The CEO of ‘velocity capital’ company Pollen proposed a service whereby developers can be advanced 100 per cent of app store sales in order to invest in user acquisition campaigns.
Pollen generally makes available 95 per cent of app store sales to developers before the cash is paid out by Apple or Google, providing them with earlier access to funds than the two months it generally takes. For this cash advance, it keeps 5 per cent of the total.
This morning, Martin Macmillan said: “We are putting deals with a number of different ad-networks together right now that will allow us to effectively recycle the money from yesterday’s sales into funding today’s paid promotions. So our target here is 100 per cent, so if you had $1,000 in sales yesterday, we’ll look to fund the ad network with $1,000 the next day.”
Unlike its existing model, where Pollen takes a cut of the cash from app sales, the company will instead look to negotiate a cheaper rate with ad-networks for its wholesale purchases. “If you are an ad network and you are looking at us, then effectively we’re like a media buying house. We’re aggregating a bunch of traffic, and for the ad network this is most often incremental, non-canibalising traffic which you wouldn’t have been able to do anyway, and it comes with no credit risk. So we look to collect from the other side,” he said.
“We are trying to make it very, very simple from a developer point of view. It’s hard to get better than 100 per cent.”
Macmillan said the move comes as a result of the way developers were looking to spend the money they had received from Pollen in lieu of app store sales. “For most people, particularly in the early days post-launch, developers are looking to take anything they get and recycle it back into paid promotion – once you know what works, you want to do as much as you can, as quickly as you can.”
“If you are going to launch, maybe you are going to get featured in the first week, so you’re going to get some great traffic. After that first week, it’s going to be a race to the bottom, unless you can afford to support your app or game with some paid promotion post-launch. Going right out of the charts, that can easily happen in that 60 day period before you get the first money out of the app store,” he said.
Earlier this year, Pollen said it will distribute $150 million to developers in 2014, in a move that would ease cash flow in the early days of app availability. It is initially working with developers in the UK and the US.