3 things about mobile revenue that app makers should know

Developers working on mobile apps have probably all felt this before – the excitement of building their app, the giddiness when it starts getting some uptake in the app stores, and then – the slowdown as less and less downloads start rolling in. Before long, the app a developer has spent months and months creating has become irrelevant.

And before developers know it, they’ve reached what Rob Woodbridge calls “the trough of absolute despair.” Based in Ottawa, Woodbridge is the founder of Untether.tv, a Web site chronicling the stories of startup founders and entrepreneurs. It features about 400 video in-depth interviews with people working in tech startups, including
Evernote COO Ken Gullicksen and Sal Khan of Khan Academy.

On Thursday, Woodbridge gave a talk at AndroidTO, a developer conference on all things related to the Android operating system. He explained what it takes to build a mobile app that will bring in revenue – and not be forgotten overnight.

Here’s a list of three things IT Business.ca pulled from his talk.

1. In the mobile app world, “freemium” is a dirty word.

While it may be hard for many startups to swallow, offering something for free and then charging users for any added services is not something users enjoy, Woodbridge said.

He recounted a story of the time he went to New York state and had wanted to quickly check his email on his smartphone. Woodbridge wanted to avoid getting hit by roaming fees, so he was happy to see a local company was offering an hour of free Wi-Fi. But there was a catch – to get in on the free Wi-Fi, first he had to download the company’s app. Then once he did that, he had to open the app – however, it was an app he was sure he was never going to use again. All it did was effectively hold him hostage, he said.

“In the app space, many developers try to limit the number of your interactions, or how much you data you can upload, or the number of filters you can put on your photos … Want data? Pay for it. Want to export? Pay me,” he said.

“If you force users … you’ve ruined that relationship. Gone is that relationship.”

And then of course, another downside is that it’s very costly for startups and small businesses to basically give away things for free until users opt to pay for it, Woodbridge added. The only way that might work is if it’s in a more niche space.

“Most apps are like $1.49, but in medical, you might get a $12 app. The freemium model in a niche space is more of an opportunity because the price can be more structured,” he said in an interview after his talk. “Apps are a sales channel, but it’s hard to get a small percentage of users to buy things.”

That isn’t to say freemium models don’t work in other spaces – for example, software as a service companies often benefit from working with a freemium model. But for apps, when the amount of revenue available depends on whether users download and use the app, freemium models are difficult at best, Woodbridge said.

2. Don’t do things the conventional way – ignore the vanity metrics.

In Woodbridge’s mind, just too many app developers spend time charting out their course based on what others have done. That’s because we focus too much on vanity metrics, like the number of downloads an app can get.
However, most mobile device users regularly use just a small fraction of the apps they’ve downloaded, he pointed out.

“It’s so hard to bring apps into people’s daily routines. You’re trying to change human behaviour, you’re trying to get them to change how they use their phones,” he said. That means developers can’t just do what everyone else is doing, since the space is so crowded.

For example, many startups feel pressured to get their app to market as soon as possible so they can start monetizing it. Conventional wisdom dictates that a product doesn’t have to be perfect – at first, it’s enough to prove the product works. But Woodbridge doesn’t believe startups should start charging money before they can build a good user experience.

Other developers might also want to put in banner ads into their mobile games. Still, entrepreneurs like Brian Wong of Kiip, a startup that rewards people for finishing tasks like workouts or for levelling up in games, have decided ads are useless. That may go against the grain and against what many marketers are doing, but that’s worked for Wong, Woodbridge said.

3. To have staying power, stick your nose to the grindstone.

At the beginning of his talk, Woodbridge told the audience an interesting fact about the mayfly – it’s an insect that lives just three days.

He also gave the example of Bruce Springsteen, an aging musician who is still rocking on and is still called “the Boss.” And he mentioned Ray Kurzweil, a futurist who is pretty much trying to live forever.

Most app developers are like mayflies, Woodbride said – they reach the stage of despair and then give up. But they should try to live beyond just three days. Try to live til the fourth day, and then after that, and then eventually become a Bruce Springsteen and someday, a Ray Kurzweil, he said.

“Don’t try to be the next Instagram – that’s done,” he said, adding that every company building apps should try to focus on building ones that people actually want. “If you can’t get people to say, I’d love that, I’d pay for that, the product is not worthy. It’s not a business.”

He added his revenue equation is simple:

Number of daily/monthly users = time spent in an app = revenue.

Build good apps that create value, said Woodbridge, and the revenue opportunities will come.

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Candice So
Candice Sohttp://www.itbusiness.ca
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

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