Investing In Mobile Monetization

Includes: AAPL, FB, GOOG, WWTH, Z
by: Emerging Growth

The mobile apps market is offering developers more options than ever to maximize their profits. Monetization is gaining traction as a viable option for companies to position their apps within the market and offer consumers the opportunity to garner financial rewards by using those apps. The best monetization programs translate the consumer's social time into a brand premium, reaching a return on investment up to four times as high as the return on investment on a television commercial. While mobile applications are one of today's fastest-growing digital sectors, many developers are still continuing to struggle with finding monetary success for their work. The companies that develop and market mobile apps are members of a fiercely competitive niche. There are disparate platforms to consider, various business models to test, issues with gaining visibility, and a whole host of other challenges that come with the territory. As a result, limited public investment opportunities exist in the mobile monetization arena. However, there are a few companies that launch an app, which yields a high return on investment and are successful across multiple platforms, but few developers have made a smooth conversion from Android to iOS or vice versa. The select few that have crossed over successfully have dealt with numerous hurdles in their quest for bulk distribution and effective monetization.

Success can be difficult to measure and most investors would agree that the key is to consider revenue models. The fact that Google (NASDAQ: GOOG) now rakes in $8 billion annually in ad dollars suggests mobile monetization is working just fine. Google's mobile run rate was $2.5 billion a year ago, including Google Play. What a difference a year makes. Clearly Google enjoys what amounts to a monopoly in mobile search with its position in Android distribution. The rest of the companies in this sector seem almost resigned to hashing it out in mobile display and in-app monetization. This appears to be a much smaller market comprised primarily of endemic categories and recycled venture money chasing install numbers. What makes mobile interesting is that there are players that can move the market such as Apple (NASDAQ: AAPL), Google, and Facebook (NASDAQ: FB). Each has an agenda and each has shifted the market with relatively small moves. Bear in mind that there are smaller companies that have had success in this market and are also worth a look if you are interested in adding mobile monetization to your portfolio.

Real estate tech company Trulia (NYSE: TRLA) went public in September of 2012. The company is a leading search engine for real estate and was an early player in the iOS space. Consumers use their apps to look at real estate, which means many of them are out driving and looking at homes on the outside while using their app to look at the homes on the inside. The company monetizes through advertising connected with its mobile app. Trulia's monetization of mobile services launched in May 2012; it is monetizing its mobile products at a substantially higher rate than web products. Mobile now accounts for 20 percent of the company's overall user traffic. Trulia has a market cap 0f $927 million and has leveraged its IPO to $30 based mainly on its successful monetization platform.

Another small-cap monetization expert is MEDL Mobile Holdings Inc. (MEDL.OB). It is an interesting company that has a finger in almost every aspect of the mobile app sector. The company's focus is on monetizing apps through four revenue generating platforms; the development of customized apps for third parties; the incubation of mobile apps from a library of more than 80,000 original app concept submissions; the sale of advertising and sponsorship opportunities directly to companies and via mobile advertising; and the attainment of apps from other developers. Recently the company released a new app called Hang w/. It is a virtual social media platform that allows users to hang out with each other and celebrities through live video feeds. And, probably one of the best options with this app is that you can get paid by having followers who want to hang out with you. Hang w/ generates revenue in several ways; through advertisements, product placement, and channel sponsorship. There are two ads in each broadcast; a pre-roll video and post roll clickable advertisement. MEDL has a market cap that has grown in the past two months from just at $9 million to over $16 million and is at an optimal entry point as the company catches strong tailwinds from the emerging monetization market.

Whether your inclination is to invest in larger companies such as Google and Facebook , or opt for the emerging companies in this space such as TRLA or MEDL, mobile monetization is a growing sector that is a viable investment option. As always research any company that you are interested in before investing.

Disclosure: I am long FB, MEDL.OB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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