App Annie and International Data Corporation (IDC) have released their second annual joint report, entitled Mobile App Advertising and Monetisation Trends 2013-2018: Freemium and In-App Ads Expand Their Lead.
This year’s report focuses on the main growth drivers in mobile, and the business models enabling publishers to monetise successfully off of that growth. The report also highlights mobile app revenues beginning to displace other forms of monetisation, 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, monetisation 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 monetise off the significant app usage they’re generating.”
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 takeaways from the report include:
* Freemium drives mobile app revenue growth: Freemium app revenues grew by over 70%, while paid and paidmium app revenues declined by 19% and 24%, 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%, 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-sise-fits-all across countries: Revenue generated through app stores versus in-app ads widely varies across countries—India brings in 70% of its app revenues via in-app ads while Japan makes more money via app stores (81%). The US and Japan are the largest markets for mobile app revenue, but emerging markets such as Brasil, India and Russia are projected to quickly grow through 2018.
“Both freemium and in-app advertising will continue to be great opportunities for developers to make money out of their apps,” says Karsten Weide, IDC’s vice-president of Media & Entertainment. “In the ten key markets we looked at, in-app ads will grow by a factor of 3x by 2018, and app store sales by a factor of 2x.”