On the surface, PaeDae’s withPrizes tool competes first with Kiip (see disclosure below), allowing brands to hit game users with real world rewards at key milestone moments when they’re feeling good. But PaeDae is a white label tool, so the rewards look like they’re made possible by the developer.

Santa Monica, Calif.-based PaeDae also tries to give out fewer rewards and really make its mark by offering brands effective targeting so their rewards go to the right people. PaeDae CEO and co-founder Rob Emrich told me the company uses an array of online, offline and location data to help target the right users without using cookies or UDIDs. He said advertisers only pay for performance, not impressions.

So far in early results, PaeDae has been able increase time played in apps by 90 percent and give developers eCPMs of more than $20, much higher than typical eCPMs. PaeDae said for most casual games, it can boost average revenue per user by more than 100 percent. And advertisers are seeing click-through rates of more than 9 percent and redemption rates for prizes of up to 28 percent with some brands.

PaeDae CEO and co-founder Rob Emrich

PaeDae also works as a way to distribute apps with its withUsers tool. Developers who install the PaeDae SDK can turn around and take some of the money they make and use it to promote their apps. So a user in another game can get an invitation to download an app from a PaeDae developer for free. PaeDae will still apply its targeting technology to go after the right users.

PaeDae is working with about 20 developers right now including Kronos Games and Doppelgames and has hundreds in the pipeline. It’s also working with more than 20 brands including P&G, Omaha Steaks and online fashion retailer Beachmint.com.

With monetization lagging usage on mobile apps, developers can use all the tools they can get, if they can really deliver. If PaeDae’s results hold up over time, it might be another viable way for developers to make some real money and also drive more usage of their apps. The company, which launched in August 2011, has raised an undisclosed amount of funding from angels.

Disclosure: True Ventures is an investor in Kiip and the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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This is noteworthy because it’s the first time that mobile users will see ads in their feed that are not triggered by their actions or those of their friends. It opens up the news feed as an advertising space that any developer can target, whether or not they have a relationship to a user or not. That may encourage investors who have been worried about Facebook’s revenue plans, especially as more traffic moves to mobile where ad space is limited. And it will likely cheer developers, who continue to look for ways to distribute and market their apps. Developers can sign up here.

Facebook has a huge audience and its mobile users are growing rapidly with more than 543 million users accessing the service from a mobile device each month. With some basic targeting by interests, demographics and platform, Facebook can serve up a pretty good mobile audience to developers willing to pay. This builds upon the work Facebook has done with App Center, which helps recommend apps to users.

But it also raises the question of how much advertising users will accept. Facebook has shunned display ads and instead pushed for sponsored stories that appear in a mobile user’s news feed. But the initial idea was to let advertisers better reach their existing fans through these sponsored stories that were engaging and interesting for users. Now, users will get hit up by developers who they don’t have any relationship with.

The new ads come on the heels of Facebook’s first quarterly earnings report, in which it generally met expectations but didn’t impress. On the earnings call, company leaders stressed the importance of a mobile and said the sponsored stories were generating $1 million a day, half of which was coming from mobile. Now, Facebook has a better shot at improving its revenue picture but the challenge will be to ensure that it can generate more money without turning off its millions of mobile users.

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It’s a little complicated but here’s how it works: free app developers still turn to Fiksu to find the cheapest way to drive traffic to their apps. Fiksu optimizes user acquisition by selecting the most effective way at any given moment to reach users across a number of ad networks, real-time bidding systems, and incentivized download networks. But now, instead of using banner ads to divert those users directly to an app store, Fiksu will now offer them a chance to get free paid apps by going to FreeMyApps.com.

Users who go there will be presented with the option of downloading a free app and then earning credits, which they can apply toward the download of a paid app. It can take a two or more free downloads to earn a paid app. Users must download the app from the App Store and interact with it for 30 seconds or more to earn their credit. They are prompted to create a provisional profile, which then allows Fiksu to confirm whether they have downloaded and used an app. When they build up enough credit, they can “buy” apps like Angry Birds or Cut the Rope for free.

The free app developer still pays Fiksu to drive traffic and that money now gets split between Fiksu, which covers its costs, and the paid app developer, who then pays the 30 percent cut to Apple and keeps the rest. When it all goes well, the free app developer gets new users, who are now enticed to download their app because there’s the promise of getting something for free. And paid app developers now have a new way to market their apps, as long as they’re willing to subsidize them through Fiksu. The service works only on iOS for now.

Micah Adler, Fiksu’s CEO and founder, said there are number of ways for free app developers to drive traffic including services like Tapjoy, which recently went direct to consumer with its own free app portal. But there are few viable options for paid app developers, who don’t want to make their apps free, he said.

“For many paid developers, they don’t want to go with a free-to-play version but they’re forced to because they don’t have a good marketing channel. Our goal is to reverse the trend and give people a viable alternative and reason to stay as a paid app,” Adler said.

