Category Archives: advertising

Top App Monetisation Tactics

Last night we held our 2nd event for Mobile Marketing Meetup. We had 30 people attend (and 40 people register). We grew from the 15 that came to the first meetup. That’s 100% month on month growth! Regardless of the numbers, its really great to find other people working in the mobile space and equally passionate about mobile.

Top app monetisation tactics 

Marc Fine, head of marketing at InMobi gave a talk on “Top app monetisation tactics“. Its based on a webinar that inmobi did recently and the full presentation is here. I thought it was quite good to see what the leaders in this space are doing – Walmart, Zynga, etc.. The presentation was very relevant to me since I’ve been knee deep in metrics all week.My key takeaways are summarised below.

1. What is the value of your customer?

The formula is cost of acquisition < LTV. It might cost you $80 to get a customer but they could be worth $300 via in-app-purchases + ads, then the cost is worth it. The key is understanding the total value of that customer worth.

2. What are the key drivers for your business?

He spoke about metrics such as DAU (daily active users), MAU (monthly active users), ARPU, conversion rates, stickiness. These are the key drivers for Zynga who watch these numbers like a hawk. When they acquired Draw Something, it had DAU of 25 million. The problem was retention of those users which has since dropped to 8 million.

3. Segment your users

A more sophisticated way to do this is to segment your users by identifying patterns of behaviour and use rules to present them offers/ads/incentives.

Examples could be:

  • Segmenting your users in China and giving them a Chinese welcome message after 5 opens
  • US users may give you more of a viral uplift. So after they spend 300 hours, incentivise virality.
  • Identifying hardcore users and treating them like your VIP’s and giving them more things to buy

Its about understanding the consumer behaviour and adapting the experience for them. This is where the web was moving towards when I was working at Next Digital. In the last few years, I’ve been hearing more about personalisation, real time, dynamic content, and click streams. We see it already with companies like Amazon, who understand your behaviour and what similar people do. They “chase” you through the website and with followup offers.

3. ARM cycle – Acquisition, Retention and Monetisation.

Its understanding the cycle of that customer. How you get them in the door, how to keep them coming back and how to make money from them. It make sense but its hard to do.

I spoke to Dan and Joe from rushfaster.com.au and they said its a similar principle to what they do for their eCommerce business. Understanding how the customer churns through the cycle and the throughput. I’ve also come across Dave McClure’s AARRR metrics presentation again and it has a similar idea – Acquisition, Activation, Retention, Referral and Revenue.

AARRR metrics

What game companies are doing

I also spoke to Matt Farnell from Appsperse, a mobile ad analytics company based in the Valley a few weeks ago.  They’re currently working with Super Cell on “Clash of The Clans” which is estimated to be doing $700k per day in revenue. He told me that game companies will test out their game in a small Western market, optimise it and then start pumping money into it to advertise it. After it gets high in the app charts from paid advertising, then scale back advertising as the organic downloads come through.

For these techniques to be really interesting, you generally need to have millions of impressions/users to understand the data and create all these rules. At Zynga they have data analysts, customer acquisition teams and tons of data to use. However, Matt believes that startups can replicate some of these techniques that larger game companies are using and use some of the same tools as well.

Bonus – Buzzy.io demo

We had a bonus demo from Mike Gardiner of Buzzy.io. Buzzy is a multi-player, multi-screen game platform. It turns your mobile device into a game controller and you can play it on another screen, against other people. You have to watch the demo to fully appreciate how it works. They’re currently looking for game developers to build games on their platform. It can be used at music festivals, cafes, outdoor events, pubs.

Future

We will take a break over Christmas. We’re looking at holding the next event at the end of January and will most likely talk about “mobile metrics”. I’d like to have a case study with some in-depth analysis as a follow on to this talk. If you know of anyone that may be a good speaker particularly from a startup perspective, please get in touch with me via the contact section of my website.

I’m out like single player games,

Matt Ho

How to get PR for mobile apps

Building an app is half the battle. The other missing piece of the puzzle is distribution and marketing.

