rake 10 million, and retire before they’re 15 95% of developers are not living the dream … as only 5% are making more than $50K per month. And that, of course, is still relative chump change, as the top 1% and .1% earn far more. The prototypical example is Clash of Clans, which is making millions every single day, as Supercell pulled in an average of $4.6M/day in 2014
- The top 1 percent of apps — the prototypical creme de la creme — get 35 times more sessions per day than the top 5 percent. They have 20 times the lifetime value. Nine times the conversion to paid rate. 8 times average revenue per day per user.
- Hello. Today, I want to share what we’re learning from talking to and surveying about 1,500 mobile developers. We asked developers with an aggregate of a billion MAU a ton of questions about what they’re doing, where they’re finding success – and where they’re staring failure head-on – and then we correlated those responses with their actual results. Thanks to them, we think we’ve uncovered some interesting insights about mobile user acquisition, mobile monetization, app analytics, and app engagement or marketing automation, and we want to share them with you tonight. Before we get deep into that … it’s a battle out there.
- Not trying to flatter anyone, but we only invited people tonight with significant success. The average person here has 1.8 million downloads of his or her app. The average company here has about $150,000 in monthly revenue. Most of you have monthly average user counts in the millions, with the average developer, publisher, or bizdev person here representing an organization whose apps have about 2.5 to 5 million downloads. Most of you have revenue over $50K per month. Many of you have revenue over $250K/month. So if it’s not you … it’s the guy sitting next to you. Or the woman.
- So you know that the only path to mobile success It starts with an app that is awesome
- There are a LOT of apps out there.
- Obviously, we’re not promising that you’re going to become an app billionaire from what you hear tonight. But we are going to share what we’ve learned about success and failure in mobile. Building a great app is step one. Always will be. Then you’ve got to acquire users You have to understand what they’re doing You have to understand who they are And then you can have to monetize them We’re going to talk about every single step on that chain tonight, focusing on the first: user acquisition, and the fourth, monetization.
- We won’t talk about building a great app … that’s your job. Some specifics we’ll cover: In user acquisition - choosing the best methods - picking the best partners - finding the best platforms for acquiring valuable users - how to pay for the best users (it matters) - picking the best social networks for acquiring users In app analytics - popular analytics solutions - the 8 “mighty mites” of mobile app analytics that really make a difference In mobile marketing automation - what is MMA? - who uses it - what results can you expect And as far as monetization is concerned - the most popular methods - the methods that return the most cash for the least effort - the least effective methods for monetization - the monetization methods that anger and annoy your users the most … the quadrant of death - the monetization platforms that winners use Then we’re going to have a panel discussion and the true wisdom will come out And, this is only a fraction of what is in our complete reports contain. You’ll be able to read those and get all the details at your leisure.
- What we won’t share today - how the magic pixie dust of the internet anoints the stupidest, oddest apps for crazy success For the purposes of tonight, we’re assuming that you’re a rock star … and that your app is the hottest thing since Kim Kardashian Hollywood
- We started doing research at VB just about a year ago. So we’re a startup too. Over the past months we’ve completed a mobile series of reports on these topics 2 of those AdColony is sponsoring your access for tonight … But we’re going to give you the other 2 also. We’ll focus on UA and monetization, and we’ll do a quick sum-up of app analytics and mobile marketing automation.
- As we create each report at VB, we look to multiple sources of data We need practitioner data … people using the tools we’re studying: small data We need ecosystem data … a broader picture of what’s going on 1500 developers/publishers … with over a billion MAU Almost 2M apps
- As you know, there’s a metric crapton of user acquisition methods. We studied 14 major methods. Key questions: what methods result in the best users? What methods do the best publishers use most frequently?
- Here are the major methods we studied. The most used method is app cross-promotion, both in your own apps and in others. When you put app cross-promotion in owned apps and partnerships together, you see that 71% of mobile publishers are using this … it’s by far the single most-used tactic. Also big: Banner ads Social media campaigns ASO Email campaigns … yes, email campaigns Video ads at 33 percent Interstitials as just under 30% These are the up-and-coming methods of the most successful developers.
