Mobile phones and i-pads are reaching a growing number of individuals each year. Mobile device usage continues to quickly expand in both developed countries and emerging markets, which is causing huge growth in mobile app store and in-app advertising revenue. Publishers and developers need to thoroughly evaluate prospective business models, target markets and growth strategies to establish their apps for success. With the ideal data, all these choices can be strategically decided and executed.
App Annie and IDC have released a joint report entitled, ‘Mobile App Advertising and Monetization Trends 2013-2018: Freemium and In-App Ads Expand Their Lead’. The report focuses on the main growth drivers in mobile, and the business models enabling publishers to monetize successfully off of that growth. It also highlights mobile app revenues beginning to displace other forms of monetization, including mobile browser and PC-based advertising, and freemium and in-app advertising models driving the majority of growth among various business models.
“App Annie has tracked the growth of the mobile economy since its infancy, and we’re really starting to see publishers hit their stride with mobile in-app revenue growing 1.7x last year,” said Bertrand Schmitt, CEO and co-founder, App Annie. “The continued innovation in mobile apps, monetization models and mobile advertising have driven significant growth in freemium and in-app advertising revenues. The space has matured significantly and publishers have the required ‘know-how’ to monetize off the significant app usage they’re generating.”
Some key takeaways from the report include:
● Freemium drives mobile app revenue growth: Freemium app revenues grew by over 70 percent, while paid and paidmium app revenues declined by 19 percent and 24 percent, respectively. The maturity and general success of the freemium model are clearly evident in freemium’s dominance of direct app revenue models. Mobile app revenue per device (including advertising) is projected to grow 2.5x by 2018.
● Mobile in-app advertising set to overtake online search advertising: Mobile in-app advertising revenue also grew by 70 percent, outpacing both mobile and PC browser-based ads. By 2018, spending on mobile in-app advertising alone (in the 10 key countries measured*) will be greater than spending on online search advertising, today’s digital advertising juggernaut.
● Geography matters and it’s not one-size-fits-all across countries: Revenue generated through app stores versus in-app ads widely varies across countries—India brings in 70 percent of its app revenues via in-app ads while Japan makes more money via app stores (81 percent). The US and Japan are the largest markets for mobile app revenue, but emerging markets such as Brazil, India and Russia are projected to quickly grow through 2018.