GetJar offers virtual currency to boost app downloads

Much like an airline tries to lure back users with frequent flier points, independent mobile app store GetJar is looking to virtual currency to get users to return and stay active in GetJar’s app marketplace. The company today is introducing GetJar Gold virtual currency, a form of money that rewards users for downloading stuff and will ultimately take into account all kinds of activity a user does, whether it’s commenting or referring other users.

GetJar’s virtual currency builds off the existing GetJar Gold program, which allows users to download specific premium apps for free. Now, GetJar is trying to further engage users and reward their loyalty by giving them gold coins they can use to buy Android (s goog) apps and pay for in-app content. It’s a model that’s growing in favor and has already been employed in recent months in some form by Tapjoy and Fiksu.

Here’s how GetJar Gold currency works:

  • A user who downloads a non-sponsored Android app can earn perhaps 5 coins and for a sponsored app, they can get about 30 coins. For now, they’ll only get rewarded for downloading content. The money goes into a wallet and can be used to buy premium apps, which could sell for 20 to 50 coins. Or they can use their money to buy in-app content in games that have incorporated the GetJar Gold SDK. The coins can also be used in apps on other app stores such as Android Market and Amazon Appstore if the developer enables that in their apps.
  • Developers will be able to accept gold coins for additional content and they’ll be able to encourage downloads of other sponsored apps with a GetJar reward page inside their app, which features promoted apps from GetJar. They’ll be able to exchange the gold coins for cash at a rate of 1 coin for a penny with GetJar taking a 10 percent cut.

GetJar CEO Ilja Laurs told me the goal is to cut out the use of real money, which can be a hang-up for a lot of transactions. When users are prompted to buy in-app items, they often don’t get through the entire Google Checkout process. That represents a loss of revenue for developers. By injecting its own currency for consumers, it encourages them to download and it makes it easy especially in areas where its hard to set up a payment account. It can also create simple transactions that don’t require a password since the cash is virtual. And by making the currency liquid for developers, it gives them a more viable way to monetize their freemium apps. Developers will still be able to use existing checkout methods.

“The problem is you send 100 users through a checkout process and only one use will complete the whole process. But because virtual currency isn’t subjected to the same limitations and requirements, our conversions are massively better,” said Laurs. “We predict our conversions will be ten times higher than checkout or any credit card or even carrier conversion.”

Laurs said the other objective is to just engender more loyalty with users, to show them that their time spent with GetJar is valuable. He said user loyalty is even more important than simple spending. “Loyalty is worth money and we’re willing to give a portion of that to users,” said Laurs. “We want to make people want to download with us.”

The program is funded by taking a chunk of the marketing dollars sponsors pay to GetJar to promote their apps. GetJar keeps a portion of that money and also takes a cut when developers cash out. But the remainder flows ultimately to developers.

It’s an interesting idea that is meant to keep GetJar as a main destination for app downloaders. The company said it’s the largest independent app store with more than 2 billion downloads to date and 350,000 mobile applications for Android. But it’s facing more competition from rival apps stores and other emerging app discovery services that are looking to become a go-to resource for finding apps.

GetJar Gold is in fact kind of similar to recent efforts from Tapjoy and Fisku. Tapjoy Games, a new consumer portal rewards people with virtual currency for downloading apps, watching a video ad or signing up for a subscription service. Fiksu’s FreeMyApps gives users credit for downloading and interacting with free apps, which they can use to buy other premium apps through FreeMyApps.

The trend toward paying users in virtual currency to download apps is ultimately about driving and keeping traffic, which is critical to all of these models. That’s not as much a concern for Android Market but increasingly, app stores are showing they need to entice users to keep them coming. Amazon (s amzn) has employed its free app of the day, which has caused some grumbling by developers, but it’s working toward that same goal of deepening engagement and loyalty. GetJar Gold also gives developers one more reason to list their apps on GetJar, which is also another brewing battle for app stores.