Lessons Learned in Monetization

Earlier this week, at the excellent MobileBeat conference, I moderated the “Lessons Learned in Monetization” panel – thank you Matthaus.

Before jumping into the summary, quick plug, I did a guest post last week for Venturebeat on “How Can Phone Makers Differnetiate in Mobile 2.0 World” – let me know your feedback.

Ok, onto the panel, we had a fantastic group, Steven Goh from Mig33, Lee Linden from Tapjoy, Juggs Ravalia from SPB Software, Sam Altman from Loopt and Chris Phenner from Thumbplay.

Covered a bunch of topics, here is my brief summary in order:

Sam mentioned that Loopt early-on (and maybe even now?) is selling data bundles with prepaid operators (eg Boost Mobile). Interesting concept, in that prepaid operators need to incentive data packs whereas post-paid operators want you to take the unlimited data pack and then of course not use it!

  • General consensus amongst the group was that prepaid content or virtual goods cards sold in retail was not worth the investment. Note Zynga recently announced virtual goods cards in 7-11 stores for Farmville.
  • Lee (and the larger group) felt that the future would be some combination of free or premium apps with in-app purchases (eg virtual goods) as opposed to a subscription model which has been mostly unavailable and maybe even traditional advertising since the dollars are so small although the rumblings are that iAd is incredibly profitable, if you can get it.
  • Not surprisingly, general consensus amongst the panelists and the audience was that regardless of the app, you need to test multiple price-points for any in-app purchases or virtual goods and offer items at all price-points to catpure each kinds of user.
  • Steve made an interesting comment about the general commoditzation of operators in emerging markets do to dual-SIM phones. I hadn’t thought of this previously but it makes absolute sense and validates the forthcoming switch in business model that I detailed in Item #11 in my previous VB article. FYI, if you are not familiar with dual-SIM phones, there is an explanation here.
  • At this stage, the audience started (and quickly ended) a debate about open versus closed gardens. As I saw at the Uplinq conference a few weeks ago, there are some developers that prefer the closed garden model as opposed to the democratized app store. Of course, most of these developers were inside the garden previously and had that key carrier relationship.
  • Sam made an interesting analogy; CPC (cost per click) is for the web but CPC on mobile is CPV (cost per visit) given the location capability of the device. This isn’t the first time I’ve heard of this concept and I know some of the check-in and AR (augmented reality) companies like Layar have been exploring new ad units and click-thru concepts.
  • Juggs mentioned that SPB has looked at ad-supported models and other mobile 2.0 type billing methods but still believe and has data to show that it’s existing premium application and B2B business to OEMs and operators are a much more sigifnicant revenue line. Juggs also mentioned that he doesn’t believe his audience would react favorably to mobile advertising and that he has no plans to try mobile advertising (as a publisher).
  • I asked Chris with Thumbplay questions about the crazy PSMS return rates. If you are not aware, as mentioned in this post, ATT was seeing upwards of a 25% return rate on PSMS campaigns – insane! Chris called the activities “criminal” and blamed much of the problems to affilites who game; this doesn’t surprise me considering the amount of PPC (pay-per-click) arbitrage that exists.
  • Not clear from my notes but I asked Steve about the roll of psychology in gifting. Mig33 allows for gifting within the social network; Steve validated that gifting has been exploding on his service. As an FYI, CyWorld based in Korea, has seen half the country buy a virtual goods gift.
  • Lee talked about incentivized downloads, also known as PPD (pay-per-download). PPD is absolutely continuing to grow and IMO, as shared with many others, PPD is what made in-app advertising more lucrative since ads could finally be measuered (eg direct response), since they led to a digital ecommerce transaction.
  • Speaking to Chris on the buy-side of advertising, Chris mentioned that they perform 10s of advertising tests within 48 hours as part of their on-going optimizations of keywords, ad units, metrics and so forth. Chris mentioned he’s heard of some advertisers doing upwards of 1000s of tests in short sprints – talk about multi-variate testing!
  • On the topic of PSMS versus credit cards, I believe it was an audience member who said in trying both, that he never received a single sale via credit card due to the huge drop off at the credit card entry page. Andy from Billing Revolution quickly responded with some incredible stats demonstrating the success of credit card entry when the workflow is streamlined.
  • Sam, not surprisingly, talked about the use of location to create location history to then draw behaviorial data to offer more targeted advertising. Loopt refers to this as the LifeGraph.
  • On the topic of offers, an audience participant from OfferMobi mentioned they have tested some mobile offers and that there has been some success but there is still not enough data on OfferPal or TrialPay type offers to draw any conclusions.

Those were my brief notes; to all the panel participants, if I’m missing or misstating any data, feel free to comment below.

Author: mobileraj


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