- But which are most successful? We asked developers to force-rank UA methods by which are most successful The lowly banner ad (we’ll be talking more about that later) ranks third, probably mostly because it is cheap and ubiquitous ... App store optimization is big, of course, because it’s “free” Patches of success In-app viral tactics such as friend invites, interstitial ads, video ads, and native ads. Key take-away: Publishers like free, and your best users are typically found in places that are aligned to your app - X-promotion: from similar app - Social: targeted to user profile
- If you’re serious about growth, you’re going to be buying some users So we wanted to learn more about paid UA. - what methods result in the best users? - what methods do the best publishers use most frequently?
- Yeah, you do. Everyone likes CPI. We studied UA methods: CPC, CPI, CPL, CPM, and CPP. CPI is that big blue chunk. Clearly, CPI is most developers’ favorite first choice.
- Here’s another way of looking at the data. We asked for app publishers’ favorites: first, second, and third. In each grouping, purple is first choice, green is second choice, red is third. Clearly, CPI is most developers’ favorite first choice. Why? Cost-per-install is simple, straightforward, and appears to be a no-brainer: If CPA is lower than LTV, you pull the trigger. For that reason, it's also very safe: you know exactly what your costs are going to be, and if they fit your app's economics, you can comfortably proceed. The problem is the kind of users you get when you do cost per install.
- CPI brings you cheapskates. Low-value users. CPC, CPM, and CPL generate, on average, much better users. When we compared user acquisition channels against LTV, we found that most users who install your app via CPI are very low-return users ($1 to $10). See that big chunk of yellow? In fact, over two-thirds of the users you acquire via CPI have sub $10 LTV, and one in six have profitability-dooming LTV of exactly zero. In contrast, CPC and CPP generate the highest percentage of extreme high-value users … in the $76-100 range. The upshot? CPI is a volume strategy. It can have value, especially if you’re trying to influence native discovery on app stores. But it is not a quality strategy.
- So we’ve talked about companies, methods, and ways to pay for users … how much should you spend? More money equals better users? Wrong!
- There’s a massive range, but average cost of user acquisition for the publishers we surveyed is currently about $2.90. The minimum was $0, and the maximum allowed in our survey was $10.
- There’s a massive range. The right amount, however, is about $1.50 to $2.20. When we compare what successful developers are spending versus relatively unsuccessful, that’s the sweet spot. If you skimp, there’s a strong upper limit – almost no one spending less than a dollar is topping two million MAUs. Conversely, throwing excess money at the problem brings limited returns, with the top spenders mostly stuck below five million MAUs. In addition, it appears that there’s a drop in results once you start spending more than $4 per user. There are a very few successful developers with huge numbers of users and painful $5/user acquisition costs, BUT there are also a significant number of relatively unsuccessful developers spending those huge sums too … getting fewer than 100,000 users. Unless those apps have users with massive LTV, they're spending more than they're getting. A quick caveat: If you have an amazing app with average LTV at $50 or $150 … well let me buy stock in your company. So your mileage may vary. How to get quality, engaged users for 15 cents Met the CEO of Disruptor Beam at a mobile games monetization conference in SF a few months ago. They publish a bunch of games including a few based on Star Trek and Game of Thrones games. CPI of 15 cents via the partnership … instant name recognition, major ASO, instant fanbase. But … challenging to get.
- We also wanted to check out social channels for app promotion and user acquisition: what works best?
- First of all, Facebook is a massive first, with ¾ of developers saying it’s the best social platform for user acquisition. But … almost 10 percent of developers we surveyed say that Twitter is the “most effective” form of social promotion for mobile user acquisition. Unfortunately, they’re deluded. Or rather, they’re the kinds of developers you do NOT want to listen to … because they’re not successful.
- When we take a closer look, by far the majority of the users Twitter provides, about 80 percent, are for apps with very low levels of users -- sub 100,000. Facebook provides both far more users … and users for apps of all sizes. We did see some interesting data on YouTube. For some developers, YouTube is very, very successful.
- We also wanted to check acquisition partners for app promotion and user acquisition: which works best?
- There are a LOT of companies that will run user acquisition campaigns for you. We studied 42 in depth, and dozens more via write-in candidates, but there are literally hundreds … this is a very fragmented market. Of those hundreds, maybe 12-15 have significant share. Those are: AdColony, Chartboost, Facebook, Fiksu, Flurry, Google, NativeX, Upsight, Fyber, Tapjoy, Twitter, and YouTube.
