Successful mobile apps usually have a hidden revenue streams. Want to learn how to spot them so you can create your own?
Facebook profits on Ads
Mint.com profits on referral fees (not data)
Thread 🧵 about how GasBuddy created a very secrete revenue stream at $500,000 per customer. 👇👇👇
Founded in 2000 in Minneapolis by Dustin Coupal and Jason Towes, the duo created a way for drivers to find gas prices near them using the world wide web.
The original idea was to allow "buddies" to share gas price information between each other - ergo creating a crowd sourced pricing platform.
Each "buddy" on the system inputs the price of their local gas as they drive by stations (verified by location) which then updates the platform for other "buddies" to see using Mapquest. (remember that!)
🏗️ Build a marketplace before taking profits.
GasBuddy utilized a point-based reward system where the users could gain points by completing tasks, such as uploading a gas price, and covert these points to raffle tickets to win $100 gas card.
Like any good point system, the founders incorporated a leaderboard which allowed social proof and gamification into their platform. The goal here is to increase traffic, usage, and trust.
By 2020, GasBuddy users submit 2-3 million gas prices PER DAY. Platform unlocked, but this adds $0 of profitability.
🥉Obvious Monetization Model, The Marketplace🥉
Of course, the easy way to convert 2-3 million eyeballs is to cash in on advertising - but you cannot advertise to the users submitting data - that would ruin the experience they have created (without getting anything in return.)
Imagine Wikipedia advertising their pages? It would be a nightmare to manage bad actors placing ads inside of desired pages to manipulate the readers.
However, when you own a marketplace there are many ways to manipulate the data for a small fee. GasBuddy deploys a bidding system allowing Gas Stations to place their prices at the top of the list without the user knowing. (Also known as Premium Listings)
While not revolutionary, this form of market manipulation is a B2B play and done by many companies you know.
Yelp, Google Business, Upwork, Clutch, Netflix (I assume), and Capterra all use this model for a source of revenue.
Naturally, the next evolution of marketplace list ranking is allowing the businesses to "claim" their page and maintain the content themselves.
Crowd Source platforms monetize by selling their business pages to verified owners. This again, is a standard model and sometimes required to maintain platform trust.
🥈 Kinda Obvious Monetization Plan🥈
Whenever a crowdsource platform becomes the market leader in information, it becomes a source of truth because it is being delivered in real time and constantly demands accuracy, increasing platform trust.
Neilson has crowd sourced people watching television through surveys driving 55% of their 6..29 Billion in revenue, explaining to advertisers what type of person is watching which show at which time. Trust wins.
Naturally, GasBuddy started getting calls from gas providers like Opis. (Oil Price Information Service) because upstream gas distributers would benefit from knowledge of real time gas usage. A simple feature intersection would provide massive opportunities to determine who is buying which gas at which time. Can you guess the intersection?
GPS Location Navigation Data crossed with the vehicle type to determine the type of gas consumed at the location specified.
OPIS loved the data so much they purchased GasBuddy (undisclosed amount). However, the valuation of GasBuddy did not reside on knowing oil prices - in fact, it was just a minority of its revenue.
🕵️Secret Monetization Model 🕵️
GasBuddy sells your speed, location, IP Address, time stamps and driving habits to insurance companies and up until 2019 was doing so without your permission.
Signing partnerships with Root Enterprise and Reveal Mobile, GasBuddy was selling location data of their "buddies" for millions without permission.
How much is your location data worth? $9.50 per 1000 users. With over 4.5 million users per month in 2017, just one partnership would net them $500,000 of additional profit without a single feature modification
The move came at a time when Insurance companies were not getting permission through their own apps when requesting location sharing. In fact, less the 10% of their installed users were sharing data with the providers even after being offered hundreds off their car insurance.
GasBuddy provided a work-around to get the data needed to price insurance policies more accurately - which is a $20 Billion Market.
Savvy Reddit users began to notice that location services take up resources and battery.
Greedy insurance company or simple revenue model? Either way - free apps are never free.
🔍How to find a secret revenue stream for your application
What can we learn from GasBuddy? Community and platforms are super important. There is a balance of features, support articles, and social branding needed to obtain market trust. Every app, in every industry should win the trust game first. Steps to do so:
- Provide value to gain user adoption
- Offer gamification systems for stickyness
- Monetize using generic and expected methodologies.
- Split the profits with the people that helped build your platform (most likely your customers.)
Do not try and sell your user data. GasBuddy sold each buddy for their own profits. Instead, find a better way to Unite your community with stronger bonds and informing your platform how revenue will be made.
Are you interested in building a mobile or web app digital venture?
If so, follow @andrewamann on Twitter or www.ninetwothree.co/zerotwoone
I am writing about 20 ways to build your digital venture the right way in 90 days.
- Every app should find a community
- A platform allows for simple monetization methods
- User trust is paramount
- Selling user data will backfire
- Split profits with platform builders (most likely your customers)