How to Unlock Revenue Growth on Google Play — Tammy Taw, Google

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat, thousands of the world's best apps. Trust RevenueCat to power in-app purchases, manage customers, and grow revenue across iOS, Android, and the web. You can learn more at RevenueCat.com. Let's get into the show.

Hello, I'm your host, David Barnard. Today's conversation is shorter than usual and will be featured in RevenueCat's state of subscription apps report. Each episode in this series will explore one crucial metric, ensure actionable insights from top subscription app operators.

With me today, Tammy Taw, Product and Business Growth Consultant on the Google Play team. On the podcast I talk with Tammy about diversifying revenue beyond subscriptions, what Google Play's data reveals about buyer behavior, and why lower price points can actually increase total revenue.

Hey, Tammy, thanks so much for joining me today.

Tammy Taw:

Thank you for having me, David. This is my first podcast, so I'm excited to be here.

David Barnard:

I wanted to kick off talking about the Play Store very specifically, and I think it's really cool how much the Google Play teams, and I know there's multiple teams across Google doing this, but have been sharing more and more resources and insights and statistics over the last few years. And so that's what I want to kick it off with is to get the insider's take. Having worked with so many developers and looking at the data internally, from your perspective, what's the best way for app developers to succeed on the Play Store?

Tammy Taw:

I find that being an Android user, admittedly I also have an iOS device, and so you could see some of the differences in terms of not just the app, but how users use the phone. There's not one solution for every type of user, and an easier way to parse that is by platform, and so if you can look at metrics, KPIs and your performance across these two separate platforms or other platforms you might have, you'll notice that the behavior is very different. No one solution fits all users, so you do need revenue diversification strategies.

Before you do that, I do think it's important to optimize your subscription business, and that's because a lot of app developers are only offering subscriptions. But what we're starting to notice in eastern markets, Asia, Africa, the Middle East, that the buyer types look different. Not all users are buying subscriptions, and instead they're buying consumable IAPs, and so the next step after optimizing subscription, once you've kind of saturated that, most of your users are not willing to buy month-to-month or reoccurring price points, maybe they have an appetite for these one-time only purchases. What we're starting to see in the data in these markets is that almost half of users are buying consumable IAPs versus subscriptions, and that they're not just buying these consumable IAPs one time. They're buying it over and over again.

David Barnard:

What does that look like across different categories? Do you see certain categories have higher propensity to spend in those ways?

Tammy Taw:

Right now, elites in the data comics, dating, social and tooling apps are ones that have more consumable features. For example, in social, you can gift and tip the creators. In dating, you can get boosted or you can send flowers to someone that you think is special and you want their attention. Those apps also are the ones that have adopted this model pretty early on. That's probably why we're seeing a lot of the success there.

But I like to argue that in other categories you can also mimic this business model it's just that you have to think through on what makes sense and what will work. I think, for example, like health and fitness, in the real world, in person, you can buy a class that will go away, so you're starting to see this with other types of applications, as well.

David Barnard:

Yeah, that's a really good example of a health and fitness app selling a package of six classes instead of a subscription. And then I've actually been seeing, and maybe this hasn't quite shown up in the data yet, where if it's something that's really computationally expensive for the developer to provide, photo creation apps, they're selling a pack of 25 creations and those are consumable and they go away. For certain business cases, especially those really high resource intensive things like AI, these kind of models work really well and align with the benefits.

Tammy Taw:

To your point, resource base or quantifiable, so AI is a great example of that in terms of the number of messaging or increase in user input, so that takes computational resource. I think you can even think about it in the sense of the streaming apps that offer different quality videos for a different price point.

For example, you don't get as good as quality as 4K unless you pay maybe $10 more. I think there's a good amount of media and entertainment apps that do that, even in the audio space, as well.

David Barnard:

Yeah. For developers considering switching to a hybrid model, there's probably a lot of trepidation. What are some of the things you've seen as far as trade-offs, but then also we've kind of already been talking about where you've seen it be more successful, but what are the trade-offs and maybe gotchas to be watching out for if a developer wants to experiment with a more hybrid monetization model?