- Facebook is by far the most popular. It’s the run-away leader here … Unless, of course, you add Google and YouTube together, in which case a combined Google/YouTube outranks Facebook. But since Google/Admob and YouTube are entirely different animals, we studied them separately. You’ll notice that Twitter ranked fourth. That’s frankly, as we’ll see, rather generous. What you’re seeing here is somewhat akin to a popularity contest … with well-known names bubbling to the top. But we wanted to learn what the most successful developers were using, not just all mobile publishers.
- So we started to dig a little deeper Publishers’ favorite first choice was Facebook, followed by Google and Twitter. There are dozens of other companies, but they didn’t have sufficient share to show up here.
- And deeper. When you remove the clutter of 50+ companies, and stack the first, second, and third choices together, you start to reveal some interesting data. First of all, Facebook is clearly number 1, at all three levels. Google is number two, clearly at all three levels. And, if you’re doing user acquisition, you are going to be working with one or both of them. But for a moment, ignore the blue and yellow here, which are Facebook and Google. Now you start seeing what I called the 5 hidden horsemen of user acquisition, the big five that are not Facebook-sized … but stand out from rest of the pack. Those 5 are NativeX, Fiksu, Chartboost, Flurry, and AdColony. All have response numbers comparable to YouTube and Twitter, even though they are far smaller. That’s interesting, to start with. But it’s just the start.
- To dig still deeper, we then compared the various user acquisition companies publishers are using with the results they are getting … in other words, how many users they have. We wanted to see if there were any correlations: are successful developers using different UA companies than the rest of us? Note that while Facebook, Google, and some others, drive huge numbers of users … Huge chunks of the publishers that drive user acquisition via Facebook, Google, YouTube, and Twitter are tiny … See the brown, which is the lowest category of mobile publisher we studied, with fewer than 100K users There’s clearly a good chunk of publishers who have large numbers of users and use those platforms, of course, but they’re joined by a huge number of also-rans. So while you can’t ignore the big boys, most successful publishers look elsewhere for big chunks of their UA efforts. In contrast to Facebook or Google, take a look at Fiksu, AdColony, and NativeX. All three have developers across all MAU ranges – but all three trend to the more successful developers with the most users. (There’s a lot less brown in all these companies’ charts.) Clearly, these companies are doing something that not only raises them above the noise from all the hundreds of other mobile ad networks and mobile user acquisition companies, but also something that correlates highly with relatively much more successful apps.
- So that was an interesting result as far as it went. But we wanted to approach the data from a different direction, so we took some data in from a different study on mobile monetization. In that study, which we’ll be looking at shortly, we asked a cross-referencing question: how many apps have you created? How many apps a publisher has released is a good but not perfect indicator of how successful they are. You have some outliers … one-app publishers … who are extremely successful and completely focused, and we have at least one of those here tonight. (I know, I’ve seen the attendee list!) But by and large, big publishers have more apps. So we compared apps published to user acquisition used. Blue is developers who have published between 1 and 5 apps; red is developers who have published more than 20. More than 20 is strongly correlated with success in numbers of users as well as financial success, so blue is not a great place to be. Only two of the mobile user acquisition companies had more than 50 percent of its developer users publish more than 11 games: Vungle and AdColony.
- So … summing up … What the data shows is that to greater or lesser degrees, there are five companies besides Google and Facebook that you should be considering when you’re looking for user acquisition help: NativeX, Fiksu, Chartboost, Flurry, and AdColony Successful developers tend to pick one or more of those companies. Correlation isn’t causation, of course … and this doesn't mean that any developer who wants to be successful must choose one of those two companies. It does indicate that successful developers who have been around the block a bit believe that these companies will help them be more successful.
- We already said that building a great app is step one. Acquiring users is step two. Now, of course, you want to engage and monetize users. But how can you engage and monetize when you don't know what's going on? App analytics solutions are the answer. Or, more accurately, the hundreds of answers ... since there are many, many options for mobile developers to consider. But which are the right ones? We’re only going to touch the surface of this report, because we’re focused on UA and monetization. But I wanted to share just a few insights.
- We also wanted to know which app analytics solutions are most popular. Any guesses?
- It’s not even a contest. Google's Mobile App Analytics is not just dominant in Google Play, it's Godzilla to almost all the other Android analytics solutions. Out of our sample size of 1.6 million apps on Google Play that use app analytics, 1.5 million use Google Analytics. In chart form, the result is almost ludicrous.
