Independent Android Appstore GetJar is continuing to sign up prominent developers for its GetJar Gold virtual currency, revealing today Germany’s GameDuell and Brazil’s Vostu as the latest two companies to sign up for the rewards program.
The system is proving to be surprisingly lucrative — developers accepting the virtual currency are seeing their revenues double, with some seeing conversion rates increase seven to eight times over. GetJar introduced the currency at the end of February as a way to reward their customer’s loyalty and open up a new monetization stream for its developers. In essence GetJar pays user rewards out of its own advertising revenues.
Unlike other reward programs that ask users to watch ads or downloading specific, sponsored apps, users earn GetJar Gold coins every time they download an app — any app. Users can then cash in their GetJar Gold coins to purchase paid apps like the premium version of Angry Birds Space or make in-app purchases in participating apps, games and utilities. For every 100 GetJar coins the company distributes, it sets aside a dollar of ad revenue. When a consumer uses a dollar’s worth of coins to buy an app or make an IAP, GetJar takes back the coins and pays out cash to developers. The company keeps a 10 percent conversion fee, meaning developers get $0.90 for every one hundred coins they turn in.
According to Laurs, the system is sustainable because the company is optimizing for longer term revenue over short-term cash balances.
“In current advertising models, it’s actually the consumer that’s getting ripped off,” he explains. “There are billions of dollars of marketing budgets being spent in the ecosystem — publishers earn, ad networks and intermediaries earn… everyone except the consumer. The biggest value we have in our business is the loyalty, the activity and the engagement of the users.”
GetJar earns more ad revenue by gaining more engaged users, which is why the company feels it’s fine to re-invest a portion of its earnings in order to solidify its market position. However, the system also raises some questions — if users can pay with free coins instead of cash, are developers seeing cash transactions replaced by GetJar Gold ones instead? Surprisingly, that doesn’t seem to be the case so far.
“The reality — proven by hard data — is that users don’t substitute payments. You get a new user base.” says Laurs.
According to early findings, GetJar Gold doesn’t cannibalize or replace cash sales. Instead it allows companies to earn money from users who were never going to pay in the first place. So far, GetJar has seen every developer in the GetJar Gold program double their revenues. In countries where Google Checkout isn’t supported, some developers have seen their sales increase seven to eight times over after providing users with an alternate payment method.
GetJar’s 10 percent cut is is also attractive to developers. In Google and Amazon’s official stores, developers pay a 30 percent share of the gross purchase price, which means companies that accept GetJar Gold might see a better rate of return from GetJar’s store than they would in an official app store.
“The reason we decided that 10 percent was the right amount was not because we wanted to compete with Google Checkout,” explains Laurs. “We decided 10 percent was the right amount is because its pure profit to us. We don’t pay banks or carriers. Managing the whole ecosystem of virtual money is much easier than real money. 10 percent is a reasonable price. Our goal is to grow big, not make a super profit.”
There are currently 1 million users signed up for GetJar Gold, and on a monthly basis the program’s userbase is increasing by triple digit percentages. So far just over 100 developers have integrated the GetJar Gold SDK into their apps. GetJar is backed by $42 million in funding from Accel Partners and Tiger Global Management.