Tammy Taw:

Yeah, I think the key is you'd have to go in with the mindset of experimenting and to evaluate where your risks are. What we have seen or what developers have expressed to us as concern is the cannibalization of the subscription business, which is a valid concern that you don't want to take away from people who are willing to pay a month-to-month fee or a reoccurring fee to the smaller bite-size type transaction. I like to argue that there's different types of users. Everyone has a different wallet size, and once you've kind of saturated or exhausted all the users who are willing to pay on a reoccurring basis, then there's opportunity to grab more users that just don't have the means to pay for something on a reoccurring basis. I like to think that we can optimize the area under the demand curve with different price points that fits users' needs.

So thinking through these buyer cohorts will help with some of those concerns about cannibalizing. I also think you've got to really think through what you're offering to that user. I think repeat purchase mechanics are great for that consumable transaction that you want users to do. It is a little harder when you're trying to offer, "Here's this paintbrush for a lifetime," then you don't have much left to offer, and so you're kind of limiting the use there. I'm trying to think, what are the holistic features of your app that can be bite-sized that users still find value that will mitigate some of the risks of getting users to not buy the subscription?

David Barnard:

I think that's something where dating apps were kind of early to this with Tinder being the most [inaudible 00:07:23] example that we've already talked about, that Super Boosts, things like that were really innovative at the time of layering on that additional monetization. And then as you said, it's kind of a double-edged sword where, yes, you may cannibalize some subscriptions, but then you also open up the opportunity to way better monetize those people who are willing to pay more.

The tricky thing about a subscription, too, is that people get differing amounts of value from your product. So if you're a note-taking app like Notion, it's like somebody who's using it to power their entire business gets way more value out of it than somebody who's using it as a diary. For certain products, there's not always a great way to distinguish between those use cases, but when you can, and figure out tiering structures and the consumables or one-time purchases and other stuff, you're better aligning the monetization with the people who get the most value, so even if some people pay less, you create the opportunity for other people to pay even more. Is that what you've seen in the data, as well?

Tammy Taw:

Yeah, exactly. The users who are already buying the subscription and then they top it off or complement it with features like a boost or whatnot, we call those hybrid buyers. And what we've seen is that, yes, they make up a small percentage of total buyers. I think the exception is with dating, because it's a little different use case, but they annually make up three times more than what a subscriber would pay, because your capped. With a subscription model, those users can't buy anymore, so they can't spend anymore even if they wanted to and saw value to. Users who buy both typically spend three times more than a subscriber, and three times more than users who just buy IAPs.

I understand that the other concern is that you'll lower your average revenue per paying user by introducing more models, but the upside is, and the trade-off I think it's important to evaluate is that you will increase your buyer percentage. You have to understand where you are in that maturity state of your business and what trade-offs are you willing to make?

David Barnard:

We've been talking at a higher level of monetization and strategy and things like that, but getting into tactics, between your team, and I know you work with a lot of other teams inside Google Play, what are the specific tactics, or what's the advice you give or you've heard colleagues talk about when folks are looking to improve their monetization on Play?

Tammy Taw:

I have like a three-prong approach, and we talked about this at our developer conference called PlayTime. That's usually held at the end of the year when we advise developers to provide them benchmarking on how they're performing against their peers that we see under performance and then we see room for growth. But we advise this, first and foremost, obviously, optimize your existing business. Right? How can you optimize subscription beyond what you're already offering? We think about it in several ways, whether that's adding more payment methods beyond just the credit card. At Play, we're starting to offer other ways that users can buy. For example, installments. Users can buy a whole year, but then they still pay on a monthly basis. That gives them the benefit of paying the yearly price, which is much cheaper than the monthly price, and they're committed to just paying on a monthly basis.

And then the others are the type of intro offer that you're offering your users. Is it a trial? Is it a discount? How much is the discount? How long is the trial? Those are things that you can test.

The other thing that we see more often is localizing the prices in those top markets. Emerging market prices are about 40% lower than developed markets, and so be very cognizant, especially in markets that you see rapid new user growth, that you are fitting your prices to that market. Whether it's willingness to pay, cultural differences, and/or the price of alternatives and substitutes in those markets.

