Making Money the Mobile Way

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By: Tim Sohn

Making Money the Mobile Way

No matter where you go, people are constantly using their smartphones and tablets. They’re texting friends, reading emails, checking and responding to social media updates, taking selfies and browsing the Internet. And yes, they’re even reading, watching and listening to the news on mobile devices.

That’s not news. The point, though, is that newspaper publishers don’t have a choice anymore if they want their businesses to survive. They must provide the news and other products and services—in mobile-friendly formats. A critical piece of the puzzle for publishers is figuring out what strategies to use to monetize their mobile apps.

Mobile App or Responsive Site?

John Clark, executive director of the Reese News Lab at the University of North Carolina at Chapel Hill, said that, at a minimum, all publishers should have “responsively designed” websites. Responsive design (bit.ly/1tGuXXw) is the optimization of the layout of a website for each screen size so it provides the best user experience.

“The cool part about it with the responsive piece is it’s an app that’s already on your devices,” Clark said. “I mean, everybody has a browser on their device. You don’t have to worry about downloading another app. You just have to know, you’re going to XYZ.com, or whatever it is. At its very core, the idea of having a responsive site for mobile is… I almost think you’d be foolish if you didn’t [have it].”

The reality is more and more publishers are joining the mobile app bandwagon—deploying apps for iOS, Android, Kindle, and other platforms—and fighting for space on readers’ devices.

Headlines or Utility?

Clark isn’t a huge fan of apps that just provide headlines. He prefers practical ones that provide some sort of utility, such as the Redeye mobile apps (trib.in/UvDnof) for iPhone and Android.

The Redeye app provides real-time train and bus tracker times; you can call a taxi right through the app. It also lets you look for restaurants and bars near your location or stop. In addition, Missed Connections allows you to post a message about your would-be crush that you saw on the commute.

The app does provide top news, but that’s only one feature.

“It would be awesome if you could get a finder’s fee on that [every taxi call],” Clark said. “Every time somebody makes a call, it’s 20 cents. How do you integrate those sorts of things where you are actually helping the taxi company and the user?”
These are the kinds of strategies publishers should be considering, he said.

mCommerce & Geolocation

Mobile Commerce, or mCommerce, is one way that publishers can monetize their apps.

However, according to Nikhil Modi, founder of Whiz Technologies, which recently created all mobile apps (iOS, Android, Kindle Fire) for the E.W. Scripps Co., owner of 13 newspapers and 13 television stations, he’s not seeing much interest from mCommerce with publishers.

Whiz Technologies, based in San Jose, Calif., also is providing its mobile publishing platform and monetization engine to Scripps.

On the other hand, Al E. Azoulay, co-founder and CEO of Rumble, a mobile management platform company based in Tel Aviv, said that he expects geolocation and mCommerce to really explode.

“Geolocation is a huge thing. It’s extremely important. It should be leveraged very well, especially when you talk about newspapers which are in local markets. Newspapers have a very good relationship with the local SMBs,” he said.
He explained that The Denver Post has a good relationship with an SMB there, and now, when somebody passes by the store that has the mobile app installed, they receive an offer through the app.

In terms of mCommerce, he said Amazon will pay publishers seven percent commission on books that are sold through their apps.

“mCommerce and geolocation are the biggest potential for mobile,” Azoulay said. “Obviously you have to make sure that the UX in how you deliver it is not foreign for the experience. You can use geolocation as a supplement to the display ad revenues.”

Other Monetization Strategies

According to Modi, its mobile publishing platform supports several monetization strategies: download the app for a one-time fee, pay meters and paywalls, and advertising (banner, interstitial, native and pre-roll video ads).

He finds downloading for a one-time fee the least compelling for publishers.

“To me, that’s the least interesting monetization, particularly for a publisher, because you may have 10,000 users, you may have 20,000 users, 50,000, but you charge a one-time fee, and then what? Your newsroom doesn’t work with a one-time fee. You have monthly salaries,” Modi said.

However, some publishers are using this strategy or some variation on it.

Dallas Morning News’ SportsDayHS app (bit.ly/1rPiAIz) provides readers access to stories for high school games and gives them access, as well as weekly rankings, and chats with journalists and fans. The newspaper charges $1.99 to download the app, and sponsors pay approximately $700,000 annually.

Adam Symson, senior vice president and chief digital officer of Scripps, said in a statement: “After a rigorous vendor selection process last year, we selected Whiz to deliver us a customized mobile solution, and it has become a key building block of our mobile strategy and vision.”

Modi explained that most of the publishers he works with use paywalls, as opposed to pay meters. Few have pay meters, which let people read a specified number of articles for free, then the subscription screen pops up. He noted that consumers can get around this by deleting the app and re-downloading it.

“Every group tends to have different strategies in terms of what is going to work for them and in their geography with their demographics and their user base,” he said.

Paywalls vs. Pay Meters

Paywalls on mobile are becoming increasingly popular.

For example, The New York Times released in April NYT Now, an iPhone app that presents top stories from the Times, article summaries, a morning briefing and curated stories from across the web.

