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APP MONETIZATION, STILL A MYSTERY ?

Praveen Alavilli@ppalavilli

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“chase your dream, money will follow”

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Still a mystery !

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History of Monetization at YouTube

• 2 Billion views a day• 3rd most visited website• Localized in 23 countries across 24

different languages• 15 The average number of minutes people

spend on the site each day• 24 Hours of video uploaded to YouTube

every minute• 45 Million home page impressions in the

U.S. every day. • 70% of YouTube traffic comes from outside

the U.S.• 100 Years of video scanned by copyright

management technology every day• 1700 Years it would take you to watch the

hundreds of millions of videos on YouTube

• Founded in February 2005• Aug 2006 - First advertising concepts launched:

Participatory Video Ads (PVA) and Brand Channels

• Sep 2006 - Underground music contest with first major advertiser: Cingular

• Aug 2007 - InVideo Ads (overlays) launched• Dec 2007 - YouTube Partner Program launched• Mar 2008 - YouTube Insight (analytics tool)

launched• Oct 2008 - Click-To-Buy e-commerce platform

launched• Nov 2008 - Promoted Videos launch• Nov 2008 - Pre-Roll ads launch• Jan 2009 - Homepage ads expanded from 1 to 7

formats (IMAGE: Homepage ad grab)• Aug 2009 - Individual Video Partnerships launch• Nov 2009 - Skippable pre-rolls test• Dec 2009 - Video Targeting launch• Mar2010 - YouTube mobile ads launched

Source: https://sites.google.com/a/pressatgoogle.com/youtube5year/

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WHAT IS MONETIZATION ?

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INDIRECT MONETIZATION

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Advertizing

• Banner ads, intrusive ads, contextual ads, target ads, interstitial ads, text ads,…

• Cost Per Impression (CPM)

• Cost Per Click (CPC)• Cost Per Action (CPA)• Cost Per Lead• Cost Per Sale

- ad network commissions

- Relies on Unique impressions

- Consumers do not - trust advertizing- want to view advertizing- need advertizing

- High supply – low demand

http://techcrunch.com/2009/03/22/why-advertising-is-failing-on-the-internet/

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Offers

• Online, Local, Shopping rewards, Surveys, in-game, etc.

• It’s really CPA/CPL/CPC• Customized/

personalized offers• Usually brings in wide

range of popular partners

- commissions- Relies on popular

partner offers- Consumers do not

- trust advertizing- want to view advertizing- need advertizing- want to stop what they

are doing

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Referrals

• Affiliates, bounties, recommendations, etc.

• CPA & CPS• Deals aggregation

- Fees vary based on item/merchant & volume

- Needs credibility- Not reselling

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DIRECT MONETIZATION

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e/m-commerce

• Selling of goods and services

• Oldest of all (since 1970s)

• Reseller platforms• Marketplaces• Social commerce• Merchandise in social

apps and games• P2P

• Better returns/commissions

• Have to deal with shipping, returns, etc.

• Merchant on-boarding

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Freemium

• Free + Premium• Popular monetization

model• Free up to certain

thresholds (usually usage) or free basic service or for non-commercial use

• Charges for additional usage or premium service

• Typically Ad supported

• Better customer acquisition

• Direct revenue • Flickr/skype/Box.net/

Vimeo/…• Free cannot be forever

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Pay as you use

• One of the popular monetization models for Cloud

• No fixed base price• Customer gets charged

only for the resources/services utlized

• Combine with Freemium

• AWS/Google App Engine

• Usually an economical option for customers

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Premium Content/Memberships

• Content available for an extra fee

• E-books, research, articles, brand, photos, video, etc.

• Typically micropayments

• Wall street journal• Forrester research• Kindle• Ooyala• LinkedIn

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Subscriptions

• Fixed/variable amount recurring payments

• Less friction• Better user experience• Popular in physical

world – TV/Telephone/Internet/Magazines/publications/etc…

• Suitable for both content and service based use cases

• Salesforce, Netflix, Apple Developer Program, etc.

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Digital Goods/Virtual Currencies

• Non-physical or digital items

• Popular in Games, Social Apps, etc.

• Virtual Gifts, in-game currency, virtual goods

• Higher conversion rates• Lower fulfillment expenses• Helps in customer

engagement, retention and acquisition

• Zynga (farmville)• Playspan• SocialGold• Facebook Credits

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Roughly 12% of Americans, or more than one in 10, have bought a virtual item at some point in the last 12 months – according to a study by analyst firm Frank N. Magid Associates

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• applying these models to their business and users - engagement is the key !• able to accept and process payments efficiently• enable consumers to be able to pay quickly, securely and easily

The Challenge for developers

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many players…

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a quick look at what Online Payment Services Provide

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GooglePayPal

Amazon

PayPalAmazon

Servi

ces

PayflowAuthorize.netCyberSourceBrainTreeWorldPay

RecurlySpreedlyChargifyZuoraFreshbooks

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Choose a Payment Provider…

Supports different payment typesProvides PCI Compliance, Fraud and Risk detection

& protectionSecure and Privacy enablingProvides flexibility to support new/non-traditional

use casesAPI vs Cookie cutter solution based on your needsProvides best user experienceEconomical

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Where do payments fit in ?

• Service Payments (rent, parking, …)

• Expense Sharing• Social Commerce • P2P / Social Payments

(group gifts, registry,…)• Healthcare• Digital Goods• Virtual Currencies• Multi-Merchant

Marketplaces

• Mobile and Device Payments (NFC)

• Games• B2B• Invoicing• Govt.• Mass Payments –

Affiliate fees• Bill Pay

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@ppalavilliwww.x.com@paypalx

Chase your dream and monetize along the way

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