There are some challenges with this model. It will depend on getting enough free app developers to join this program, which is separate from Fiksu’s existing program. And those developers must be convinced that the downloads they get are worth the cost. The problem is some research shows that most people who download an app through an incentive abandon it. Adler said that the fact that users can pick out the app they want to download can help them engage more with the app. And because Fiksu confirms that a user actually used the app, it’s more likely that a consumer will stay with it instead of apps from other distribution models, which rely on just a download only. He said in the future, FreeMyApps will offer more personalization tools to help users find more relevant apps to download. The model also relies on users leaving an app to go to this portal, which may not be attractive to users who want to stay inside their app.

Though we already have a number of services aimed at helping users find apps, it still seems to be a growing opportunity, especially in a world with more than 1 million available apps. I think Fiksu has an intriguing tool for paid developers, who are reluctant to give up charging for their apps but struggle to keep up in a world dominated by free apps. It will have to prove its model over time but it’s another option for developers.

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Users who want to gain free Wi-Fi access will now be able to pick from a list of sponsors, whose apps must be downloaded in order to gain four hours of free Wi-Fi. If a user already has an app, they’ll need to view an ad to access the network. Daily deal providers will make up some of the major sponsors on the network, who will rent out a channel on Towerstream’s network of almost 1,500 access points. Users will be able to see daily deals that are targeted for their location in Manhattan.

The deal represents a new money-making opportunity for Towerstream, which has been looking primarily at being an offload solution for carriers. Jeff Thompson, CEO of Towerstream, said app distribution and advertising could ultimately be a bigger revenue driver than the offload business.

“We believe that connecting consumers with products that are in their proximity is invaluable. Our distribution network for daily deals not only drives downloads to mobile apps; it significantly expands the reach of daily deal sites and all mobile app providers by offering untapped users, a key ingredient for all parties,” Thompson said.

It’s an interesting way to use Wi-Fi networks to distribute apps and target specific local users. With daily deal sites competing fiercely for consumers, this is a way to get their discounts in front of people who can take advantage of them. This could also prove appealing for any large brand looking to drive downloads of their apps. BlisMobile counts Amazon, Google, and eBay among its customers.

This shows the power of wireless and how it can be monetized in different ways. Especially as consumers face more data caps, free Wi-Fi access will be more appealing. Towerstream last year recorded days of more than 1 terabyte in usage and 21 million connections in a single quarter on its New York City network.

Also, for brands and companies, being able to target a location helps deliver very personalized and relevant messages. Towerstream isn’t segmenting its targeting by more than large neighborhoods, but it could theoretically break down offers to individual access points if it wanted to. The daily deals distribution service will likely be a big part of Towerstream’s business as it expands further in its 12 markets, starting next with San Francisco and Chicago.

Image courtesy of Flickr user Hooch. 

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That reality is pushing app distribution and monetization companies to continue to evolve around Apple’s ban. W3i, once a leader in incentivized installs, has come up with a new alternative app discovery service that it hopes will aid game developers to push downloads while staying within Apple’s rules. The new product, called Mobile App Ad Network, allows game developers to offer their apps for free for a 24-hour period in customizable banner ads that appear in other gaming apps. The new “free app of the day” ads are going into beta today.

Advertisers and publishers have a number of options as to when and where they run the ad so that it is most effective. Instead of just a persistent banner, an advertiser can have the offer run when the app is launched, when the user hits a milestone or in exchange for an achievement. This targeted use of the ad means it works more within the flow of an app and is less intrusive. And because it only advertises free games for one day in other games, it is more likely to be downloaded because it is more relevant to the target audience. W3i said this model can boost conversions to 48 percent, though we will have to see if that bears out over time.

W3i believes the new ad product won’t run afoul of Apple’s ban on incentivized installs because it is basically a banner ad for an app that is on sale. Incentivized installs, which allowed a user to download an app in exchange for virtual currency or goods, was targeted by Apple for apparently gaming the App Store rankings, boosting apps that paid for those ad campaigns.

“It’s difficult to predict Apple’s behavior but they have no problem with recommending apps and they have no issues with publishers putting their apps up for sale,” said W3i product manager Melissa Johnson.

Johnson said that incentivized installs also enticed people to download unrelated apps they may not have been interested in to gain virtual goods. By offering games that may have appealed to a gamer, they increased the chances that the user would continue to engage with the app, making the investment more worthwhile for advertisers.

W3i’s product illustrates how the mobile app distribution market is shifting in response to Apple. Tapjoy, another leader in incentivized installs, said it has had to move away from pay-per-install campaigns on iOS, and it now targets other platforms and runs more cost-per-action ads, which allow users to gain currency in exchange for watching a video. It is also doing more-traditional banner ads for apps, Tapjoy’s CEO Mihir Shah recently told me.

This new campaign by W3i shows that mobile advertising is also becoming more contextual, something I’ve noted with products like Kiip and Tap Me, which use very targeted moments in apps to offer up real rewards or sponsored in-game power-ups. There is more creativity happening now in mobile advertising, some of it by necessity in the case of W3i. With a booming market for mobile apps, the marketing of those apps is a big opportunity that can’t be ignored, and marketing will always find a way.

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