So we decided to organise a mobile marketing meetup with some startups in this space to discuss these issues. It was inspired by this discussion on From Little Things. We decided the first meetup would cover the topic of “How to get PR for mobile apps”. You can check out our event here on eventbrite.

For our first meetup, we had a pretty good turnout with 15 people. The crowd was mainly comprised of app developers, product managers for apps, app marketers, and people with web apps looking to go mobile. It was scheduled to go for 1 hour, but it ended up being 2.5 hours. People just wanted to talk about mobile!

There was actually a lot of self-taught marketing experience in the room – people with some of the top apps in the Australian charts. So I’ve written a summary of some of the key learnings from the meetup. Its mostly about PR, and then we started covering other topics organically.

1. A targeted approach to each journalist

How you approach a journalist is important. Alison from ChillWithMe said that sending targeted emails with specific information for each journalist was critical. Networking with people at the SXSW conference before they launched and letting them be the first to know about it. That’s how they were able to get into PandoDaily.

2. Develop a knowledge base of relevant industry articles

Daniel from Parking Made Easy kept a spreadsheet of articles about his industry with notes on each article. He did this prior to launching his website. When he was ready to launch, he then personalised the email using the notes about the articles.

Media Scrum

When everyone wants to talk to you

3. Contact regional media

Chris from Buuna shared that contacting smaller regional papers was a great way to get writeups. They have more time available and may be easier to get in touch with them. Dain Hedgepeth also mentioned that local newspapers are interested in the “local boy done proud” angle as well.

4. A journalist will write about a group of apps 

It is unlikely that a journalist in a major publication will write an article that will only cover your app. I have previously spoken to Will Glasgow from BRW who suggested that journalists prefer to group similar types of apps together and write about segments. So its critical to understand what industry that reporter covers and if they have reviewed similar apps in the past. You can also reach out to them and introduce yourself if you have a similar app.

This recent article about taxi industry is an example – its about the industry and not one particular app. Personally, I have found positive responses from journalists if they write about our industry (language learning) and I’ll introduce our app to them as a follow on to that article and suggest that I can provide an industry point of view or about mobile apps.

5. Have a press kit available

This was something that I shared. We’ve had over 50 articles written about Native Tongue, and we make it easy for the journalists to find all the assets that they need from our press kit. Michael Fox from 22Michaels blogged that they missed a PR opportunity with MX when they didn’t have images of their products available. Check out the press kit for Shoes Of Prey – I used this for inspiration.

Ben Hamey of Bonobo Labs previously suggested you should have the following available in your media pack: app screenshots, app icon, pictures of people using the app in an everyday setting, FAQ, and press release. You also don’t have to panic to get these assets to them in time and miss potential opportunities. The media kit for Zilla App by Bonobo Labs is pretty impressive.

6. PR for your target audience

I’ve started becoming a big believer of “blog to your audience”, a concept I picked up from Mark Suster. I think the same applies for “getting PR to your audience”. Many people in the room agreed that most PR had a limited effect on downloads. There might be a spike but it wasn’t sustaining and started to taper off as the article became less recent. Sometimes that much hyped spike never came. In the group’s experience, those users that signed up from major news articles also weren’t as sticky (i.e. they didn’t keep coming back). I believe its because they weren’t the target audience for the product.

One of the biggest download days for our app Mandarin Madness came from an education article written in the South China Morning Post, Hong Kong’s largest English print newspaper. It appeared in the education section and was written by an author that covers education and technology. This result made sense given that parents living in Hong Kong would read it, download it and love our app. It was our target audience.

7. Virality

Yose from Jormy Games had a simple, yet fun iphone app which involves replicating the reaction of shaking a softdrink bottle and having it fizz up and burst. It was one of the early apps on iPhone and topped the charts. At its peak, it was doing 70,000 free downloads a day. He believes it went viral when kids started uploading videos onto Youtube of them shaking their iphones and playing the app.

