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Evolution of App Stores (Part II): Putting the Brands perspective to Monetizing Apps stores

Posted in Applications and User Interfaces by Manas Ganguly on February 8, 2011

In the earlier post, i had written about the evolution of application stores. 1st Gen and 2nd Gen Apps stores were great in as far as apps in principle were concerned.But the real test of Apps stores is in the MONETIZATION bit. Millions of Apps and Billions of Downloads are great stats to convince USER ENGAGEMENT, but “it aint mean nothing” if it makes no money and Monetization is the key.

To provide an analogy, a radio station with great broadcast content and listener-ship is great from a user engagement perspective, but the station does-not make money unless there are sponsors. And then the monies can be used for better content, more broadcast rights, bettering the quality of the programmes etc. Sponsors use the radio station as another media channel to reach out to the listeners to create awareness and engage their consumers better. Majority of the listeners will not possibly not want to pay for the programmes directly, but don’t mind being part of the channel. The same applies for Apps as well.

Apps Stores Evolution

3rd and 4th Gen Apps stores

The key addition here is “sponsors”. Sponsors would use the apps as another media channel to reach to consumers and engage them more effectively. “More Effectively” reflects the ability of applications to profile its users better and thus a greater match between target audience and the sponsor message. On a very initial level, this could be ads and we all know how iAds, inmobi or Admob are able to advertise better to the consumer through ads in apps. Thats just the beginning.

Sponsors can use applications most effectively to engage with them through the awareness- inclination – decision making and purchase cyles and that will constitute Ads as a channel to engage consumers. Precision Support by engines and APIs having direct build up to context will be critical in terms of user discovery and experience.

Where’s the money honey?

Globally app stores are monetizing traffic through in-app and in-store subscriptions/payments.However, there is a larger picture that many of us are missing in terms of media capabilities of apps stores & how brands could use apps as a channel to engage consumers. Apps with their unique push capabilities and API sensitiveness can be a very efficient medium for reaching and engaging out to Brand users/consumers.

Under the constraints of consumer freetard-onomics, the answer to monetization problem lies in getting a key stakeholder who has yet not been a part of the eco-system: Brands. To me, Brands today and tomorrow will try establishing apps as a key channel to establish an engagement with consumers. This according to me will establish what i call the third evolution of Apps stores which would centre around Channel and User Centricity. Thus apps will increasingly go from just an app to enable branded life-style experiences around focussed groups of users. That to me is where Applications and Platforms will monetize.

The construct that i build hereis actually close in principle to the search legacy in Google.The difference here is that while search delivers ad-sense relevant advertising/message for monetization, Mobile App stores will have brand deliver experiences which are far more customized to the user. What would brands pay to have these experiences delivered to the user? You can start the calculations basis the broadcast media numbers

We would need APIs enabling the portfolio of services such as LBS. LAYAR, Search and Profiling engines, Shopping Carts, NFC and Analytics is more than adept at taking this Brands concept to fruition. To me this rivulet is the mother lode of monetization going forward.

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