Adknowledge brings alternative payments to the iPhone

Adknowledge is announcing today that it is opening up new payment options, such as offers, to iPhone app developers. This gives users yet another way to pay for goods and developers another way to make money.

Adknowledge’s Super Rewards division specializes in ads known as offers on platforms such as Facebook. In social games, users can play games under the free-to-play business model, where the game is available for free and users can pay real money for virtual goods.

Those who don’t want to pay with money or a credit card can accept an offer, such as signing up for a Netflix subscription in exchange for virtual goods. That has turned into a big business on Facebook, with 30 – 50 percent of all paying users of social games turning to alternative payment options. It reduces friction, or the obstacles that prevent users from paying. The result is that developers can monetize more users.

Now Adknowledge is bringing those offers to iOS devices (iPhone, iPod Touch, and iPad devices). In the past, as recently as a year ago, most iPhone games were sold for $2.99 or so through direct purchases on iTunes.

Then Apple opened up in-app purchases, which allowed app developers to use free-to-play business models. Now the free-to-play model has tremendous momentum on the iPhone. Total game revenue is expected to hit $11 billion by 2015, according to market researcher Juniper. And an increasing percentage of that revenue is from free-to-play games.

“After working with thousands of free-to-play game publishers, I am 100 percent convinced that this model will be the dominant monetization strategy that will enable developers to successfully build and monetize their games,” said Chris Smutny, general manager of games at Adknowledge. “We think this is going to happen a lot faster on mobile than it did on social networks.”

Rivals include Tapjoy and Flurry. But Adknowledge can offer a wide variety of advertising offers to users, he said. Some offers simply get users to install other apps. But Adknowledge will tap the full potential of its 10,000-client base of advertisers in order to offer a wide range of deals for users, from movie ticket offers to viewing videos.

If Adknowledge can come up with offers that users are more likely to accept, then it can help make iPhone apps much more lucrative for developers. Apple may not like the fact that it isn’t getting as much direct revenues from sales. But it will reap the benefits of having more successful developers, who will make more games for the Apple platform, Smutny said.

The company announced the new business at the Mobile World Congress event in Barcelona. Adknowledge was founded in 2004 and it acquired Miva, Super Rewards and Hydra to grow into one of the largest privately-owned advertising networks. Adknowledge launched alternative payments on Android devices a couple of weeks ago.