App developers looking to make money from their apps have a small range of monetization strategies at their disposal and depending on each app’s unique user demographic some will work better than others. By looking at macro level monetization trends, collective wisdom can help app developers to learn from the past experience of others and gain insights on how to design their own effective app monetization strategy.
Two leading market intelligence companies, App Annie and IDC, have joined forces to identify mobile app advertising and monetization trends for the period 2012-2017 and have distilled their findings in a free report which you can download here.
In-app advertising and freemium are the two business models that outperformed the others in the last two years and are projected to enjoy a significant growth by 2017.
42% of app developers use in-app advertising within their apps.
Worldwide mobile app revenue from in-app advertising in 2013 surpassed $8.5B USD and has grown 1.6x times since 2012.
The mobile app revenue from in-app advertising is expected to further grow 3.8x times by 2017.
The main drivers of this growth are the massive increase in smartphone and tablet install base as well as the increased revenue per mobile device due to improvements in app monetization.
Both drivers are predicted to further grow by 2017, with the current device installed base expanding 2.3x times and reaching 1.6B smartphones and tablets worldwide.
Mobile in-app advertising takes away share from desktop advertising as advertisers shift budgets towards mobile to maximize ROI.
Across all their apps 15% of the developers surveyed make up to $10K/month, another 10% makes $10k-100K/month and the breakout apps can make more than $100K/month.
Across all their apps 80% of the respondents have up to 1M in-app ad impressions per month, 10% have 1M-3M/month, 10% have 3M-5M/month and the breakout apps can have more than 5M/month.
There is a range of in-app ad formats to choose from and app developers plan to use more native ads, interstitial ads and incentivized ads while at the same time less are excited to use banner ads.
To sell their ad inventory app developers use mobile ad networks (80%), mediation partners (20%) or contact directly advertisers (20%).
Mediation platforms and RTB exchanges have been gaining traction over years as a way to sell ad inventory.
The business models that contribute to the total mobile app revenue vary by region with India, US, UK, Germany and Canada having a high contribution from in-app advertising. On the other hand, in countries such as Russia, Brazil or Japan a significantly higher contribution comes from app store revenues.
Most key countries are expected to have a higher contribution to mobile app revenue from in-app advertising by 2017.
This March 2014 report from App Annie and IDC has some interesting insights and is well aligned with the monetization trends identified from a large developer survey carried out by Vision Mobile that was published in February 2014.
No one can doubt that mobile advertising revenue is growing at a rapid pace and by combining the technological advancements that are happening in the ad-tech space with deep understanding of their users, app developers are well equipped to develop solid monetization strategies that can vary between regions to maximize revenues.
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