Preference, Profitability, and Ranking in Mobile App Monetization

Posted: 18 Jun 2019

See all articles by Shengjun Mao

Shengjun Mao

University of California, Irvine

Sanjeev Dewan

University of California, Irvine - Paul Merage School of Business

Yi-Jen (Ian) Ho

Pennsylvania State University - Smeal College of Business

Date Written: May 29, 2019

Abstract

For more effective monetization of cost per action (CPA) in mobile app distribution, the platform should balance its app revenue margins with consumer utility from click and conversion (i.e., install) decisions. In this paper, we develop an empirical framework to estimate consumer click and conversion utility using mobile clickstream data from a large mobile service operator. Our data set uniquely includes actual CPA margins for every app. Consumer click and conversion utilities are jointly estimated as a function of a comprehensive set of quantitative (screen rank, quality, and popularity) and qualitative (textual data of app titles, descriptions, and reviews) covariates. We conduct policy experiments on our structural model estimates to examine the effectiveness of alternative screen ranking strategies, finding that a personalized ranking scheme accounting for both utility and margins outperforms the methods based on margins alone (by 24%) or utility alone (by 11%). Overall, our analyses shed light on consumer click and conversion behavior and on how app monetization can be optimized through a personalized ranking that balances consumer revealed preferences with app CPA margins.

Keywords: Apps, Ranking, Platform Profitability, Hierarchical Bayes, Text Analytics

JEL Classification: M15

Suggested Citation

Mao, Shengjun and Dewan, Sanjeev and Ho, Yi-Jen (Ian), Preference, Profitability, and Ranking in Mobile App Monetization (May 29, 2019). Available at SSRN: https://ssrn.com/abstract=3396085

Shengjun Mao

University of California, Irvine ( email )

P.O. Box 19556
Science Library Serials
Irvine, CA 62697-3125
United States

Sanjeev Dewan

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA 92697-3125
United States

Yi-Jen (Ian) Ho (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States

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