Mobile and app revenues are seeing significant growth over the past months and years and the most recent reports are consistently suggesting this trend will continue in the coming months and years. In fact, it is being suggested that mobile app revenue is quickly becoming one of the most significant markets for growth in revenue than any other. This is largely due to the platform becoming much wider with significant levels of increased adoption each and every month and year. Well, a report last month published jointly by App Annie and IDC seems to continue the thinking that app revenue is a growing business and highlights the right app monetization model is crucial to identifying and generating the strongest possible app revenue.
The first point noted by the report is the rising prominence of mobile app revenues over those from mobile web and PC web ads. In both instances, it seems mobile app revenues have over the last year seen a greater momentum in their growth than either PC or Mobile web advertising. Not to mention this growth is set to continue in the year(s) ahead.
The report notes that the smartphone market is seeing a continued greater level or growth and adoption, which in turn, is fueling the level of revenue which can be generated from mobile apps. Interestingly, the report also notes how this level of growth in adoption is also seeing a fueling of per-device-revenue. Therefore, offering a larger market to generate revenues from, as well as higher levels of revenue per user and device.
Which Market to Choose?
With what seems to be an established (and growing market), simply entering the market is not enough to maximize results. While revenue does and remains to be the biggest driving force for publishers, apps can help to increase corporate branding, identity, offer greater level of offline product functionality and help to increase traffic to an business overall.
Types of revenue
It is no surprise that revenue significantly outweigh the other benefits of mobile apps, but what might be surprising is the various models which can be applied to generate revenue through mobile apps. As such, choosing the right avenue is crucial to maximal results. These are best summed up as ‘Freemium’, ‘Paid’ and the crossover model, ‘Paidmium’. While the first largely focuses on after-download revenues and the second relies on pre-download revenues, Paidmium offers the ability to twice generate the revenues form one app. There is of course, an additional method, which is commonly defined as ‘In-App Advertising’. This model utilizes the concept of charging the end-user nothing, before or after downloading, but instead focuses revenue on charging for advertising. The benefit of this model is the more ‘free’ an app is to the consumer, the more chance of a greater level of downloading is possible and therefore, more ‘eyes on adverts’.
Comparisons Of Models And Choosing The Right Model
The report does highly suggest that of these models, it is the Freemium (free with in-app purchases) and In-App Advertising models that provide the highest levels of generated revenue. Significantly more so, than either the paid or premium options.
Now that it has become clear that In-App Advertising and Freemium models seems to be the more effective models of revenue for mobile apps, the next question is which of the models to go for? This is also highly dependent on which model is right for your app. Not to mention, choosing the right model will still leave the question of how to best utilize the chosen model. For instance. Freemium covers a variety of different freemium sub-models such as ‘Usage’, ‘User-Experience’, ‘Functionality’ and ‘Free Trial’. In terms of the difference, Usage offers the ability to restrict (and therefore charge to make available) usage of the app. User-Experience works in a similar way, although this option is ad-based and therefore revenues are generated from removing the ads, resulting in a cleaner and greater user-experience. Function models offer the ability to charge users for needed elements to continue the game or app. While Free Trials are just that. A taste of the full unrestricted app before being charged for unlimited access.
According to the report, it seems Function based Freemium models are the most widely used by publishers at the moment, suggesting their likely benefit for generating revenue to publishers. This was then followed in adoption by User-Experience and then Usage, With Free Trial seeming to be the least used by publishers over the last year. In fact, overall, the report suggests that even with a low level of in-app purchase conversion, Freemium can still be an extremely beneficial revenue medium.
For in-app advertising, the initial decision is far more simply than it is for Fremium, as there seems to only be one integral question. To use adverts or not. Deciding this will have an impact on how the end-user perceives and experiences the app. According to the report, the use of in-app advertising is increasing steadily, with effectively half (49%) or responding publishers noting that they do include in-app advertising in their apps. This is a 7% increase from the previous year. However, in terms of in-app advertising, the emphasis will always be on the apps which acquire a unique presence in the market. Those that do establish themselves as a standout offering are more likely to generate greater revenue returns. While, in-app purchasing can benefit any app, of the respondents noted in the report, only 15% observed revenues of $10,000 a month or more.
In terms of the options on offer when it comes to in-app advertising, these are best thought of as the method used to display adverts. For instance, the most commonly used, include ‘Banner ads’, ‘Full-screen ads’, ‘Video ads’, ‘Rich Media ads’ and ‘Offer walls’. In terms their success, the report notes that overall, it seems banner ads are the highest earning method. However, the most successful advertisers noted that video ads and the offer walls, for them, proved to be the highest revenue generating methods.
That said, there is also the worldwide factor to consider when making your decision. For instance, different markets in different countries and regions see significant differences in their ability to generate revenue. As such, some of the markets which do not currently offer massive growth today might very well be the emerging markets of tomorrow. Not to mention, what might best work in one area will not necessarily work better in other regions. The report found that while In-App Advertising was a bigger revenue generator in countries like the UK, U.S., and India, other countries including Russia, Brazil and Germany, all saw better revenue returns from purchase-based app monetization models. Therefore, adopting one revenue model in one region and another in another, may prove to be the most successful option for publishers. That is, along as the correct model for the correct region is chosen.