3 App Monetization Strategies: How To Diversify App Revenues?
Real Live Case of German Media App
Almost two years ago we started our first project with meinestadt.de. Soon after releasing an MVP of the app the management needed to decide on the future of this app. Is it worth investing in? What would be the ROI? When will we reach break even?
That’s where we came in: we calculated our growth hacking impact on this app using the existing business model. The numbers did not add up. Using the old business model — even after the whole arsenal of our growth hacking strategies — this app would not have become profitable.
Then we took an alternative approach. What if we could suggest not just a growth hacking support, but also a business model change. In fact, what if we could use several monetization strategies, and not just one. We calculated again. And the business case was sound.
The App received funding. And we started our growth hacking effort.
What follows — is the result and some insights we learned along the way.
Monetization Strategy 1: Native Advertising
The Native Advertising Strategy is something all of us have seen in such apps as Facebook or Instagram. The key in this kind of advertisement is its targeting. The user gets profiled while using other apps, or surfing the web on her smartphone. When she comes into our app her demographical data and her interests graph is used by the app. And the user sees the most relevant ad set for her. The app gets compensated for every 1000 ad impressions — the model called CPM (or TKP in German).
We created the whole new product feature — a city newsfeed — just to support this monetization strategy.
In meinestadt.de App this model was implemented using Google DoubleClick for Publishers. We were very happy to have received the CPM prices that were 20% over the original plan.
Monetization Strategy 2: Cooperations
The cooperation model — or partnership model — is based on integrating partner’s products into the app. It is a performance-based model, meaning that we receive the revenue when we generate a lead for our partners. This could be a booking of the new flight, a registration on the dating platform or an inquiry by the local real estate agency.
meinestadt.de App has an increasing number of partners. In this article we are going to cover two of them: a real estate platform and a dating platform.
The screens of the App we reserved for the partners were met with astonishing interest by our users. The visit rate was 9 times better than we planned. Putting the principle of “building on our strength” to work we focused on those two partner integrations in our next sprint.
For the real estate integration we designed and developed enhanced search and filter features. Since the use case of searching for flats often requires several people involved in the process, we also integrated a share with your friends feature. The German real estate market is booming. It’s really hard to find a good flat and when you do — you often are too late to contact the agency. We faced this problem with our push notification feature. When the new real estate matching the search criteria appears — the user gets a push notification and an email.
For the dating integration we redesigned the interface from scratch. A/B testing our design with the previous one has shown the significant growth of conversion rate on our design. Which led to integration of this design not only into the app — but also in the main web platform of meinestadt.de.
Monetization Strategy 3: Direct Sale
Direct Sales monetization is based on the work of the advertising team of meinestadt.de. The team offers exclusive products on different platforms of meinestadt.de to the advertising partners. One of this products is geo-fence push-notification campaign we developed together with the advertising team.
This is how it works.
The user of the meinestadt.de App is passing by McDonalds and gets a push notification. This notification is informing him about a new cheeseburger offer that is on sale right now.
The advertising team had broaden their platform portfolio with a new application, which enjoys the growing numbers of page impressions and retention rates. But more importantly, this is the app that is offering an innovative advertising product.
The geo-fence notification feature was very well received by such big players on the German market as Mercedes-Benz, McDonalds, Höhle der Löwen.
The push-notification campaigns are being actively shown in over 11.000 cities in Germany.
At the very beginning of this project, we could not have predicted which monetization strategy would be the silver bullet. There were just too many variables: a new product, a changing market and a very special audience of this app.
That is why we decided to design our KPIs with possible fluctuations in mind. We put forward several monetization strategies, not just one. That helped us hedge the risks and gave us the freedom of innovation.
Want to learn more about the product development path? Take a look at this case.
The author of the article — Dmitry Provotorov, the COO and Product Manager in a mobile development company, with 10 years of experience in e-commerce marketing.