- Even if we take GA off, you still have a 900-pound gorilla … Flurry. So it looks like everyone else is a midget. But this chart means much less than you might think. Many publishers include SDKs but don’t use them … which is quite often the case with several Google SDKs in Android development, and something we’re currently digging deeper into. But there’s no doubt about it: GA is massive, and GA is pretty bloody good - it’s free (always good) - easy to use on a basic level - and very in sync with both Android app development and Adwords But … GA is not the analytics solution that will make the difference for developers who want to be super-successful
- Before we get into why, let’s check iOS too On iOS it’s a different picture. iOS is a much more level playing field for app analytics companies than Google Play, so Flurry's domination of iOS analytics isn't nearly as hard core as Google's of Android. Still, Flurry has the most market share on iOS, even if it falls shy of an absolute majority. But once again, a one-dimensional chart of market share like this is simplistic. It’s not something to base your analytics solution decision on. Why?
- The reality is that 2 out of 3 mobile developers use more than one analytics tool And a significant number of developers – more than a quarter – use 3-5 analytics solutions to understand what is happening with their apps. More than a third use two, and the average number is 2.2. This suggests that many and in fact most developers are not getting all of their needs met in a single solution. It also suggests that there is room for more than just the market leaders. And, finally, it's a good reason for you to not stop your app analytics search at Google, or at Flurry. In fact, the best developers with the most popular apps go much farther
- It turns out that more successful you are, the more likely you are to use multiple solutions So, what we see is that developers with more than 2 million active users are more likely to use 3-5 analytics tools than they are to use either one or two tools. A great example is Big Fish Casino, currently the fourth-highest-grossing app on iOS, which uses not one, not two, but five different app analytics solutions. Another example might be Racing Rivals, the 13th-highest grossing app on Google Play, which also uses five, or the dating app Zoosk: also five. Most of the top 20 grossing apps on both platforms, however, use two or three (you can get the full data in the report)
- In addition, only 30% of developers say Google is their primary analytics choice … and more than that say they do not consider any of their multiple app analytics solutions primary. The big take-away? About 70 percent of the developers we talked to do NOT consider Google to be their primary mobile analytics solution provider. It's there, it's free, and it's easy to integrate (especially on Android)... but it's not the only game in town. So let's take a look at some of the top contenders.
- We call these the 8 “mighty mites” of app analytics Given that most developers use multiple solutions, the most successful developers preferentially use multiple analytics engines, and only some 30% of mobile publishers actually consider Google analytics their primary data source on what users are doing, the differentiators are in the second tier of analytics providers. They don't have majority market share, they (mostly) don't have hundreds of thousands of apps in their stables of clients, but they do provide significant developer advantages in terms of user experience improvement.
- Third chunk. Everybody stretch!
- Mobile marketing automation is a pretty new concept. App analytics solution is focused on big numbers and big data in aggregate, which publishers then use to infer user behaviors, emotions, and mindset. Mobile marketing automation is focused on the user first, which publishers can aggregate into cohorts and segments. In other words: Forest, meet trees. And where app analytics is after-the-fact data on which to base future development decisions, mobile marketing automation is real-time data which marketers use to make both real-time decisions and future engagement plans. Developers and marketers can use MMA to deeply understand unknown users and engagement them. And then, of course, deeply monetize them. Quick Q: who here is using MMA?
- Mobile marketing automation users range from car companies like Kia and Land Rover to innovative banking companies such as ING. Enterprises like Starbucks and Alaska Airlines use MMA, as do Walgreens and Macy’s. And leading mobile first or mobile only companies like Rue La La, Glide, or AccuWeather, which powers forecasts for over a billion people globally, use MMA. E-Commerce companies like SeatGeek and HotelTonight use MMA to maximize revenue. Sports teams like the San Francisco Giants and the New England Patriots use MMA to maximize engagement. Media outlets like Fox, ESPN and Yahoo use MMA. Web giants moving online, like Photobucket and StumbleUpon, use MMA. eBay uses MMA.
- But where the tool really started gaining traction, and maybe where it’s currently most penetrated, is mobile gaming. In 2014, a Nudge VP I spoke to estimated that 50% of the top games in the hyper-competitive Asian markets were using live ops or MMA solutions, while only 10% of big North American games were. That stat is no longer true; the numbers have gone up. Way up. Plants vs. Zombies uses MMA, as does Rivals at War. Subway Surfers and Gameloft’s Despicable Me use MMA, as does Talking Tom Cat. So do Deer Hunter and Coin Dozer, Sonic Dash and GunApp. The upshot: pretty much anywhere you find the most successful apps, you’ll find mobile marketing automation. But that’s at the very top of the app universe. For the broader universe of apps, it’s still very early in the MMA growth curve.
