Hot iPhone app Tapulous eyes profitability

 

Surprisingly, Tapulous doesn't expect to make the bulk of its near-term revenue from selling apps. Rather, Bart is eyeing advertising to bring this company to profitability, at least in the short term. And, it's not years out, but six months from now.

 

In the near term, what's going to drive your revenue? I asked. "Advertising is going to be the biggest one for the next six months," he said. "Having free ads that monetize is a fantastic model."

Now making money on advertising online isn't easy these days. In my interview with Rajeev, he said that online advertising was down 20% in July from June. So the thought that marketers will pour money into mobile advertising in a big way seems tough to imagine. But when you're showcasing usage like Tapulous is, it's not hard to see why they would.

Bart believes advertisers will be all over his apps. Already, Tapulous has 1.3 million installs of its products, including Tap Tap Revenge (at more than 1 million), Twinkle, which is a Twitter app and alternative, at 100,000, and FriendBook. Users are booting up Tap Tap Revenge 250,000 times a day.
 
The ads you'll start seeing will come after the game. At the end, you'll begin to see an ad, said Bart. Now, at that quarter of a million level and one ad per session, if an advertiser paid a $1 CPM, then Tapulous isn't going to break even with Tap Tap Revenge. But Bart doesn't expect $1 CPM, he's expecting $30 CPM. 

"The CPMs are really high because you're able to reach and personalize the ads," said Bart. "They may be consistently higher than the Web, because you don't have cookie issues and you are able to target based on location," he added. (Bart wouldn't share which mobile ad network Tapulous is launching with. But given that AdMob says it can sell ads on iPhones for $30 CPM, I'm guessing it could be them.)

Moreover, users of iPhones have a tendency to click 10 times more on links than those on regular phones, said Bart.

 

Subscription services, like ringtones

 

Now advertising aside, there is clearly room for charging a fee, which the Tapulous team is definitely set to do.

"People are willing to pay for stuff on mobile. There's a tradition to valuing convenience. You can sell stuff much more easily than the Web," he said.

"The key to making the game fun and addictive is to keep improving the game play, make it social, and have great music in there," he said. Tapulous is working with labels and artists to feature songs, and coming soon, Tapulous plans to charge $4.99 flat fee to play the game with the ability to access 20 top hit songs. The model is not unlike ringtones, Bart said. Additionally, Tapulous plans to sell virtual goods and skins, or sell a branded experience to marketers. Note to Bart. Don't forget my idea of branded balls in the Tap Tap Revenge game.

Additionally, Tapulous plans to put ads in its Twinkle app. Twinkle is a Twitter app, but can also be used like Twitter if you don't have a Twitter account. In due time, watch for ads from Starbucks. On Twinkle, the neat thing about the app is that you can find people Twinkling or Twittering in a particular vicinity. So, if you only care to see the people in a ½ mile radius, then that's who you'll see. You can see how the location-based services can work effectively here. 

Final thoughts

If Tapulous rings up $30 CPM's that'll be impressive and encouraging. But even if it doesn't do so, or it doesn't break even by yearend, it will still have accomplished a stunning milestone. Moreover, Tapulous plans to ride on the iPhone coattails, hoping one day to be the social graph on the mobile browser. Based on analyst predictions, there could be a market of 90 million devices by next year, said Bart. "In a year and a half from now, you're looking at a Facebook opportunity," he added.

 

That's an opportunity indeed. Which is why my bet is Tapulous probably raises money between now and then and Bart comes back for an interview and tells me he's in growth mode.