The most intriguing story I heard last week was that Apple has made somewhere between $20 million and $45 million in revenue from the 1 billion iPhone apps that have been downloaded from its store to date. In blog posts and Tweets about this estimate, the most common reaction was “That’s all they’ve made?” Since most apps are free, and Apple gets only a 30 percent cut of any revenue from paid-for apps, this seems like relative nickels in the grand scheme of things.
But one @reply from my Twitter feed, Rob Saker, had a great point that’s been sticking with me:
“I’d love [$20 million] with no inventory, spoilage, and few promotional costs… They may have found the Holy Grail of marketing, promotion that in itself generates revenue.”
To paraphrase Rob, Apple’s true take from the app store is much higher considering that these apps are the best marketing possible for the pricey iPhones and revenue cut from AT&T service (30 million of which are now in the market). The ulitmate test of Marketing with Meaning is when people actually pay for your marketing. And I believe marketers must set this as a new goal and revenue source for the work they do.
iPhone apps offer the perfect way for companies to create marketing that in some ways pays for itself. Kraft’s very successful and slick iFood app is probably the best-known example. At the iMedia conference in March, the brand owner of the program, Ed Kaczmarek, said that Kraft chose to charge $.99 for the tool because they felt it was valuable, and putting a price on it actually helped communicate that value to consumers. That’s right-charging for the marketing made it even more valuable and meaningful. The result: iFood hit its three-year download goal in a matter of weeks.
At Bridge Worldwide, we’re developing a few iPhone app ideas, and my strong guidance to clients is to charge at least $.99 for them. Not only do I believe this adds to the value impression, but business managers start to get excited when new revenue comes in. Even if it doesn’t add a lot to the bottom line, the money that comes from selling apps can be directed toward further development and marketing of the app, which, in turn, can drive greater app quality and total downloads.
Another related and exciting piece of news last week was that Amazon has opened up a beta program to allow bloggers to get paid for people who subscribe to their blogs via the Kindle. Subscriptions are priced up to $1.99 per month, and the blogger gets 30 percent of the revenue. Of course, this is small beans right now, as there are likely not even 1 million Kindles on the market yet. But, again, we’re starting to see a model in which people are willing and able to spend a little for blog content. And blog content is almost always considered “marketing.”
In a recent post on his blog, John Gerzema makes a great point about consumer mentality of micropayments:
“The luxury of micropayment pricing is that a consumer can instantly make a low-risk value judgment. Limiting risk allows for product experimentation leading to little failures or successes and the consequent expansion of brand loyalty.”
It’s still too early to make this claim across the board, but I believe most iPhone and Kindle owners do not blink at being asked to spend less than a buck on impulse for a useful service. Frankly, I find it hard to believe that killer apps such as Facebook and Pandora for iPhone do not even charge a penny for their services. Both lack a viable business model today, and it’s so easy and cheap to make a buck through the app store. But I was also disappointed to see that Nationwide doesn’t charge for its very cool Car Accident Toolkit app, and Bloomberg—a company that charges thousands of dollars for its proprietary information and terminals—is giving its milk away for free as well. The industry actually needs these big players to start charging for apps in order to set the bar. Let’s not lose this opportunity to convince people that free is not the standard!
I’m very excited to see where brands play in the world of charging for their content. I’m so excited that I just signed up for the Kindle blog program, and invite those of you who are Kindle owners to subscribe to Marketing with Meaning now. I promise that every dollar that comes will be put right back into making this blog bigger and better. In fact, I will send a free Tide Loads of Hope T-shirt to the first person who subscribes and emails me the receipt!



As much as I like getting stuff for free, I agree that companies could be making money right now through micropayments. I’ve often bought $3-$10 apps for my phone or computer. If I’m using them, and I want the full feature set, its cheap enough. Some businesses may have a great model of reach over money. But I do agree with Bob here, that companies should take another look at the emerging micropayment market.