Once you've optimized on that subscription business, then you can start thinking about where does it make sense to introduce in-app purchases or consumable transactions? What trade-off am I willing to take if I increase my buyer percentage? Is it okay if my average revenue per paying user goes down? And so you need to calculate some of those LTVs and see what you're willing to trade off for that benefit. Obviously, think about your cost of acquiring the users, the cost of operating, and things like that to see where you can take that risk.

There is users who are interested in paying more if they especially see value in your app. Sometimes a small percentage of buyers, the average stat that we see is they make up 7% of total buyers, but they can bring in a quarter of the revenue, which is pretty impressive.

David Barnard:

In kicking off these kind of experiments and thinking about broadening the monetization model and experimenting with different offers and things like that that you were just talking about, what are the things to watch out for?

Tammy Taw:

The biggest one, you could give your users so many options or choices on ways to convert, they probably will have some decision paralysis, then they'll probably take a whole year to decide what they need. Obviously, in terms of price discrimination laws, you need to present the same prices and same offers to everyone. However, I think what you can be strategic about is how you offer it during their user journey. Are there any signals that you can say, okay, this user most likely will take a monthly skew, or this user might not be so comfortable with the monthly skew, can I prioritize the weekly skew for them?

Obviously, you won't know those signals right at the first hour of that user experience, but, especially if you're a premium app, you can gauge it over some time based on how they're using the app. You can have some kind of decision tree as those users are going through that first-time user experience when you offer that type of offer that you think they'll most likely convert on. Once you finally get a user to transact, that you're done with that user, definitely continue to optimize that buyer's experience, because whether it's a reoccurring skew or one-time transaction, you want them to continue to pay. To get that loyalty, you need to show that loyalty back to the customer.

David Barnard:

Yeah, that's fantastic advice. I think as the industry matures and just as time passes, this is going to be more and more of a thing. For the apps that truly generate value in people's lives and that leave a good impression on the user, as you're thinking about long-term strategy and leaving users with a good taste in their mouth, that in the long arc, a lot of people are going to start coming back to some of these apps that they've abandoned. Even longer-term win-backs will be more and more of a thing as the subscription app industry matures over time. Awesome. Well, is there anything else you want to share as we wrap up?

Tammy Taw:

I know I threw a lot of stats out for developers that do have that support, Android, one, thank you, and two is there's a lot of information in the Play console. I think people forget what you can find there. We actually have a lot of benchmarking data in there, so if you want to see how you are performing against a peer set or a different category outside yours, you can look at some of your KPIs, especially around Play Store conversion rates, and you can see how you're performing against your peers.

The few other ones that we have is the Play Academy, where if you are a small developer trying to get started, and even if you're a larger one, there are a lot of courses in Play Academy that you can learn about how to acquire users, how to monetize, different monetization tactics that we talked about earlier, and then at the end of the year, the Play Team hosts a conference that we call PlayTime in different regions around the world. We share a lot of the insights that you heard today at those conferences, as well.

David Barnard:

Awesome. We'll include links to all of that in the show notes for people to be able to just click into. It's been really cool to see how much Google Play teams are sharing. I get to go to Google I/O for the first time this year, which is an incredible conference, so don't sleep on all the resources Google is putting out. It seems like incentives are aligned. It's great for Google Play to have good apps that are monetizing well, and it's cool to see Google really leaning into that and kind of helping developers more and more with all of these resources.

Tammy Taw:

Yeah, definitely. I'm excited that you get to come to I/O. If it's similar to last year, hopefully, I get to present the same content that we presented at the end of this past year, which is around resubscriber trends and that there isn't quite the subscriber fatigue that all the headlines are saying.

David Barnard:

All right, thanks so much for joining me, Tammy. This was super insightful, and I think folks who do have apps on the Play Store are are going to get a lot out of this and, hopefully, increase monetization in 2025. Thanks for sharing all these insights.

Tammy Taw:

Thank you.

David Barnard:

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