- There are basically 17 feature sets. Remember, mobile app analytics solutions show you WHAT is happening in your app. Mobile marketing automation solutions show you WHO is in your app. And then allows you to do something about it. That usually means communication. So here are the features: Cohort analysis Breaking down users into multiple groups based on affinity characteristics A/B or multivariate testing Testing two or more messages or elements simultaneously to find the most effective Segment targeting Targeting segments or cohorts with different messaging, offers, or experiences Push notifications Notifications pushed to users via iOS/Android/Windows’ global notifications functionality Email campaigns Emailing your users with contextually and temporally relevant messages SMS campaigns Messaging users with contextually and temporally relevant messages In-app messaging Messaging delivered in the app Geo-targeted behavior and/or messaging Messaging or changing app behavior based on their physical location Optimal-time messaging Learning users’ messaging preferences and releasing messages only at appropriate and effective times LTV tracking Tracking the lifetime value of a user Retargeting (outside app) Sending retargeted ads to your users via display ads on the web, or in other apps Personalizing content Customizing content to a segment or cohort for maximum relevance and efficacy Personalizing app functionality or gameplay Customizing app behavior or gameplay, including interface or power-ups, to increase engagement Targeted in-app rewards or incentives Delivering virtual incentives or rewards to users to increase engagement and forestall churn Promotions and/or sales Offering intelligent pricing and offers to maximize revenue Real-time analysis Monitoring activity and responding to it actively in real time Surveys, ratings, or feedback Surveying users for their opinions, desires, or gripes
- What can you expect from MMA? One Appboy client who unleashed mobile marketing automation on a large userbase -- in the millions -- achieved that dream of all marketers: instant ROI. According to CEO Mark Ghermezian, the tool highlighted a set of users who were engaged in the app (a photo app that I cannot reveal the name of), but who had never purchased anything. The marketers created a targeted campaign for this segment of users, convinced 2% of them to link their credit cards to their accounts, and realized a $100,000 revenue boost with just the first in-app message. Here’s where the disclaimers come in: results not typical, this may not happen for you, YMMV. This is something you can’t do if you don’t know your users. It’s also something you could roll-your-own for … but the point of MMA is to make it easy to find these opportunities. And the best solutions are starting to find them automatically for you.
- $100K from one in-app message might not be what you get on your first shot But … 86% of developers reported successes: increased engagement higher revenue improved conversions better user insights higher retention
- Here are the 19 solutions we studied, with full details on their solution stack. (Don’t worry, you can get this in the deck.) Niche solutions It’s important to remember that while some of the companies tick off fewer of the MMA feature buckets than others -- and in some cases dramatically so -- that does not automatically mean that you should disregard them. In a sense they are niche players, but in many cases they have clearly defined their space, which generally overlaps mobile marketing automation, but it also goes places that MMA does not. That’s partly due to the newness of the mobile marketing automation space, and partly due to the proliferation of marketing technology in general, which is growing to encompass large numbers of niches in general. Some prime examples include Nudge, which is laser-focused on live ops, and Scientific Revenue, which is an intelligent pricing engine. Intercom (8) Scientific Revenue (6) Feature-complete solutions As you move up the graph, the number of boxes that vendors tick goes up. The most complete MMA solutions based on this framing of the data are Appboy and Adobe, each of which ticks 16 of the 17 boxes. (The only one Appboy doesn’t do is SMS campaigns, which no other startup MMA vendor does either). The only one that Adobe doesn’t do is Feedback (surveys and ratings). The very feature-complete solutions include: Fuse Powered (13) Kahuna (13) Salesforce (13) deltaDNA (14) TapTarget (14) Appiterate (15) Localytics (15) Adobe (16) Appboy (16)
- So … you’ve made your awesome app You know the big picture about what’s happening inside of it You know the little picture of each user’s experience of your app … or, your software does … Now you want to monetize ...
- Let’s start by taking a look at monetization methods. We wanted to know not only which companies are most associated with success, but also which methods are most successful.