The Times would not tell E&P if the app is making any money, but based on information from the Times’ website and trying out the app, the newspaper is using a two-pronged approach to mobile monetization: paywall and ads.

The cost for access to all content in the app is $8 per month. Subscribers also can access NYT Now stories on NYTimes.com. The Times’ digital subscriptions cost $15 to $35 a month.

The Times also sells native ads, called Paid Posts, in the NYT Now app.

Modi said that many publishers are signing on with pre-roll video ads.

Video

According to a recent report from eMarketer, mobile video advertising is expected to quadruple from $1.44 billion this year to $5.44 billion in 2018 (bit.ly/1pfkJfr).

The study also says that this year mobile video advertising is expected to make up about 25 percent of total online video ads, while in 2018 mobile video ads could make up more than 44 percent of the total online video advertising market.

This is big.

Additionally, according to eMarketer, the number of people who watch video on smartphones is expected to spike from 89 million in 2014 to 125.4 million in five years. Viewership on tablets is also expected to rise—from 113.4 million to 149 million.

Rick Edmonds, media business analyst for The Poynter Institute, said pre-roll video ads are a good solution for media behemoths like the New York Times and The Wall Street Journal, but smaller papers “don’t have as deep a talent pool to produce good ones, and they may be wooing a pool of local advertisers who don’t have the building blocks for a good pre-roll at hand that national advertisers do.”

Edmonds added that using video content from services like the AP can help to an extent, but it doesn’t provide local video.
Azoulay said data should be key to publishers’ mobile strategies.

“There should be a complete backend system that can support every piece of your operation, that is totally based on data and allows you as a publisher to have very clear visibility and control of this app to put in the hands of your audience,” Azoulay said.

He added that Rumble analyzes data and has layers of algorithms. It can predict users’ household income, among other metrics.
“We use that data to empower our publishers basically to better understand how the mobile product is performing against the user profile,” said Azoulay.

Publishers can then create mobile products for specific groups of readers based on that data—for example age, gender, which part of the mobile app do they use first, and more.

Azoulay said publishers need several things when they launch monetization strategies on mobile apps, including technology integration, and a mobile publishing platform that provides data (Rumble captures 35 data points for every impression—from gender to age to location to time to what part of the app the user entered first).

He also said publishers should have a platform that provides flexibility for monetization—they should be able to see how the ads perform and be able to easily make changes based on that data.

Additionally, Azoulay mentioned that the user experience is also important.

“It’s important to be very sensitive about how the UX is combined with the entire product,” he said, to provide the best user experience.

He added that publishers have many options to try out when it comes to mobile monetization, including advertising (banner, rich media, video, interstitial—this is when the user sees an ad after so many swipes), programmatic and native ads, content syndication, and mCommerce and geolocation, as mentioned above. He also noted that native (in-stream) ads are very popular right now among publishers.

Strategies for Smartphones, Tablets

Behaviors of smartphone and tablet users are changing. This is according to a study by Media Technology Monitor mentioned in a blog post by The International News Media Association (bit.ly/1jRkTKG).

A portion of the INMA blog post reads: “If a news organization can create a daily audience that spends 30 minutes a day or more reading content inside a controlled environment, then suddenly an argument to charge premium rates begins to emerge. Perhaps that premium rate might just have some staying power, unlike what is being experienced at most Web sites.”
According to the MTM study, 50 percent of tablet users check out the news regularly from their devices.

However, the INMA blog post points out: “… the smartphone has deeper penetration in virtually all markets globally. It’s been reported that more people have a smartphone than have a toothbrush. Also, the smartphone is accessed on average more than 100 times a day and is truly a personal device. As such, it should be an ideal place to develop the next successful news business model.”

Clark said it makes sense that people spend more time on their tablets.

“People are engaging with their tablets much like they would a book or a paper,” he said. “You’re willing to give it more time. I did a quick poll here—you can see it. People are willing to engage with it a little bit more. That’s the difference between a mobile device—it’s quick, it’s a time killer. It might be a 20-minute time killer, but it’s still a time killer. The tablet, for whatever reason, seems like more of an intimate device, where you’re willing to do a little more with it.”

Clark said that because people have different behaviors using different devices, there should be different monetization strategies, based on “what the user’s doing at that time.”

“You look at newspapers—we put up ads in a newspaper. Then, the Internet comes along, and, great, we put up ads on the Internet. So, the mobile comes along, and we put up ads on the sites. We’re not taking advantage—it’s not necessarily the device or the platform. We’re not taking advantage of the state of mind of the user that’s engaging with that content,” he said, adding that more traditional advertising strategies may work better on a tablet.

He said native advertising works especially well on phones, but value is especially important when considering monetization strategies.

Clark mentioned the Weather Channel app. He finds that app particularly useful because it provides a utility—it only provides the weather.

He added that there is talk of the Weather Channel getting into the health and workout business.

“That’s brilliant to me. They have weather, and that has total impact on someone that’s going to go out and jog. By virtue of giving people a sort of utility to help them out with that, they can then get in front of them with the weather,” he said.

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