Sramana Mitra: In your user base, how does that behavior split in those three categories? People who are legitimate free riders, people who are willing to look at advertisements, and people who are actually buying stuff.
Steve Wadsworth: It depends on many things. It depends on the publisher and how they implement the advertising proposition. At a very high level, in aggregate, maybe 4% to 5% of that user base ever purchases anything. Usually, for majority of them, it’s once. On the ad side of it, that side is growing as more and more publishers realize that the pure in-app models is not fully valuing what they’ve created. It’s increasing but I’d say 5% to 10% of people in our user base are engaging inadvertising. The reason that it’s not higher is our model does not force ads in front of a user, it lets the user choose to engage in the ad and opt in to the whole model.
In quite a bit of our implementation, the user could go to the in-app purchase store and purchase something or they could choose to engage in advertising. We are extending our model across more ads and we have a broad range of ad types now. Again, in the core model, the user is choosing. This advertiser will sponsor. We will surface that proactively to the user. The user then chooses, “Do I want to do that or not?” There are publishers who are thinking outside of our current user base because we’re very focused on that model of we don’t want to be spamming the user. We’re going to be part of the value proposition the user opts into. We’re certainly expanding the visibility of that to the user base through different ad types. But there are publishers who will just put all sorts of ads and therefore, a high percentage of their users will see ads. We just don’t think that those ads are very effective.
Sramana Mitra: In your worldview, you’re probably monetizing somewhere between 15% to 20% of the user base in a meaningful way.
Steve Wadsworth: Yes, and growing.
Sramana Mitra: From your customer’s point of view, what is the best way to handle the other 85% – 90% of users who are the free riders?
Steve Wadsworth: That’s where the analytics component of what we do comes in, because mobile analytics and 5Rocks is all about looking at the user base and putting them into different segments or categories based on their behavior, and determining where we believe this user will fall in the spectrum of value. Are they going to be a never-spend-a-penny type or are they going to be, what’s referred to as a, a whale in the freemium model where they’re going to buy a lot of things?