8. Partnerships

ScribblePics has a white label app to turn your photos into postcards. They  were able to get partnerships with QANTAS, Jetstar, Perisher, and Contiki Tours. How did they do it? Well Peter Bradd simply got on the phone and called them up. A direct sales approach worked. A few people in the room also had examples of how partnerships benefited them to get more distribution.

There are only some of the tips and experiences that were shared. If you want to know more, you’ll just have to come to the next meetup!

Its on Monday, 3 December, 2012 and the main topic is “mobile advertising”. RSVP here.

I’m out like kids shaking Coke bottles,

Matt Ho.

Is Spotify Profitable?

I just wrote an answer on the profitability of the music subscription model on Silicon Beach. I used Spotify as my example, cause that’s the one I’m familiar with and most high profile. Here is my full answer in case you are not a member of Silicon Beach.

————————

Many organisations are banking on the paid subscription model – from music, news, movies etc..whether its the answer is another question.

Clay Shirky understands this better than most people. He explains the paid content model, comparing music subscription vs news subscription model here:

http://www.shirky.com/weblog/2009/03/why-itunes-is-not-a-workable-mod…

I have also been thinking about the music subscription model today. Apple has a whole ecosystem supporting the music experience. People will pay for this convenience and experience.

In terms of music, lets use Spotify as an example since they are most likely to extract value from the rest of the value chain. Is Spotify profitable?

Spotify has 10million users. News articles suggest they have approx 650,000 paying subscribers (~ 1 in 20 paying).

http://eu.techcrunch.com/2010/09/15/spotify-10-million/
http://gigaom.com/2010/11/22/spotify-2010-revenues/

MUSIC REVENUES

90% of users pay $10 Euros/month = $120 Euros yearly
10% of users pay $5 Euros/month = $60 Euros yearly

On a revenue basis, Spotify generated $74m Euros last year on music  subscriptions alone.

ADVERTISING + “VALUE CHAIN” REVENUES

Gigaom reckons that Spotify made $58m in advertising. I take this with a pound of salt cause I don’t see how this could be true. My estimates below are based on the low side.

I project the following revenue streams:

– Advertising (PPC): 10m users x 1% of users click on ads x $0.02 x
365 days = $730k/year

– Ticket sales: $5 commission x 10m users x 1% purchasing yearly =
$500k/year. Using the average Posse commission prices.

– Merchandise: $20 tshirt x 10% commission x 10m users x 1% purchasing
yearly = $200k/year

That’s roughly $76m in revenue.

COSTS

The only cost that’s public is music royalties at $30m. That leaves $46m on table.

I wouldn’t think the operating cost of a lean startup business would be any more than 40% of remaining revenues (assuming 20 staff, low overheads). Opex = $46m x40% = $18m.

Total profit is = 76m – 30m – 18m = $28m profit.

So in short, their music subscription model is profitable.

I’m sure they’ll have other revenue streams from deals with mobile companies. I think that’s where the real value is for Spotify – the mobile apps. People will subscribe to this. They probably need to get it to 10% – 20% of paying users (currently at 5%). Their push into the US is more likely to build a barrier to competition cause it will prevent other people from moving in.

I’m out like Myspace,

Matt Ho.

Air Force 1’s

This is a cool upcoming doco about Air Force 1’s, probably the most famous sneaker out there, along with Chuck Taylors, Jordans, Nike Air Max and Tigers!

I must admit I have a pair of Cloverdale Park 25th Anniversary Edition Air Force 1’s. They are actually a bit tight, making them a bit uncomfortable and they are kinda heavy. But that’s more a sizing issue as they only had limited sizes when I bought them at the Nike Factory.

There’s a lot of documentaries about Nike Air Force 1. This particular documentary is part of WBF (World Basketball Festival) in New York which is sponsored by Nike. This looks like an awesome 4 days of celebrating the best sport in the world (MMA/UFC is second).

