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Monetizing mobile apps in Africa: What specificity? (2/2)
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Monetizing mobile apps in Africa: What specificity? (2/2)

In recent years, entrepreneurship in Africa is the digital one…It is about mobile apps. In the first article of this series (here the article), we have discussed about existing monetization models in the app economy. This last article aims at showing barriers to app monetization in Africa. We will also propose some solutions.

[Version française ici]

Barriers to  apps monetization in Africa

I only consider applications on Android phones. Actually, according to Ovum, more than 85% of the applications used throughout the world, are Android ones.

Apart from the challenge of smartphones low penetration and even though we are experiencing a high growth rate of smartphone uptake in recent years, the major obstacle to the monetization of African apps is undoubtedly the insufficiency of the available means of payment both for the app developers and end-users.

  • Apps developers: Except Nigeria and Egypt, Google Play does not offer the opportunity for apps developers in Africa to create a merchant account. In other words, unless a developer is resident in these two countries, he cannot create paid applications on the Play Store. As a result, it is impossible for an Android developer to receive money from a potential advertiser who would like to use its mobile app for advertising purposes.
  • End-users: The low penetration of credit card on the continent hampers any use of conventional international payment facilities. Thus, the African end-user without a credit card and having access to Pokémon Go[1] from Play Store will probably not be able to make an in-app purchase to unlock features of the application simply because that Play store does not offer him alternative payment methods to credit cards.
  • Cyber Fraud: There have been occurrences of cyber fraud in parts of Africa (mostly west and southern Africa) as a result many African mobile app users fear to make payments within mobile applications. Due to presence of this bias, monetization of mobile apps has been slow.

What are the solutions?

1. Mobile phones operator APIs

In Africa, mobile money is undoubtedly the most used mean of payment after cash. In 2014, the World Bank[2] estimated that only 17.9% of adults owned a credit card. This figure falls to 8.7% when it comes to users making regular purchases via Internet (e-commerce, in-app purchase, etc.). By way of comparison, mobile money in sub-Saharan Africa is 34% adult penetration, 84 million active accounts for 222.8 million registered accounts in 2015.

 

Mobile Money penetration in the world, GSMA

 

Logically, this mode of payment is an unprecedented solution for app developers who want to monetize their application. The fact that Play Store does not currently offer this mode of payment makes it somehow logical: African developers have for a long time not been very “present” not only on the app store but also in terms of users. In my opinion, this has probably justified the fact that a mode of payment as popular as mobile money is not yet integrated into Play Store.

Fortunately, African mobile operators have taken the measure of the problem and are offering APIs to facilitate payment.

  • Direct Carrier Billing API: With these APIs, it is possible to invoice the customer directly from his prepaid balance.
  • Mobile Money API: Developers have the ability to receive payments from customers via mobile money.

The flaw of these APIs, however, lies in the non-interoperability between operators’ mobile money and operator billing systems on the continent. In short, an Ivorian developer who decides to integrate one of the 2 APIs of local mobile operators will unfortunately not be able to monetize his application outside his country if he so wishes.

2. Mobile advertising, an untapped potential

About advertising, to my knowledge, it is not possible for a developer to collect ads revenue from these APIs. However, the Admob service of Google suits for mobile app advertising because it allows developers to collect their money via services like Western Union which is very popular in Africa.

Once the appropriate modes of payment have been incorporated in the apps or app stores, it is important to know how to consolidate the revenues once they start flowing in.

In-App Advertising is one of the ways to bring in revenues but this must be done the right way so as to have the best effect. As we saw earlier, from a developer perspective, advertising remains the dominant app monetization model. However, this popularity does not necessarily translate to stronger payouts. While 46% of mobile app developers do employ advertising in their monetization strategy, only 17% of them generate more than $10,000 a month from this revenue stream.

Two reasons why these ads don’t receive much attention:

  • Ads that don’t enhance the user experience: most of us will agree that unexpected pop-ups of ads completely disrupt the user of an app, dis-engaging him or her from the activity at hand and consequently making the user experience bad. It is the duty of the app developers to guide the administering of the ads to ensure they never disrupt the user experience in any way.
  • Ads that don’t add value to the user: the ads that are sent out are usually ignored. 95% of the time, these ads are ignored. The reason is that these ads are sent to app users to whom the ads don’t add value. If for example an ad about gadgets is sent to a user who uses apps to find reviews of latest gadgets, such an ad would add value to him or her.

 A best example of this in practice is the Facebook app. Despite the fact that it is free, the ads in the Facebook app are user-centric and as a result, they form a part of the user experience on the Facebook app.

Monetizing the content and audience of a mobile app is not an easy task for developers as a whole. In Africa, the task is more difficult because of the low penetration of conventional means of payment. The strong penetration of mobile phones is a huge potential to harness in order to help the new generation of digital entrepreneurs of the continent in the monetization and profitability of their business. Finally, mobile advertising needs to be properly used.

Which challenges do you encounter most frequently in monetizing your apps in Africa? How do you overcome these challenges? Let us know in comments!

*Contributor: Matthew KUKUNDAKWE

[2] World Bank Global Findex 2014

[1] Pokémon Go is a free-to-play, location-based augmented reality game developed by Niantic for iOS and Android devices

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Written by Jean Jacques Abe in 21/04/2017 / 199 Views

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