Monetizing iOS apps — lessons learned

When we started our first iPhone app we wanted to test first hand if we could develop a product that was ready for the market. We didn’t know how to code Objective-C, not all of us had iPhones, no-one had a Mac – those were strange times. We didn’t plan for profit – we were just poking around to see if we liked it. Well, we did like it. And the app turned out good. The users liked it, we liked it, it was featured on the App Store and reached the #1 spot in Bulgaria.

After the dust settled down, we found ourselves with a free app, which was taking us several hours a week to maintain. The movie theaters were sending their listings in doc files which were very hard to parse automatically so a big part of the work had to be done manually. We developed some tools to make the process easier, but it still took a lot of time. And there were no profits. Not a single dime. We started looking around for a solution to our problem, short of shutting the whole thing down.

One option was using an ad network to serve banner ads inside the app. There were already banners in it – experimental ones – and no one seemed to disapprove (there were no anti-ad comments or reviews), so it was an easy-to-implement solution. But, judging from our past experience, profits tend to be quite low – the app was in Bulgarian and there weren’t that many advertisers willing to pay for a banner locally. That observation could be wrong, of course, as it was based on our experience with web sites, not apps. Yet it was still a logical assumption. Moreover, we didn’t like the idea that one day the ad network could just delete our account and take away our profits without having to tell us what the problem was.

The only option left was to negotiate directly with advertisers. It was a scary proposition, but we had no choice. So we tried to compile a list of “things” we could show them to win them over. Here it is:

  • 5,000 passionate users (judging from their reviews and comments)
  • ? active users
  • ? pageviews
  • 2 or 3 banner spaces (there were banners already in the app, although they were just fillers and didn’t bring any income)
  • no competition (at least on the AppStore)
  • dedicated team
  • independent (we had our own backend and API)
  • open to suggestions (we hadn’t set our minds on banner ads or anything else – we were willing to try new things)

We had a major flaw in our strategy – we didn’t really know how much users were actually using our app and how they were using it. We needed some sort of tracking. We did our research and we decided to try with Flurry – they had a friendly site, quite a lot of options and custom parameters and they even had an API, which we could use at a later time.

We integrated Flurry, but decided to add some more features to the app itself – we didn’t want to push an update with no real value to our users. We picked a bunch of users’ requests and some of our own ideas and made quite an update – it became so good that we labeled it 2.0. We were a bit skeptic about the app approval, but it did pass and it was well liked. More than 75% of our users did update (as of today), which I think is a very good percentage. The data we gathered with Flurry was useful and we were able to face the ad reps with less apprehension (though we were still quite nervous, it being our first ever pitch). We’d write about that in our next update.