- June 28, 2017
- Posted by: Hanna Kassis
- Category: App Development
As a mobile app developer, there are multiple ways to make money on smart phones. The most popular is creating an app — a free game, utility or novelty — and earning revenue from ads and in-app purchases. Sounds easy enough, right? But how does your app ever get seen? However most app developers spend significant amounts of capital into the actual development of the game or app, but then how does it get seen? The ideal method would be revenue recycling, which allows quick internal reinvestment of revenues for growth. Before we define revenue recycling, we’d like to give a little background.
Since 2015, we’ve helped over 65 app developers (400+ apps) by accelerating digital revenue.
It’s no secret that the key to success is getting your app found (and downloaded) by the masses. Your app can be featured in an app store, written about by a popular blog, or advertised via proven marketing channels. The best proven approach to have your app seen by the masses is successfully advertising it to convert into downloads, called Paid User Acquisition (“PUA”). App developers pay to put ads for their app in front of certain audiences, across various platforms and devices, to increase downloads (acquired users).
PUA requires a capital up front, which can be sourced from bootstrapping with revenues, angel investment or personal loans.
Paid User Acquisition (“PUA”)
Paid User Acquisition, the most common approach to user acquisition, is a three-step approach in no particular order. The order depends on the creativity and experience of the app developer’s creative team. One factor is identifying the marketing channels to advertise your app through. Another factor is figuring out the audience and device you want to put your ads in front of. Lastly, creating the numerous ad copies and figuring out which ads work in front of which audiences is the most important — once you figure this out, you’re basically printing money.
Revenue Recycling: Funding Paid User Acquisition
The only issue to successful PUA campaigns is the mismatch between revenue and expenses, i.e. the timing between ad revenue or in-app revenue and funding required for PUA. Most PUA campaigns require capital up front or within 15 days, but revenue pays much later: Google Store pays in 45 days, the App Store pays in 65 days, and advertisers pay in 60-90 days. If your PUA campaigns are successful, this requires a float of at least 30 days, at worst 75+ days. Credit cards and angel investment will only get you so far. That’s where revenue recycling comes in.
Revenue recycling is a method of quickly obtaining revenue from digital marketplaces, to immediately reinvest into successful paid user acquisition campaigns.
Revenue recycling eliminates the wait associated with revenues earned from digital marketplaces and advertising. This allows app developers to “scale” by quickly reinvesting revenues into their proven and successful PUA campaigns.
The problem is that many of the content promotion platforms do not have the capital base to extend credit to app developers, or they do but they are not qualified in underwriting the risks of extending credit to advertise. That’s where OAREX comes into play.
OAREX: The Online Ad (or App) Revenue Exchange
We help app developers with revenue recycling by advancing funds against outstanding advertising invoices, or digital marketplace invoices from Google Store or the App Store. This enables app developers to “step on the gas” and exploit winning PUA campaigns and start other campaigns that they know, with great confidence, work.