Nike also created this series of online docos called 1Love, which highlights the 5 boroughs in New York (Brooklyn, Queens, Staten Island, Bronx, Manhattan). They also have a video for Harlem, but I don’t think Harlem is a borough, and there’s no video for Manhattan. But enjoy nonetheless!

If you want to check more video’s look here:

Air Force 1, Part 1
Air Force 1, part 2
Top 100 Air Force 1 (Prolly my most favourite video, especially part 2)

The cost of free

The internet has fundamentally altered the business models of many industries.

One of these is the content industry. We have seen recently that the Readers Digest filed for bankruptcy. News Ltd posted a $300m loss in the last financial year.

The World Wide Web can give you almost unparalled access to any kind of information that you want. Its changing the way that we read the news and how much we pay for it. If I can access information anywhere, will I be prepared to pay for it? Will users be prepared to pay for it? And how can publishers and content producers make money from it? How does this affect online services?

At the same time, it is also altering our view of online services.

I’ve just started reading Chris Anderson’s “Free” book which has inspired me to write this as well as the current debate around this topic. The problem is that everyone now expects everything to be free. Chris Anderson’s discusses this briefly, on the divide between the older generation (30+) who are skeptical about anything offered for free, and the younger than 30 (gen x & gen Y) who have grown up in this free era.

free-chris-anderson1

Free online services but at what cost?

We get email services for free – gmail, hotmail, yahoo, et al. And these are all really good email services. There’s almost an unlimited capacity of email storage now. Gmail offers 7GB storge for free (Seven! that’s right). Sidenote: You can actually upgrade to 10GB – 400GB for $20 – $400 USD.  Except the cost of free email is advertising. And most people are willing to put up with it.

Free wifi is available in many cafes, particularly in Starbucks in the US – but there is an expectation that you will buy a Starbucks coffee in exchange for the price of free internet access. Its really an economic cross subsidy. Give me one service in exchange for paying for another, which allows the provider to make a profit margin. Free internet means you will stay longer in the cafe, sipping more cups of coffee whilst browsing the internet.

Many internet services like Huddle.net, Yammer and countless others more offer you a good service for free. They try to entice you by giving you a basic version and hoping that a percentage of users will upgrade to the paid version (when the 80/20 rule kicks in). It forces these kind of companies to be innovative and their competitors as well. Because if I’m not using their service, I could easily jump onto their competitor’s service. 20% of the paid/enterprise customers are subsidising the 80% free customers.

This is the same thinking behind the next release of Microsoft’s office 2010. They’ll give you a web version for free, most likely stripped down. Because if your not using this, your going to be using Google docs which is free.

I use Huddle, a project management software and it gives you a certain amount of capacity for free. It’s quite convenient, and I am seriously considering paying for it to use in my church for project management. I just need to investigate how it would work with many users, etc… I would consider this, because I have used the free service and seen how useful it can be.

The CEO of Box.net, which offers a similar collaboration/storage solution, said this gem of a quote:

“Free is not a business model. It is a distribution and marketing tactic”.

I agree with this 100%. You cannot last in a business environment (especially in a harsh GFC climate like now) without thinking about how you will eventually monetize your business. Free can only last for so long. Really its for marketing purposes, to allow users to sample your services and provide stickiness. If your service isn’t good enough, I’m just going to go somewhere else. So it keeps these online service providers on their toes.

With Google, they provide such superior search services (bing who?), it keeps drawing you back. They surround the organic search results with paid advertising in the form of search engine marketing on the right hand side. And I am perfectly cool with this, as are many other people. It’s done in a way that is unobtrusive and occassionally offers relevant paid results. Not that I have ever clicked on them, but someone must. Right?

free-cover

I remember hearing one of the google maps engineers who was asked why does Google provide the google maps API? It’s really comes down to advertising. The more you use google services, the more advertising you are exposed to. However is the cost of free……… advertising? In relation to Google services, yes. Because Google typically starts its services with free and needs a way to monetise its services. It’s really a advertising/media company which also has a side business selling enterprise apps =)

You can provide a free service, but there needs to be something else which is making money. Anderson uses the example of King Gillete who gave razors away but made money through the sale of blades. Wow you with one hand, take your money with the other.

