In this first series of 2 articles, we will discuss the obstacles to the monetization of mobile applications in Africa at a time when many countries on the continent are experiencing a digital shift.
In recent years, entrepreneurship in Africa has been dominated by digital technology. Entrepreneurial initiatives in the digital space are numerous and focused on promising sectors in Africa such as agriculture, livestock, health, renewable energies, finance and the environment. Generally, these initiatives are focused on the development of mobile applications to solve problems related to the above-mentioned themes. According to the firm Partech Ventures, 2016 saw a 40% increase in the number of start-ups on the continent
However, the major challenge of the tech-entrepreneurial adventure is undoubtedly the viability of the business model: how to make money from mobile applications? Although monetization models already exist, they are not easily transferable to the African context. What are the challenges of monetizing African mobile apps? What solutions should be considered? This is a brief overview.
An overview of existing monetization strategies
There are two strategies to monetize a mobile app:
- Making the end user pay for the service provided by the application
- Charging an advertiser who wants to advertise to the users of the application.
However, there are variants to these 2 models: the case of app sponsoring where an advertiser pays the developper for monopoly of visibility, or an institution invests in the application to be available for free.
Making the end user pay
2 ways are usually used to make the end user pay. The easiest way is to charge the download of the application (paid download) or rather the subscription (in-app purchase) to the service (Netflix for instance). The second is the freemium model. It consists in making certain features of the application payable after the user benefits from free features.
Charging an advertiser
An advertiser is usually a brand that wants to take advantage of the audience generated by the application in order to reach a target. Charging an advertiser is about integrating advertisements to our mobile app for a financial counterpart. Many use cases exist to incorporate advertising into mobile applications. I have listed 4:
- Virtual currency: Mobile gaming apps such as Candy Crush, Subway surfers or Clash of Titans usually offer to view a video (or an image) of an advertiser in order to collect virtual pieces; these pieces are going to be used to unlock levels of the game.
- Interstitial ad: This type of advertising appears, for example, when moving from one level to another in a mobile game or just before entering a desired window of the application. It usually lasts a few seconds and is clickable.
- Native ad: It is ideal for apps whose contents are in the form of information feeds. The “sponsored” posts of Facebook or Twitter are obvious examples.
4. The advertising banner: it is a traditional and the simplest method of advertising on mobile, sometimes with the disadvantage of reducing the area available for display.
Join me very soon to discuss about barriers to app monetization in Africa and how to overcome these problems; in the next article.