- One of the pieces of good news is that there are a LOT of ways to make money in mobile apps and mobile games. Hopefully, what that means is that at least one, and hopefully several, will work for you … We studied at least 17 forms in-depth. The first thing that you notice is that ads are by far the most popular form. Just one form of ads is the most popular way to monetize, and there are at least 8 different varieties … if we added them all up, there wouldn’t even be a competition. Interstitials are tops, followed by banner ads, video ads, text ads, notification ads, lock screen ads … you get the point. Of course, it would be a big mistake to assume that just because there’s a massive variety of ads, and because they’re popular, that they’re the best form of monetization. I wouldn’t assume anyone here would make that mistake … Ads are super-popular, however, probably because they’re the easiest for of monetization … drop in an SDK, call an API, make some room in your interface, and boom! you’re monetizing. It’s much harder to build a virtual currency, for instance, and/or implement in-app purchases. Also note that just because some types of ads are not popular – e.g., native ads – doesn’t mean they’re not smart ways to monetize. In that case, it’s just that your app has to be the right kind of app to use them.
- A bit of a different picture emerges when we change the conversation from what’s simple and easy, to what’s most efficient … which adds effectiveness to the equation. Here you see that freemium hits the high note. For certain types of apps – for example, games with levels, difficulty, and ways of reducing that difficulty – freemium is perfect. Interstitials rank high as well … so if you’ve built a UX that transitions a user from place to place or stage to stage: that’s a perfect opportunity to insert an interstitial, which monetizes well because it’s front and center … solo on stage. Essentially, developers believe that freemium in-app purchases is the most effective method of monetization, with interstitial ads, traditional banner ads, and video ads closely following. Of course, if you’re a social network like Facebook or Twitter, or some others here tonight, native is going to rank high for you.
- Here’s another way of seeing the same data, with a ranking of monetization methods. (it’s good to be at the top of this list) After the top few, app walls and offer walls make an appearance, and a surprising affiliate/e-commerce strategy which seems to work for some product or commerce-related sites. When we dug a bit deeper on that one, we found that while purchases are rare, the amount made per purchase is significant enough to make this an interesting source of income for some app publishers. Imagine something like this from a fashion mag or community, for instance. Developers are pretty solid in their agreement, however, around the top 4, and there’s clear separation for freemium as the top method.
- It’s also interesting to see which vendors are strong in which areas. Google is mostly banner ads, with a dose of interstitials. Flurry is pretty close to evenly divided between banners, interstitials, and video ads. Chartboost is mostly about interstitials, while AdColony has been mostly about video ads. Apple’s iAd is even more heavily banner ad-focused than Google, although those banners might be more interactive than Google’s. Also, when you tease the data, you find something interesting about native ads. Native ads, which we keep hearing more and more about and seem to work very well in social media such as Twitter, Tumblr, and Facebook, are currently barely being used at all in mobile games. But. A very important but. Even though native ads is not a popular ad format for game developers, likely due to how hard it is to build native ads into your monetization strategy when gamers are playing games, not creating media, NativeX is the sixth-ranking mobile ad company in terms of monetization effectiveness. Which almost certainly means that, for those developers who actually use them, native ads are very, very effective. And finally: video ads … Digital video ads have tripled in the past five years, according to the IAB, hitting $2.8 billion in revenue in the United States alone. A lot of that is on mobile, with mobile ad revenues jumping 110 percent last year. Clearly, if you’re not generating revenue via video ads, it’s something to think long and hard about.
- We also wanted to tease out which ad formats are the least effective … the ones to stay away from.
- Here’s what developers said are the worst monetization strategies. Ironically, despite the fact that banners ads rank fourth on the list of most effective monetization strategies, developers separately indicate that banners are also the least effective monetization strategy. Contradiction? Not really. Much of the apparent contradiction can be explained by the type of mobile app and how immersive an experience it delivers. Banners are non-starters for many mobile games where screen real estate is at a premium, even though they appear to work just fine for simple games such as – yes, of course – Flappy Bird. Clearly, however, banner ads are polarizing: a lot of people feel they are great money makers and they clearly have the ability to make money at scale, if not with efficiency. But for a lot of apps they are a total waste of time and screen space. They also rank as the single most annoying monetization strategy for users – even more than interstitials and notification ads, abuse of which has resulted in Apple booting apps off the iOS app store.
