You may or may not realize this, but some of the world's most popular apps (such as the brand-new Pokemon GO) are making millions of dollars per day.
Candy Crush, Clash of Clans, Kim Kardashian: Hollywood--these might be the apps you would expect to be making that kind of money. But there are others too.
The amount of money in apps is just outright insane. As an app marketer who has been involved behind the scenes with some of the world's biggest apps, I have seen first hand how it all works.
It is not a secret how that these apps are making their money, through a combination of in app purchases and advertising.
However, the real secret is how these apps are generating millions of users through widely unknown marketing methods.
This Is What's Possible in the App Business
One of the top dogs on the block is Supercell (the company that makes Hay Day and Clash of Clans). Supercell made $924 million profit in 2015. Yes, profit.
Ketchapp, a French app company, has made it to the top 5 on the app store week after week. In less than two years, they have amassed 70 million plus downloads for their hit game "2048."
They did all that without making any unique apps. Instead, Ketchapp takes submissions from game developers or clones existing popular apps. Case in point, their most popular app 2048 is a clone.
Most people think the gold rush of apps is over, and there's no way they can duplicate it.
But the gold rush is not over. For example: Pat Mackaronis, CEO of the rapidly growing audio-based social media app Brabble, has raised over eight million dollars to go up against Snapchat, Facebook, and Instagram.
Here's How Apps Really Get Millions of Users
While Super Bowl commercials and mainstream advertising certainly help, there are other ways to get a massive surge of app users "overnight." This completely scalable method of app marketing also allows the app publisher to control the spend and ultimately the result.
The secret is performance marketing.
Performance marketing is a way to create not only one marketing campaign but potentially dozens or hundreds of marketing campaigns, at once. Perhaps the best part is that you only pay for results (app installs) on a cost per install basis.
The campaigns are designed by performance marketing companies to get the end user to install the app. Think of it like an outsourced army of marketers working on your campaign. You can then pick and choose which ones are working and not working, and cut the fat.
There are hundreds of app marketing companies to choose from that offer this cost per install model. Even Google and Facebook are getting in on the performance marketing model to offer it as a service to app publishers.
But how do they do it?
"App marketing is all about tracking," says Alex Tsatkin, a mobile marketing veteran, entrepreneur, and speaker. "The more you track, the better you can optimize your campaigns to yield a return on your ad spend."
"The key is to track at a user level to understand which marketing channels and partners are producing users that generate revenue for your app," Tsatkin says.
Tsatkin concludes: "By understanding your Key Performance Indicators, you can cut the fat and attract users that are excited about your app and willing to spend money."
This meticulous tracking and targeting result in quality users who are invaluable to the app publishers.
App publishers should monitor user quality on their end as well, to ensure each campaign is meeting key metrics.
Get a Winning Combination, Monetize and Scale Up
Although getting millions of users is debatably the real secret of building a successful app business, monetization is clearly important too. Paid apps have the advantage of well, being paid.
Free apps, however, use a combination of in-app purchases and advertising. If the user quality is really high from the performance marketing campaign, it makes monetization relatively easy.
If you are spending two dollars per app install and making four dollars or more per user, who wouldn't scale up?
The App Craze is Just Warming Up
Pokemon GO is the most recent example of how this all works.
Pokemon GO tapped into the performance marketing industry to generate many thousands of installs. Subsequently, they picked up mainstream news and social media coverage, a viral surge of organic installs, and massive revenue.
You can get a piece of it too.
"The sky is the limit on where apps will go over the years ahead," says Mackaronis, Brabble CEO. "There is enough room for a lot of players in the app publishing business. As long as people want to stay connected with their network and have fun, social media apps and games will continue to grow."