Nowadays, there are more and more applications that use the hybrid model of IAA and IAP to monetize, so which model is more suitable for your own application monetization?
At the end of 2023, WPS suddenly announced that the domestic personal version will completely shut down third-party commercial advertising. This move did not make any waves in the noisy Internet market, but it was enough to arouse the alarm of advertising industry practitioners - developers are gradually moving away from advertising monetization, and in today's highly developed Internet industry, IAA is also showing more and more limitations - users are not friendly, relying on more traffic, and low monetization autonomy and other problems always exist. At present, there are fewer and fewer developers and applications that only monetize through the IAA model, and more and more applications that use the mixed model of IAA and IAP to monetize, so should they use the IAA or IAP model to monetize, how to monetize the same application, and what are the problems of the hybrid monetization model?
IAA, the full name of In-App Advertising, in-app advertising monetization, refers to a form of revenue that developers obtain through in-app advertising, and the corresponding IAP, full name is In-App Purchase, in-app purchase, which refers to a form of revenue that developers earn by charging users within the app. These two models + hybrid model are common models for developer app monetization in the market. Both have their advantages and disadvantages:
In many cases, the advantages and disadvantages of IAA and IAP are completely reversed. It can also be seen from the comparison table that the IAA model is more suitable for developers to quickly obtain users and income in the startup stage to reduce the risk of starting a business, while the IAP model is more suitable for the situation that when the application develops to a certain stage, has a certain user group, and can provide users with better content or services.
In this way, it seems that WPS should cancel the IAA model. After all, as an office service with a history of 35 years and more than 300 million users, its revenue from personal and business subscriptions accounts for more than 3.6 billion, accounting for more than 80% of all revenue, while Internet advertising revenue is only 288 million, accounting for only 6%. In the context of the AI era, it is logical for WPS to pursue brand improvement and increase subscription services to abandon advertising revenue.
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So here is a new question, why QQ, WeChat, Douyin these apps are still free for users so far, especially Douyin, advertising revenue has risen in recent years, as if it has become a cash cow for bytes.
This is closely related to the properties of the product itself. In the comparison table between IAA and IAP, IAA has a disadvantage in that it is highly dependent on traffic. From the perspective of ad monetization, the traffic is 10000000... The previous 1, advertising commercial products racked their brains to do countless strategies, but they can't match the reality of "adding some advertising inventory". In practice, traffic is not a specific number, but a concept that integrates a series of factors such as users, pages, visit duration, and ad filling. In simple terms, ad inventory = PV*Adload. (Note: PV here is not PV in the traditional sense)
Back to the specific APP, or take Douyin as an example, the form of Douyin draw video stream makes the user's use time very long, and at the same time, the user constantly slides the video stream, which can bring a huge number of pv, even if the adload is very low, there can also be a large amount of ad inventory.
From here, we can see the natural advantages of short videos compared with long videos in terms of ad monetization: short videos with an average duration of 1 minute are compared with long videos with an average duration of 20 minutes, even if users use them for the same time, short videos can still bring 20 times the PV, and with the same Adload, the ad inventory of short videos is 20 times that of long videos.
This is why Aiyouteng finally returned to the route of mainly relying on user payment for monetization, and did not hesitate to increase prices many times - the ceiling for the realization of long video ads is naturally much lower, and it cannot support the high content cost of long video PGC. The natural and better advertising monetization ability of short videos can help Douyin quickly obtain revenue, and at the same time, use advertising revenue to subsidize users and content creators, encourage creators to continue to create content, and motivate users to stay in Douyin, and the increase in user usage time has further increased Douyin's advertising revenue.
To sum up, we can see that applications with large traffic are more suitable for the IAA model, with more PV and more user usage time, even if it is just a large number of users, they can be monetized through IAA, and all kinds of leaders are naturally short videos. Others, such as novels, information, etc., are also available, so that many tool APPs embedded in the scene are also short videos, novels, and information.
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Back to WPS, the number of users of WPS is very large, the number of combined users in 23 years exceeds 300 million, and the user usage time as an office application will definitely not be low, so why is the advertising revenue of WPS not high, and the IAA model will not work.
Here's a concept to be introduced. There are two types of applications on the market: kill-time and save-time. Kill-time apps are those that consume the user's time, mainly in the entertainment and gaming sectors. Users use these apps mainly to relax and kill time, typically short videos and novels. The second is save-time applications, which help users improve efficiency and save time, such as office application WPS. The impact of these two types of in-app advertising on the user experience is completely different.
What the ad needs to do is to attract the user's attention, and with the user's attention, there will be a series of conversion processes. In the kill-time app, the user's spirit is relaxed, and the attention is scattered, in this case, the greater the chance that the ad will get the user's attention, the better the conversion effect. Conversely, in save-time applications, the user needs to complete some work or obtain some key information in these applications, and the user's mind and attention are concentrated.
If an ad appears in the app and grabs the user's attention, it is contrary to the user's original intention of using the app, and the impact on the user experience in this case is much greater than the impact on the user watching the ad in the kill-time app.
As a more realistic example, users who receive an advertising flyer while lounging on the side of the road tend not to be disgusted, but instead watch the flyer, and are likely to convert it into a transaction. However, if a door-to-door salesperson comes to the office to hand out advertising flyers, the user will most likely call the security guard to drive the salesperson away. Therefore, as a save-time application, it is difficult for WPS to make money through advertising, but it will greatly lose its brand reputation.
In other words, the IAA monetization of utility apps is actually a false proposition, as a result of the IAA model of save-time utility apps, either the user experience is extremely poor, or the monetization efficiency is low. The IAA tools that have been popular in the past period of time are more of a package of tool apps, and the monetization kernel still relies on online earning or other embedded change scenes.
Some developers will say that it is difficult for this generation of users to know how to fight, and they are very good at it, and they like to prostitute for nothing. It's like the wronged leaders in Europe and the United States in the Middle East, and the money is very cheating. I had no choice but to add some advertising to make a living. This brings us back to square one. Whether it's IAA or IAP, the choice ultimately depends on the user: whether your main users have the ability to pay, and whether they have developed the habit of paying. If users don't have the ability or habit to pay, such as users in lower-tier markets, or some economically underdeveloped areas overseas, then IAA is the monetization method you have to choose - "the people are too poor to squeeze oil and water", but developers always have to eat, right? Another situation is that although users have the ability and habit of paying, the value you give to users cannot be recognized by users and reach the threshold of payment, which is very complicated, involving consumer psychology and so on, but in short, if the application cannot improve the user's willingness to pay, even if the user has the ability or habit to pay, the result is ultimately in the air, and it is difficult to monetize through IAP.
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Finally, to summarize what types of applications the IAA mode and IAP mode are suitable for, developers can bring their own applications into it to see if IAA or IAP is more suitable for them.
Of course, in actual operation, many applications are faced with complex situations, such as whether the application is a start-up application or a mature application, for example, the traffic of the application is not too much to say less, for example, there are always some users with strong payment ability and habits, so you can't generalize, black and white to choose IAA or IAP, in the next article I will talk about how IAA and IAP can develop together in complex applications to get better income.
This article was originally published by @rorain on Everyone is a Product Manager. Reproduction without permission is prohibited
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