- We wanted to learn about dangerous methods of monetization … ways that will potentially alienate users The ones that publishers should be the most worried about – and cautious about – when putting into your app or game. As a category, ads are undoubtedly the most annoying monetization strategies, taking six out of the top eight spots in the survey. Banner ads 34.8% Notification ads – 31.2% Surveys – 31.2% Lock screen ads – 27.5% Interstitials – 24.6% Video ads – 21.7% Subscriptions – 21% App walls – 18.8% Text ads – 18.8% Offer walls – 13.8% This is no real surprise since they typically intrude on the user experience, without notice, unwanted. And in the case of interstitials and notification ads, they may also break the user's workflow. Note, however, that native ads don’t make the annoyingness cut. Part of that is likely due to the fact that they’re not jarring … if done well they don’t break the user experience but even enhance it. Personal example: ads we’re running for VB research on Facebook … two days after start, had 200-300 likes. When you get people liking your ad, you know you’re either doing something right. Least annoying? Freemium (in-app purchases of digital goods) – 6.5% Premium (pay to download) – 8.7% Real-world rewards – 10.9% Affiliate and e-commerce links – 12.3% Offer walls – 13.8% It makes perfect sense that freemium is the least annoying: you’ve given someone a free game, which they can use as they wish, and can purchase power-ups and other game goodies if they desire. Premium forces users to ante up before they get the game, which might be annoying for some, but thereafter is a very clean user experience. (Anyone here using real-world rewards?) You could image a sports team or a fashion brand very easily creating real-world rewards for mobile engagement and perhaps viral behavior. Some NFL teams do this now. Done right – discounts at the team store – they’re both non-annoying incentives to deeper engagement, and revenue drivers.
- Here’s the Quadrant of Death for mobile monetizers …. Ads that are both annoying and ineffective This is worst of all possible worlds: your monetization efforts not only don’t work … but they also drive users away. There is clearly a relationship between effectiveness and irritation, and it’s at some level counter-intuitive. The least irritating monetization strategies are often the most effective ones. While it’s not a strong correlation, it’s clearly visible in the data and therefore significant. In addition, there’s significant overlap between the top ten least effective monetization strategies and the top ten most annoying ones. The counter-intuitive part of this is that some monetizers might thing that they need to boldly capture attention in order to drive monetizable actions. What we’re seeing, however, is that this kind of behavior almost always backfires, in the most dangerous of ways. Strategies like surveys, lock-screen ads, and notification ads clearly fall into this territory. A thought: There’s time to break every rule. All this does does not mean that game developers should never use certain types of ads prominently – Flappy Birds, after all, made its $50,000/month with simple banner ads, right at the top of your gameplay. It does mean, thought, that you should use them with caution and wisdom, and that your game or app mechanics should be built to take advantage of these dangerous monetization strategies if you want to see success. And that, in your testing, you be ready to drop things that don’t resonate with your users.
- Let’s move on to monetization companies. We wanted to know: which monetization companies make publishers more money? Which are successful? Which aren’t? And we found that the most popular monetization company among mobile developers is probably also the worst one to use.
- There are a LOT of them … just like user acquisition companies. And there’s a lot of overlap … companies that do monetization as well as user acquisition. (Some people, of course, have argued that significant chunks of money in the mobile app ecosystem are cycling around between monetization for one publisher and UA for another, and so on … Rinse and repeat ) Overall, we studied 36 of the leading companies, plus another 15 that our respondents added … the write-in vote. We saw that most developers use multiple companies … in total our respondents used about 500 different combinations of mobile companies. In other words, this is a very fragmented market.
- When we asked developers what they use, they ranked Google highest, followed by Flurry, Chartboost, Tapjoy and AdColony. And, while it’s a very fragmented market, share drops off pretty quickly. While the number two and three companies (Flurry and Chartboost) each have about 70 percent of the developer share of Google, according to our survey, after that share starts dropping rapidly. When you leave the top ten, everyone else has less than 30 percent of Google's share of developers. And although Google clearly leads, it doesn't have anywhere near the overwhelming dominance it enjoys in search, where it has something like 80% share. This is both a function of the newness of mobile monetization as a market and an opportunity for companies to exploit possible missing features in Google's mobile ad offerings.
