I just completed a cool mastermind event with some amazing app entrepreneurs.
We talked about business, mobile, strategy, and opportunity. Among the hundreds of million dollar ideas, one model stuck out. It's something I have done a few times, but never really thought about. Looking back, I was sitting on a goldmine and never realized it.
I guess I still am.
What I want to do today is explain to you a simple, yet advanced strategy you can use to make money with apps.
Please note that this DOES NOT work for everything. There are some apps that work extremely well and others that do not. By the end of this article, I will show you why.
My goal here is to show you how this model works and to show you an opportunity in mobile you probably haven't thought of.
There are dozens of these creative models out there. If you're ever interested in hearing more about them, please setup a time to chat so we can discuss, and definitely checkout our Mobile App Development Guide, it's FREE!
First Things First – Frontend vs Backend
Before we get into this, you need to know the difference between frontend and backend systems. It's not too complicated and you probably already have an idea of what they are.
The frontend is the consumer facing part of your application. It's the piece that people interact with. For apps, it's the design, the functionality, the movements in the app. It's the buttons that people press, the in-app purchases they buy. Everything that the users see is in this all-encompassing bucket that is the frontend.
The backend is what happens behind the scenes. It's where data is and where information is stored. The analytics are in the backend. Email addresses are captured in the backend. The processes that are coded into apps happen in the backend.
In other words, the backend is everything that happens with an app that users never see.
The backend and frontend work together to make everything happen. Neither can exist without the other.
Next – Moving Parts and Moving Users
As you can imagine, certain apps are more complex than others.
For example, an app like Uber is 1000x more complicated than a basic casino app. Grand Theft Auto is more complex than my little racing game (shocking, I know).
As apps become more complicated, the power of the backend increases as well. Data will drive the frontend more than it would in your average runner game. You start to create individual experiences and to drive users to certain funnels within the app to cater to their behavior.
In other words, you have more control over what each person sees.
With most high level apps, the backend's goal is to drive better frontend usage. Understand the analytics, then cater to the user experience.
As apps grow, data comes in and these funnels become segmented.
Similarly, usage increases because everyone has a better app experience.
Complexity increases to drive more individual engagement. It can be expensive, but powerful.
Simply put: big apps need to feel like a small, perfectly matched app to users…and they have the power to do so.
As of now, this is the primary function of backends for apps.
The Potential Upside of the Backend
Let's face it – most apps are developed by developers. This is how early stage markets work – the innovators who get it going are often the early winners.
In other words, marketers aren't usually the first to ones to the party. They come in once the premise has been established and find ways to scale opportunity.
Because of this, a lot of the backends being built right now are highly insular. They take analytics and information about the user and re-engage directly in the app. Everything is focused on pushing people through the app in one way or another. The goal is to increase KPIs (key performance indicators) that the company and investors find relevant.
Apps feed themselves in their own little world.
But what about the world outside of an app? What about the thousands of other options developers have to monetize users? The internet, retail, etc.
It goes wildly underutilized. Why? Developers aren't marketers and don't think (nor do they usually care) about things like this. Similarly, marketers don't realize this is possible with apps nor do they have access to apps that are viable.
NOTE: THIS IS AN EXAMPLE OF A MARKET IMPERFECTION. What you just read – that's what it looks like. Opportunity that is not being utilized. The connection is not there. Millions of dollars….just sitting there. Ugh.
When I see something like this, my money radar goes off (Moneydar). It's frustrating, but it's a huge opportunity.
The backend is not just a way to manage data – it's also a platform to create a monster marketing machine.
Let's walk through a an example so that you can see exactly what I'm talking about.
How It Works – Facebook, Parse, Aweber
“Hey Carter – cool, I think I understand this. Big apps collect data, but only use that data for themselves and to re-engage app users. You're saying that they could be using that data to make additional money by marketing to them OUTSIDE of the app. Nice! How can I do this?” – Average blog reader, The Internet
Great question, average blog reader.
This is not as complicated as you think. I want to show you the easiest, cheapest and most turnkey way to do this effectively.
There are three parts to this model: gather information, store information, use information. Let's talk about each one.
Facebook allows you to use it's SDK to Oauth users when they enter your app. In English, that means it can use Facebook information in lieu of creating an email/pw account. You've probably seen this when you signed up for Tinder – a blue button that says “Login with Facebook.”
When this happens, the Facebook app you setup for your iOS or Android app collects relevant information – name, email, location, etc. The user will give you permission, then their account is created. Easy as that.
What happens to that data is the fun part.
If you don't know what Parse is, it's a cloud database storage service. That means it can store lots of data for you in a very organized and accessible way. Specifically, information just like the information you received from your latest app user that logged in with Facebook….
When the user logs in and approves the SDK usage, that data is sent over to Parse. Your developer with setup the database and the communication channel between the app so that everything is delivered in a clean manner.
That data is now living in this database, collecting usage data on the app user in real time. Yes!
Often, this is where the train stops. What I'll usually see is people taking this data and managing it exclusively for the app.
Example: I see that Rachel is a diehard user of medical apps. Once I notice this, I sent her some targeted push notifications about parts of the app she may have missed. I might also offer some free content if I know she's an avid user. This is purely based on an engagement model WITHIN the app.
This works and is often enough for apps, but there are two important assumptions:
- It's worth your while. You need to have a proven monetization strategy to be able to justify time/costs of doing this. It's actually easier and cheaper than you think, but a steep learning curve.
- There is no money to be made elsewhere.
#2 is what I want to talk about….and is possibly the biggest opportunity in mobile right now.
Which leads us to…
Aweber is an email marketing service used by thousands of people. They pioneered what is known as the auto-responder – an automated way to setup mailing campaigns. They're great for sending timed emails around specific actions. A good example is a form sign up.
Amazingly, almost no one is using this type of marketing for mobile. It's powerful, it's proven, but it's still stuck in this world of internet marketing despite it's widely available options.
Maybe it's time we change that.
You now have an app that's collecting hundreds of downloads (leads) every day. On average, you can expect 60% of them to login via Facebook and give you their information. That information goes to Parse.
Now it's time to send that information over to Aweber. Your developer will write an API call between Parse and Aweber to send information between the two.
This will build a list in Aweber that has Rachel's name, email, and any other specifics.
In Aweber, you will setup a targeted follow-up (automated) email series that speaks directly to Rachel, our medical app user. You'll introduce yourself and help extend her app experience. A
As the email series continues, you begin to introduce her to new information and products that she'll be interested in, specific to the medical fields highlighted in your app.
She clicks on the link in your email, purchases the product that she finds interesting, you get a commission for the sale….all outside of the app.
This happens for everyone that comes through your app and sets up an account with Facebook (or manual email and password). It's all automated, it's builds a targeted email list, and gives you a powerful new way to market to your audience.
The Future Of Mobile – Lead Generation?
What I just explained is a quick overview of something very powerful. It's a new way to build lists and engage users outside of apps.
If this was completely over your head, no worries! This is just an advanced marketing technique that you can come back to later.
It's important to remember that you can't just slap this onto any old app and expect to double your income – you need to have users that are interested in buying outside of the app. If you can't sell them something in the email series, it's very hard to make any money with this model.
But it also makes you think about what to build in the first place.
What's great about this model is that it gives you a very viable reason to build apps in those non-competitive, boring categories with high caliber demographics: Medical, Reference, Newsstand, Food, etc.
You'll be shocked at how fast you can ramp these up, potentially building a list of 25,000-50,000 in a matter of weeks. If you told that to an internet marketer, their jaw would drop.
This is just another example of the ocean of opportunity in mobile. If you ever want to chat about this, feel free to schedule a time.