App Monetization Strategies for TVE & Media
Back in February, a House of Cards episode featured Frank Underwood playing a game called Monument Valley on his tablet. The effect of the feature was almost immediate, with the app jumping significantly in major app stores.
But what if there was more to it? What if there was an option for viewers to download the game immediately? Or what if at the end of the show, there was a link to download from the App Store and Google Play?
The Monument Valley example got us thinking about app monetization strategies, specifically for TV Everywhere (mobile, tablets, media players, and Smart TV). In an era where the app ecosystem is so robust and audiences so active, advertising and monetization strategies need to be anything but normal.
Common Monetization Models
Even though media companies have embraced mobile, monetization strategies for mobile media apps have – for the most part – lacked imagination.
There are two major app monetization strategies currently used: advertising based and over-the-top. For the former, almost all advertisements are in video form – the same format they’ve been for decades, just on a different medium. The latter, OTT, is a monetization strategy in itself, with the direct pay model circumventing the need for advertising.
But there is opportunity to do much, much more. These mobile advertising and app monetization strategies can help TVE services break open new sources of revenue.
Adding Basic Interactivity
Video ads are still an important source of ad revenue, particularly in TV Everywhere mobile applications. But even the most basic video ads can be ramped up to take advantage of the technological capabilities that the medium offers. The TV Everywhere applications we made for a major media client, for example, added basic interactivity to traditional video ads on the app. With a single click, users could invoke the web browser and navigate to the websites of the advertisers. And this is just scratching the surface – the capabilities to completely transform advertising models are there, we just need to get imaginative.
Beyond Video Ads
While it’s difficult to envision ads that go beyond traditional video spots – especially for apps that serve video content – the fact of the matter remains that on mobile apps you have an audience of users, not just viewers. They have the ability to interact, rather than just watch.
With Smart TVs and media streaming players, you can serve ads that are much more interactive. Nexus, for example, has a controller that can be purchased, and Roku’s remote can be used for playing games. Also, platforms like Apple TV support slideshows and other rich media that open up advertising possibilities.
Some companies have opted to offer games in place of traditional spots. But ads can also take the form of slideshows, quizzes, and other experiences where the ad is not just a push message, but an immersive interactive experience. Users can control what is happening on the screen and how they interact with content with their mobile devices or controllers. These ads can also be directly related to the content being consumed, which allows advertisers to reach an audience targeted based on viewing behavior and activity within the app.
For media companies looking to attract advertisers, these could be offered as sponsored features, like the clip sharing function we implemented for one of our media clients’ TV Everywhere app, though there are other opportunities as well.
In-App Purchases Integrated With Content
Though not an entirely new concept, we think in-app purchases that are integrated into content are still in their infancy. The major challenge to this isn’t necessarily technological but has to do with user experience. Do users even want this option? Is there a way to include it without negatively affecting user experience? We believe the answer is yes.
Let’s borrow from the Amazon Dash concept. With the click of a button, you can order products, and payments are handled via your Amazon Payments account. A similar concept can be applied to media apps with almost no interruption to the viewing experience. If a song is playing in the content, for example, users could have the option to download the song by hitting a “Download Now” button, with the purchase happening in the background while the content continues to play. There could also be an option to include a list at the end of the content that allows users to easily purchase products, soundtracks, etc. that were seen or heard in the content.
Mixed Model Monetization
As discussed above, we typically see two distinct app monetization strategies in the media space: OTT and advertising-based. But the two don’t have to be mutually exclusive. A hybrid model is not only possible but feasible. In fact, the concept has been proven (albeit for a music app) with Spotify, which offers both a free and a premium service. The free service contains ads, while the premium service is ad-free.
This is a viable app monetization strategy for media applications, and with the number of freemium products available on the market, it’s surprising this isn’t more common. It’s also a simple model: users who don’t want to see ads pay for the service, while those who don’t want to pay are served advertisements. This allows for companies to offer content directly to users via OTT, and additionally to collect advertising revenue.
Most TVE apps tend to follow predictable advertising formats and monetization models. However, advancements in technology coupled with shifting viewing patterns present new opportunities. Rethinking app monetization strategies – from advertising methods to the business model itself – will help media companies building applications to have a more robust, revenue-driven solution, without interrupting the user experience.