Its the same example for VCR’s/Playstations/Computers, etc… Subsidise the sale of hardware, so you’ll buy the software. Its the software / videos/DVD’s which have a higher profit margin and you’ll consume more of once you have the hardware.

I actually think that they could offer the iphone for almost free or heavily subsidised. And make the money back through apps. I know there’s a group of people out there that refuse to pay for apps. But there’s enough people (a minority) that will pay, and scaled over the millions that own iphones, its enough to generate significant revenues for Apple and the developers that create those apps.

So what’s the deal with online news content?

If I want the latest news, I can jump onto news.com.au and read any of the articles. If they build a paywall around it, I’ll just go to New York Times. I’m really only one click away. Or more likely, I’ll just search in google and end up reading an article from Google news, which is the king of all aggregators. They suck in content, strip it down and spit it out.

You can’t simply just aggregate content. Because you’ll just be re-aggregated by someone bigger or some other new service. It’s a continual battle. You need to produce original content which draws people in and they want to share.

The news industry is very different to many other industries because of its dynamics which focus on content, editorial standards, readership/subscription model, rapid distribution of news, classified advertising, etc…

I spoke about it with David Meerman Scott about it briefly this morning and he had some thoughts around creating customised content based on the user’s preference. I think this idea is worth exploring. As I’ve stated before, the business model of the  news industry needs to change. The question is – to what? What will people pay for?

You can’t just give stuff away for free. Their is a cost involved. You need a cross subsidy or some way to generate income back in return – whether through advertising ala google, or a freemium model.

But give me the news that I WANT, on demand and I might pay for that. I see BBC news and also news.com.au moving to this model. They allow you to rearrange the content based on what I want to read. Allow me to select my preferences. Perhaps they can build some intelligence around my behaviour. Understand what I like to read, what is sticky to me, what engages me, what I share with my friends. What conversations I am having on facebook, twitter, etc… about your news article.

Feed that loop back in. Know that I am interested in sports, particularly basketball & football. Hip hop music, international affairs, quirky news articles, etc… Make sure these kind of articles rise to the top. Create me an igoogle type portal or a popurl interface.

popurl

I would consider paying for this type of service. Would I consider paying on a ala carte basis per article? No. I would pay a monthly fee and consume as much as I could. If it works for Pay TV, this could work for news as well. Even though there is free to air tv, people pay for premium tv services that offer a greater variety of shows, and latest movies. Give me somethign superior to what is free, and I believe users will pay. It works for huddle, yammer and other online services. Why can’t it work in the news industry (despite its different dynamics)?

I don’t believe that the news industry should solely rely on advertising to monetise content despite the advances of advertising technology. Consumers are sick of pop-up ads, pop-unders, take over ads, pre-roll ads, banners. That stuff doesn’t work anymore.

If you know me, I’m a big fan of Mark Cuban’s blog, and he’s also got some ideas around this which are worth reading.

I’m out like free content,

Matt aka Inspiredworlds

Seth Godin on the tribes we lead

A few weeks ago I went to TEDxSydney. One of the videos we watched was the one above from Seth Godin. It’s quite good. Its about how change no longer comes from mass marketing, cheaper labour & faster machines, but rather tribes. Tribes can be used to start movement and connect people.

Very inspiring video. There’s more here. I’ve been watching them all night. There’s lot of really cool videos on music, design, technology. Other diverse topics include health, education, etc.. It’s more about innovative ideas. 

I’m out like tribes,

Matt

Beware the Witch of Man

On Monday night, about 300 people gathered for the inaugural launch of the social media club in Sydney. The event was held at the Polo & Supper Club in Oxford St and the event was well attended by the masses. By the masses I’m referring to marketing people, the digerati, the twitterati, PR people, etc…or whatever you want to call them. The key note speakers were the fake Stephen Conroy aka Leslie Nassar (love your work!) and Adam Ferrier of Naked Communications. The MC for the night was Tim Burrowes, editor of Mumbrella.  The topic for the night was “authenticity & transparency in social media” – one of those airy fairy marketing topics. 

