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5 Reasons Mobile Advertising Is The Best Way to Monetize Your Apps

13 June 20111 comment Android, inneractive, iPhone, Mobile Industry

There has been so much talk lately about the best way to monetize mobile apps. As a developer, you have multiple possibilities available to you and the choice is not always black and white.

At inneractive, we carefully analyzed all the options and came to the calculated conclusion that in-app advertising is the way to go. If you have a mobile app and want to get the most traction and generate the most revenue, the only way to do it is by offering your app for free and integrating relevant and targeted ads within your apps.

Why? I thought you’d never ask, here are five reasons:

1: Ongoing Revenue: There are two basic schools of thought when it comes to monetizing your apps. The first one is to charge users money for downloading your app. Now, putting aside the debate of how effective that is (we will discuss that later), let’s analyze that option for a second. Assuming your app is good enough for people to not get scared by a price tag, you are going to have to price it, in most cases, at $.99 or a maximum of $1.99. Anything higher will just scare people away.

So you take that $1 or $2 and split it with Apple 70/30. Now, how many times are you making that money? When you charge per download, once. That revenue is generated once per user, i.e when the app is downloaded. The other option is to include advertisements in your app. How often do you generate revenue from ads? The sky is the limit. If your app was good enough to charge for, then it is surely good enough to download for free.

The more downloads, the more traffic. The more traffic, the more impressions and clicks, which means more revenue for you, every day. Not one time revenue, but ongoing cash that your integrated ads are generating for you 24 hours a day, 7 days a week. Is there really a question here?

2: Larger User-Base: OK, let’s assume for a second that your app is that good, people are willing to pay for it. That is great! There is only one problem. For every one person that pays and downloads your $1.99 app, there were four that heard about your app and went to check it out, only to move on to your competitor once they saw that price tag. Yes, it is now safe to say that the pay per download model is somewhat of a failure.

The fact of the matter is users do not like to pay for apps. You want cold numbers? Well, Distimo’s latest report about the Android platform provides just that, read about it here. Here is one fact that will put it in perspective for you. In the Android Market, till today, there have only been two (yes, two) apps that cost money and have been downloaded more than a half a million times. How is that for proof that free apps is the way to go?

On the App Store, the numbers are a little more optimistic with six paid apps generating the same half a million downloads per a two month period, is the U.S. More optimistic maybe, but far from promising.

3: Up selling Sucks: Now that we established that charging users for your app is not exactly the best strategy if you plan on generating a serious number of downloads, what are your other options? In-app advertising is not the only alternative. Having said that, let’s talk a little bit about user experience. If there is one thing that matters most when it comes to mobile apps, it is the user experience. The last thing you want is to scare your users away by annoying them with up sales.

If you have ever tried an app with in-app purchases, chances are you shared the sentiment that those popups asking you to buy more apps or virtual items, are extremely annoying. Users want to download an app, own it, and use it as they see fit. They do not want their apps to act as a sleazy salesman trying to sell you other apps.

Maybe it is just me, but in-app purchases are a good enough reason for me not download an app, especially when the banners are agressive and affect the overall user experience, which is generally the case with in-app purchases.

4: It’s Where the Money is: When deciding how to best monetize your mobile apps, it might be worth taking a look at the predictions regarding the market of mobile advertising as opposed to the pay per download model. According to recent studies, 81% of all iOS apps downloaded this year were free apps.

Another staggering statistic is that the mobile advertising industry is expected to reach over $56 billion in revenue by 2015, while paid app revenue will reach the $10 billion mark. You do the math.

5: Added Value: OK, so having been in the mobile advertising space for a few years now, we are well aware that many developers object to the very idea of integrating ads into their apps. It is the same objection we all heard with Web advertising, and we all know how that turned out for company’s like Google. Putting that aside for a second, just like Web advertising, it all depends how it is done, but mobile advertising, if implemented well, can actually provide an added value to users.

Due to the nature of the mobile phone and its Always On capabilities, receiving relevant and targeted ads within a mobile app, can actually contribute to the overall user experience. The problem is when ads appear that are completely irrelevant and displayed in a way that interferes with the core functionality of the app you are using.

It is for this reason that selecting the right company for your mobile advertising efforts is a crucial step. You must ensure that your ads can be targeted per location, per app category, and per content. In addition, the ads you integrate must be included in the app in a way that will not decrease the quality of the user experience, while maximizing clicks and increasing your revenue.

inneractive, as part of its offering, provides developers with an APS (Ad Placement Strategy) document, which ensures that your ads are placed and integrated into your apps, so users can benefit from the extra content you are providing them, and not the opposite. This document has had a track record of increasing CTR on mobile ads by as much as 10%. More clicks, more revenue for you, the developer.

In conclusion, the market has spoken and decided that in-app advertising, just like its big brother, Web advertising, is the most effective way to monetize mobile apps. If you want to jump in the game, sign up for inneractive now, grab any one of our cross-platform SDKs, and integrate it in ten seconds. Then sit back and count the Dollars. How easy is that?

Please share your thoughts in the comments or on Twitter, Google+, or Facebook where we are always listening.
In addition, to sign up with inneractive and start monetizing your free apps now, click here.

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Comments

  1. Essay December 12, 2012

    I agree. We can develop some mobile apps and give to the public for free but of course with ad supported in order to monetized it and continue it's service.

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