Given the problems most mobile app developers have getting their apps noticed in the App stores, it’s no wonder that they are trying to figure out other ways to monetize than advertising. More likely than not, they’re considering a form of m-commerce. Even Snapchat, which certainly has a large enough user base to draw the big advertisers, is experimenting with charging people to re-play a snap.
Much of mobile advertising up to now has been display-based download advertising — trying to get a user to download a specific app. With this formula for monetization through advertising, the more popular apps would help the newbies get found, and the newbies would be a revenue stream for the big boys. But now, because of a shift from apps with lots of features to “thin” apps, combined with limited screen real estate, there’s just not much room for mobile advertising, and it isn’t working particularly well. If my futurist friends are correct, apps will continue to be thin for a while, driven by smart watches and Apple’s new tvOS, which doesn’t download an app to the set top box until it is needed.
The need to find alternative means of making money is why most of the chat apps already make it possible for you to send someone money, make a VOIP call, order food, or get customer service from a merchant right inside the app. Apps like WeChat and Facebook Messenger are already about taking transaction fees from commerce streams. And this despite the fact that Facebook turns out to be the company that has done the best at figuring out mobile: 78% of its ad revenues came from mobile this year, and its revenues are up.
The big companies are at different stages in figuring this out. Foursquare and Facebook split their apps last year, and are now re-inflating their new offerings with more tightly integrated features. Amazon, however, is a little behind this power curve: today alone I had to download Amazon Prime Now to get 1-hour deliver, and another app, Amazon video, to stream the pilot episode of a TV show.
It’s difficult to see how brands are going to capitalize on this new app strategy, unless they’re Facebook, Google, Amazon or TenCent.
Fortunately, most of this doom and gloom for mobile applies only to display. Video ads, inserted in stream, are still highly effective and well-tolerated. In fact, apps that are not video services will have to adopt formats like our inArticle, whose usage grows exponentially month over month, just to stay in the ball game.