- Here’s a better picture of where developers rank the various monetization companies. As you can see, Google’s in front, but it’s not running away with this race. In fact, its competitors are much closer on its heels than other markets Google competes in. But there’s more important data to see …
- When we’re looking at monetization we’re thinking of advertising as one of the key methods. And when we think about digital advertising we’re thinking about Google. But … The data we collected suggests that developers abandon Google once they hit 11 apps published. About three quarters (77 percent) of Google ad users have fewer than 10 games published. That’s significantly because outside of a few outliers with one massively successful app, most big publishers have many apps. Disney, for instance, has hundreds. Take a close look at Google on this chart, which is 4 columns from the left. Even if you can’t see the numbers, you can see how big the blue area is. Blue is publishers with only 1 to 5 apps. Blue is typically not good. Blue is small time. (Mostly. Most successful developers have more than 5 apps.) Which means that while Google has the largest market share of any ad company, it’s a huge amount of long, long tail. In fact, it’s the de facto monetization company of choice for less successful – and less prolific – game developers. Simply put, Google is a solution that, as publishers become more and more successful, is found less and less often.
- Another way of looking at the same data … Vungle users overwhelmingly (61 percent) have more than 10 games in play. Along the same lines, more than 50 percent of game developers who use AdColony have more than 10 games published. No other companies’ monetization solutions resound so strong with successful game developers, although each of Chartboost, iAd, and Upsight (Playhaven/Kontagent) approach 50 percent. Data like this is why when we announced this study, we called Google the “loser’s choice” in mobile monetization.
- In case you’re not quite convinced, one final way of making that point is that large game publishers with more than 50 developers very seldom use Google, as you can see in this chart, where the light and dark blues are both for publishers with only a very few developers … small fry. Two-thirds (66 percent) of the respondents using Google employ fewer than six game developers … Google seems to be a default choice for small game developers who don’t have the time or resources to investigate and try other options. The flip side is that top companies in use by big publishers who have larger teams of developers include Chartboost, AdColony, and Flurry. It makes sense: Google is virtually synonymous with ads, and if you have your hands full just building your game and running your company, you don’t have a lot of time to test multiple companies. In addition, you’re very likely to have just a few apps, making it not as simple to test variations as a developer with 20 or 40. However, small developers are cheating themselves by not using multiple monetization strategies from the top companies who are winning larger shares of ad revenue per user.
- The data shows that, to greater or lesser degrees, there are five companies besides Google and Facebook that you should be considering when you’re looking for user acquisition help: NativeX, Fiksu, Chartboost, Flurry, and AdColony Correlation isn’t causation, but what we’re seeing is that successful developers tend to pick one or more of those companies.
- Just like with user acquisition, the most successful developers try stuff. Lots of stuff.
- It is clear that the more monetization strategies you try, the richer you are There’s a clear correlation: as monthly revenue increases, so does the likelihood of using more strategies. In fact, for respondents who earn less than $1,000/month, 50 percent have just one lonely monetization strategy. But for developers earning more than $50,000 per month, only a slim eight percent rely on just one way of making money. In high earning mobile games ($100K or more per month), about 58 percent of developers use between 4-10 different monetization strategies. That’s an astonishing variety, although the most common number of strategies these superstars of mobile game revenue streams use is three. The lesson is clear: Try multiple methods to find the ones that work for you, and don’t be afraid to build several revenue streams into your games.
- It’s also clear that the more apps you publish, the more monetization methods you use In fact, only four percent of developers who have published more than 20 games are only using one mode to monetize, and only another three percent are using two modes. But 14 percent are using three, 20 percent are using four, 36 percent are using five, and a whopping 50 percent are using six to ten methods. Basically, the more apps you have published, the more monetization strategies you're likely to engage in each app, and the more likely you are to employ multiple methods across your apps. Only one outlier that we studied has a single monetization strategy but more than 20 games published. Interestingly, the “X factor” for game developer success seems to lie in the six to ten games published column. This seems to be the make it or break it point for game developers. Push past this milestone, and your odds of success increase significantly.
- When we’re doing research at VB, we’re deeply interested in what is happening. We’re much more interested, however, in using that data to predict the results of future behavior, however. We hope we’ve helped you understand a bit more about - user acquisition - app analytics - app marketing automation - app monetization I’ll happily make this presentation available to you, and not only give you the 2 reports on user acquisition and monetization, but also the reports on app analytics and mobile marketing automation. Our goal is to make you more successful by finding and publishing actionable data. Thanks for your time!