At 6.30pm when I arrived, the place was pumping. They had two levels booked out, and the bottom level where the main arena was, was absolutely packed. Standing room only! (Well bars are made for standing room).

Man with the $349 jacket

Adam Ferrier went first and spoke about their infamous “girl in the jacket campaign”. This campaign was created for Witchery to launch their mens range and they had a budget of zero (emphasis) and wanted to generate a lot of buzz. So they created a fictious story where girl sees boy in cafe she fancies, boy leaves jacket, girl wants to find boy. Girl then goes to the enormous length of posting a video on youtube. The story then got amplified as the main stream press picked it up and they showed that Sunrise breakfast program, newspapers, etc… Their intention was to get the brand noticed and get people talking about Witchery Man. Check it:

 

As of now, 212,100 views in youtube. Pretty impressive for a budget of zero. I’ve watched the video for the first time, and although I have the benefit of hindsight, I would have been highly skeptical of it at the time. The way that she goes to great lengths to describe the jacket and how the “perfect guy” would be wearing it. In fact its not a bad jacket. Subliminal advertising must work on the weak.

Then the press started asking who is this girl, is this a marketing campaign, who is behind this? They eventually got outed. Naked & Witchery came clean and posted a video response saying yes it was us. I’ve only seen the videos now (after the talk) so here it in all its glory:

Man, I cringed when I saw this. It could have been executed a lot better and definently with more class – the way that Heidi turns it into a ad for the jacket. In fact, the only time I cringed even more in the last 24 hrs was when I heard Adam Ferrier’s response as to whether Naked was arrogant.

Its all about generating conversations

It seemed that for most of the night Adam was defending Naked’s actions. He even had stats to back himself up. But at the end of the day, I think he was convincing and I agree with Tim Burrowes comments on Mumbrella that he did help to sway the crowd onto his side.

Honestly, I don’t have a problem with this tactic of creating a false story or building a mysterious story to get customers engaged and talking about a brand. Brands do it all the time. It’s what we do as marketers. Can Jordan really fly? (Wait, there is doubt?), are pure blondes really made from pristine rivers? Brands make up stories and fantasies all the time to get customers talking and excited. All they want to do is generate buzz. If that’s the objective, then Naked slam dunked it.

Was the public misled about Girl in the Jacket. I have no doubt they were. Was their a line that was crossed? Yes – only when they made that cringeworthy followup video. If Naked did not do the followup video like that, I think it would have been a great campaign. Consumers are smarter than what we give them credit for.

Was it groundbreaking? Of course not. In fact some guy in the audience asked “Did the Witchery Man campaign helped increase the popularty of social media?” – dude are you kidding me? They posted a youtube video about a fake story and it got picked up by the press. It’s not as if they created Twitter. When the story was being told, I immediately thought of the real life campaign of NY girl of my dreams, the cybersearch by one NYC man for an aussie girl he met on the subway. I came across this when I was travelling in the States, and I had actually thought about it when I started reading about this campaign and the connection became even more clearer last night. 

I agree with Adam’s insight that social media is a communication channel. It could be more than that, but at the end of the day that’s primarily what it is. Yes it is democratizing media (see Ashton Kutcher). However, it does make it a lot harder for brands and marketers to do something similar now because people think they got screwed over.

It nots really Stephen Conroy?

I love Leslie’s work as the fake stephen conroy. Dude is funny but a walking PR disaster. He didn’t have a lot to say on the night and Tim was trying to involve him as much as possible by asking him questions as well. But he definently had a couple of good insights – that not everything created by companies on social media is great. Everyone does go nuts when they see a brand do something on social media. 

If you want to see more of the Witchery Man campaign check the video from the night.

I’m out like the man in the jacket, 

Matt