Research companies IDC and App Annie released a joint report entitled: Mobile App Advertising and Monetization Spotlight 2012-2017: The Economics of Free, which explores mobile app monetization models, monetization by country, and projections for mobile advertising through 2017.
As the app market matures, app publishers continue to look for the monetization models that will work best for them. As it turns out there is no “one size fits all”, and it’s critical for developers to think about which markets they plan to enter before deciding on how to generate revenues.
We are already aware that freemium is the best way to monetize an app today, but the report shows in-app advertising outpacing both mobile and PC browser-based ads in revenue growth, making it the next important growth model, but not in every market.
“Unsurprisingly, the United States and Japan lead the way in mobile app monetization, with revenue growth occurring across several countries,” said Karsten Weide, Program Vice President of Digital Media and Entertainment at IDC. “However, most device growth will come from emerging markets moving forward, which significantly influences the app monetization profile in aggregate. India is a prime example with 8.7x revenue growth from 2013 to 2017, which appears to be largely driven by rapid smartphone adoption.”
The report explores a variety of trends and helps publishers and others in the app ecosystem understand the consequences they may have on tomorrow’s business decisions.
Some key elements from the report include:
- Freemium and in-app advertising outpace paid or paidmium: Freemium and in-app ad models grew by 2.1x and 1.6x, respectively, from 2012-2013, dramatically outpacing paid app business models
- The US is still a revenue leader: Mobile app-related revenue is projected to accelerate through 2017, and the United States will remain the leading source of mobile app related revenues with 3.5x growth from 2013-2017
- Ad networks are alive and well: They are still the primary channel for selling in-app ads with over 80 percent of publishers selling over them, however RTB exchanges were the least common channel, used by only five percent of surveyed publishers.
“What isn’t known is that in-app advertising is a rapidly-growing source of revenue, with over 40 percent of publishers we surveyed, many of whom are users of our Analytics platform, using it to monetize. Add to that a 1.6x growth in in-app advertising revenues from 2012 to 2013, and it’s clear that it is beginning to rival freemium as a way to generate revenues”, said Bertrand Schmitt, CEO of App Annie.