Revenue model of top mobile applications
Instagram, a photo sharing app was purchased by Facebook in April 2012 for $1 billion in terms of cash and stock. With nearing 1 billion user base, Instagram has 300 million active users every day. Want to know how it makes money?
Instagram is not only a photo sharing app but also a platform for brand advertising. Most of the Instagram revenue is based on the paid advertising by the top brands Nike, General Electric and Walt Disney Co. Instagram display paid advertisements in terms of sponsored posts in between the user posts.
Advertisements are displayed either in terms of Slideshow ads or in Carousel ads. All the advertisements are based on per-click basis rather than just per-impressions.
Instagram is the amazing platform to share brands, products and dominant app for advertising.
Pinterest is one of the famous personalized media platform for sharing images, videos and other media contents in the form of pins. Pinterest revenue model is based on the Pinterest Shop and Promoted pins.
Pinterest shop is a feature in the mobile app for buying pins (media contents) by the users which they aspired to own. The next one is the promoted pins which looks similar to the user pins. Brands can promote their products as pins on their boards and can reach customers directly. Actually, users are advertising for the brands by doing repins on their boards. Pinterest do not charge brands for promoted pins.
Pinterest has over 70 million user base, in which 80% are women. Pinterest is also planning for a “buy” button on their app that allow users to buy product in the app itself, instead of going to the product website. This will allow Pinterest to charge a fee as well.
Snapchat, an image messaging service deletes photos and texts in 10 seconds after opening them. With an estimation of over $15 billion, Snapchat does not display any ads on its service. Hope you could feel the surprise, how it makes money?
Discover, a feature in Snapchat which allows media publishers to post a storytelling format of media contents. These series of media contents are available for 24 hours as public snaps and visible to the users who are following them. The top 11 publishers in Snapchat are CNN, Warner Music, Food Network, Cosmopolitan, Yahoo!, Vice, Daily Mail, National Geographic, People, Comedy Central and ESPN.
Snapchat costs around $100 cost per million views from its publishers and if a publisher decide to use space for ads, they share profit with Snapchat. And also companies and brands pay to get featured on Snapchat. It is reported that Snapchat costs around $750, 000 for a day placement from top brands.
Since Facebook purchased WhatsApp, the app generated a revenue of $1, 289, 000. Surprised! How it made money?
In some countries WhatsApp is costing $1 for downloading the app, but in other countries it is free for a year. In 2016, the founder of WhatsApp, Jan Koum announced that app will no longer charge $1 from its users for download, instead allowing the users to interact with business organizations. When its competitors like WeChat, KakaoTalk are making millions by advertising in the app and online games, WhatsApp can able to generate over $2 billion in advertising and $1 billion in subscription every year.
With more than 1 billion user base, the company’s long term goal is to make it for useful purpose. Though, the company has exponential user base, only board has the answer for making it exponential in revenue model.
Because of advancements in mobile computing, sharing economy is growing rapidly. Companies such as Airbnb, Uber are growing exponentially without selling any services or products directly.
Airbnb is a platform for connecting guests, who are looking to accommodate lodgings and the hosts who are looking for renting their residences.
Airbnb’s revenue model is based on the booking fee and service fee. If a guest book for an accommodation, Airbnb charges 6 to 12% of non-refundable fee. More expensive the reservation, less will the service fee and vice-versa. Hosts are also charged 3% fee for processing guest payments. Service fee will be adjusted for next booking or refunded when the host cancels the listing.
Depending on the international tax laws, guests are required to pay VAT for their accommodations and hosts are required to pay VAT from their accommodations.