LAST UPDATE 12.01.2011
Financial planning and developing ad sales projections is a dry and boring topic, but no one would deny that it’s also a core aspect of building a successful business. Because app developers and entrepreneurs tend to be a busy bunch, (we know this because we’re an organization of entrepreneurs ourselves) we put together a complete Economic Toolkit for App Developers in Excel, which is free for you to download here.
The model takes you through step-by-step, with instructions on how to:
- Calculate your eCPM on a monthly basis and adjust it based on number of impressions served, fill rate, click-through-rate, and CPC.
- Develop a basic 12 month sales projection and calculate your yearly earnings from advertising.
- Determine how much of your monthly budget you should spend on advertising to promote your app.
- Understand what impact advertising will have on your earnings, when compounded over 12 months.
If you have questions or feedback on this Economic Toolkit send an email to firstname.lastname@example.org.
The data that is included in our economic model is a conservative estimate based on the Android advertising market in the U.S., for long tail apps. Fill rates and CPCs vary greatly, depending on platform, region, seasonality, content type, time of day and a number of other factors. We can’t publish fill rates or CPCs for obvious reasons. The best way to get accurate data for your app or business is to run a 30 day long test on our network and then use that data in the sheet.
We received the following questions over email about this model. Here are our answers:
Q. Where does the 200 impressions per user number in the Advertising Impact on Business section come from?
That is an estimate based a survey of long tale apps on our network. Usage levels per app very greatly from category to category.
Q. Should the $2,500 monthly spend on ads to promote the app be deducted to arrive at a Net New Monthly Income amount? For example, should monthly net earnings be row 79 minus $2,500?
We don’t assume that in this model. It is something that developers may want to do their own models.
Q. If the Publisher/Developer partners with an ad network like InMobi then would the earnings figures above require adjusting for the agreed upon share %?
This model assumes that we’re only dealing with the developer’s share of revenue.
Q. Is the 24% compound growth rate in row 73 and 75 a reasonable assumption?
We believe this assumption is accurate for a hit app. However, not every app is a hit. High-tech, venture funded business are built on the assumption that the entrepreneur will find a high growth market segment.