For Mobile-Social Apps, Advertising Is Winning As The Money-Making Revenue Model

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MOBILE ADS WILL RULE: Mobile advertising is poised to explode over the next five years, and no companies will benefit more than burgeoning social-mobile apps. With all kinds of data to offer advertisers from their massive, growing audiences, these apps make the perfect ad platform to serve up personalized marketing content to users based on browsing history, interests, demographics, and location.

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STRATEGIC PARTNERSHIP: Tinder, the mobile dating app which sees nearly 400 million "swipes" per day, just experimented with sponsored content for the first time, mixing in fake user profiles for characters from the FOX sitcom, The Mindy Project. While Tinder execs say this is more of a strategic partnership instead of a full-blown ad, the move suggests that Tinder will soon be incorporating paid ads on the app. Tinder has yet to introduce a revenue model, but it looks like the app will most likely follow in the footsteps of some of the industry's largest players by relying on revenue from ads.

MASSIVE VALUATIONS: In the past year, well-established mobile-social networks like Facebook, Twitter, LinkedIn, and Instagram all made massive strides toward monetizing their mobile apps and sites by selling ads. And it is paying off. For example, over 70% of Twitter's global revenue comes from mobile.

By incorporating some ad space, many of these popular apps have strengthened their mobile revenue potential after previously having no real revenue stream. This has helped Instagram and other mobile-centric apps earn multi-million or even billion dollar valuations. While some users may be put off by this strategy, it's clearly the strongest revenue model. Tinder already has claimed that it wants to remain a free app.

While in-app purchases can also drive revenue on mobile-social apps, this model is not as lucrative as advertising. Messaging app and sticker maven LINE generates just $0.10 per user from sticker sales from its Asia-Pacific audience, while Facebook brings in over $0.80 per user in the same region from ads. Tinder's move toward an ad revenue model is just the latest in a line of mobile-social apps that have pursued this approach, and come away with big valuations and big expectations for growth. (Bloomberg Businessweek)

In other news...

THE NEXT MOBILE MUSIC DISRUPTION: What iTunes and digital music did to physical CD sales, mobile and online streaming sites like Pandora and Spotify are now doing to digital music sales. Nielsen claims 2013 was the first year that digital music sales decreased since the launch of iTunes. (Billboard)

As newer smartphone vendors from China like Xiaomi and Lenovo soar, struggling Taiwanese handset maker HTC will likely miss quarterly investor estimates for the fourth time in a row. (Re/code)

Connecting Old Cars In A New Way: Ford will outfit over 3 million existing cars with its connected car software through a simple over-the-air download. (GigaOm)

MORE CONNECTED CARS: Google announced the Open Automotive Alliance venture with auto manufacturers GM, Hyundai, Honda, and Audi to bring customizable Android-powered interfaces to their vehicles. (Bloomberg Businessweek)

COST OF BUSINESS: China Mobile will have two major expenses as it partners with Apple to sell the iPhone: extensive capital outlays for a new network, and further reduced profits from having to eat the cost of handset subsidies. As a result, some analysts surmise the network may actually reduce its expected net profit this year. And, with uncertain demand for premium handsets among Chinese mobile users, this deal may be costly for China Mobile. (Wall Street Journal Digits)

WHY PHABLETS? Phones and tablets are morphing into phablets as more and more mobile consumers move beyond the PC and handle traditional in-home desktop entertainment behaviors like gaming and watching video on larger phone screens. (GigaOm)

In the nearly saturated U.S. market, new subscribers are getting harder to come by for wireless carriers. So, AT&T is offering current T-Mobile subs a $450 value to switch over to their network. (Wall Street Journal Digits)

"OK, Glass, Find A Killer App." Rachel Metz discusses the importance of having a robust app ecosystem for the mainstream debut of Google Glass. First and foremost, developers need to focus on making apps that improve upon the previously developed smartphone versions of apps. (MIT Technology Review)

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