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

0:00Hello. 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 and share actionable insights from top subscription app operators. With me today, Tammy Toh, product and business growth consultant on the Google Play team. On the podcast, I talked 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. Thank you for having me, David. This is my first podcast, so I'm excited to be here. I

0:40want to kick off talking about the Play Store very specifically. And I think it's really cool how much the Google Play team, and I know there's like 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 to kind of get the insiders 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? I find that being an Android user, admittedly I also have an iOS

1:16device. And so, you could see some of the differences in terms of just the 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 and 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. So, before you do that, I do think it's important to optimize your subscription business. So, and that's because a lot of app developers are only offering

1:52subscriptions. 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 know 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. And so, 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

2:33over again. What does that look like across different categories? Do you see certain categories have higher propensity to spend in those ways? So, right now, at least in the data, comics, dating, social, and tooling apps are ones that have more consumable features. So, for example, in social, you can gift and tip the creators. In dating, like you can get boosted or you can send flowers to someone that you think is

3:00special and you want their attention. And so, those apps also are the ones that have adopted this model pretty early on. And so, 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. So, I think, for example, like health and fitness, in the real world, in person, you can buy class that will go away. So, you're starting to see this with other types of applications as well. It's a really good example of like a a health and fitness

3:33app selling a package of six classes instead of a subscription. And then, you know, I've actually been seeing that and maybe this hasn't, you know, quite shown up in the data yet, where if it's something that's really computationally expensive for the developer to provide, you know, photo creation apps, they're selling a pack of 25 creations and those are consumable and they go away. And so, for certain business cases, especially those like really high resource intensive things like AI, these kind of models work really well and align with

4:02the benefits. To your point, resource-based or um quantifiable. So, AI is a great example of that in terms of like the number of messaging or inquiries a user inputs, 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. So, for for example, like you don't get as good as quality as 4K unless you pay maybe $10 more. And I think there's a good amount of media and entertainment apps that do that even on the in the audio space as well. For developers considering switching to a hybrid model, there's probably a lot of

4:39trepidation and, you know, what are some of the things you've seen as far as tradeoffs, but then also like we've kind of already been talking about like where you've seen it be more successful. But what are the tradeoffs and maybe gotchas to be watching out for if a developer wants to experiment with a more hybrid monetization model? Yeah, I think the key is you have to go in with the mindset of experimenting and to evaluate where your risks are. And so, 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, but

5:14you 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 a different types of users. Everyone has a different wallet size. And once you get you've kind of saturated or exhausted all the users who are willing to pay in a reoccurring basis, then there's opportunity to grab more users that just don't have the means to pay for something in a reoccurring basis. So, I like to think that we can optimize the area under the demand curve with different price points that fits users' needs. So, thinking

5:49through, you know, these buyer cohorts will help with some of those concerns about cannibalizing. I also think, you know, 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. So, it is a little harder when you're trying to offer like, 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. What are the holistic features of your app that can be bite-size that users still find value that will mitigate some of the risks of, you know, getting users to not buy the

6:29subscription. I think that's something where, you know, dating apps were kind of early to this with Tinder being the most famous example that we've already talked about that super boosts and things like that were were really innovative at that time of like layering on that additional monetization. And then, kind of as you said, 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. And the the tricky thing about a subscription, too, is is that people get differing amounts of value from your product. So, if you're a

7:04a note-taking app like Notion, it's like somebody who's using it to power their entire business gets way more valuable, way more value out of it than somebody who's like using it as a diary. And 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

7:35what you've seen in the data as well? Exactly. And the users who are already buying the subscription and then they top it off or complement it with features like a booster or whatnot, we call those hybrid buyers. And what we've seen is that, yes, they make up a small percentage of total buyers. The exception is with dating, but it's a little different use case. But they like annually make up three times more than a what a subscriber would pay because your cap with a subscription model, those users can't buy anymore. So, they can't spend anymore even if they wanted to and saw value, too. And so, they typically

8:09users who buy both typically spend three times more than a subscriber and three times more than users who just buy IAPs. And so, 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 in the tradeoff I think it's important to evaluate is that you will increase your buyer percentage. And so, you have to kind of understand where you are in that maturity state of your business and what tradeoffs are you willing to make. So, we've been talking at kind of a higher level of monetization and strategy and things like that, but getting into tactics,

8:43between your team and I know you 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? I have to have like a three-pronged approach and we talked about this at our developer conference called Playtime. Um that's

9:03usually held at the end of the year. When we advise developers to provide them like benchmarking on how they're performing against their peers at there we see underperformance and then we see room for growth, but we advise is like first and foremost, obviously, optimize your existing business, right? So, how can you optimize subscription beyond what you're already offering? So, we think about it in several ways, whether that's a payment like adding more payment methods beyond just the credit card. At Play, we're starting to offer other ways that users can buy. For example, like installments. Users can buy a whole year, but then they still pay for a monthly they still pay on a

9:40monthly basis. So, 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, you know, 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. And the other thing that we see more often is like localizing the prices in those top markets. So, emerging market prices are about 40% lower than developed markets. And so, be very cognizant, especially in markets that

10:10you see rapid new user growth, that you are fitting your prices to that market. So, whether it's willingness to pay, cultural differences, and/or the price of alternatives and substitutes in those markets. And then, 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

10:45willing to trade off for that benefit. And 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. What we've been seeing is that hybrid buyers do There is users who are interested in paying more if they especially see value in your app. And so, sometimes it a small percentage of buyers, the average stat that we see is they they make up about 7% of total buyers, but they can bring in a quarter of the

11:14revenue, um which is pretty impressive. In kicking off these kind of experiments and thinking about broadening the monetization model and and experimenting with different offers and things like that that you were just talking about, what are the things to watch out for? The biggest one, you give your users so many options or choices on ways to convert, they probably will have some decision paralysis, and they will probably take a whole year to decide what they need. And so, 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

11:49you offer it during their user journey, right? Are there any signals that you can say, okay, this user most likely will take a monthly SKU, or this user might not be so comfortable with the monthly SKU. Can I prioritize the weekly SKU for them? Obviously, you won't know those signals right at the first hour of that user experience, but maybe you can gauge it over there, especially if you're a freemium app, you can gauge it over some

12:12time 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, cuz whether it's a reoccurring SKU 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. Yeah, that's fantastic advice. And I think as the industry matures and just as time passes, this is going to be more and more of a thing. If

12:49for the apps that truly generate value in people's lives and that kind of leave a good impression on the user, like as you're thinking about long-term strategy and kind of 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. And so, even longer-term win-backs will be more and more of a thing as the subscription app

13:13industry matures over time. Awesome. Well, is there anything else you want to share as we wrap up? 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

13:42you'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

13:59tactics 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. And so, we share a lot of the insights that you heard today at those conferences, as well. Awesome. So, we'll include links to all of that in the show notes for people to be able just click into. And yeah, it's been really cool to see how much Google Play teams are sharing. And I got to go to Google I/O for the first time this year, which was an incredible conference. So, don't sleep on all the resources Google

14:29is putting out. You know, it seems like incentives are aligned, you know? 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. Yeah, definitely. I'm excited that you get to come to I/O. If it's similar to last year, hopefully 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. All right,

14:58thanks so much for joining me, Tammy. This was super insightful, and I think, you know, folks who do have apps on the Play Store are going to get a lot out of this. And hopefully, you know, increase monetization in 2025. So, thanks for sharing all these insights. Thank you.