By: Justin Goldberg

It should come as no surprise that the market for mobile apps is a big one, but just how big is it? The year 2012 saw a total industry revenue of $8.5 billion, quite a respectable figure. This is chump change, however, compared to ABI Research’s 2016 prediction of $46 billion. An already large and continually growing portion of this income is from in-app purchases, or additional content purchased by consumers within a game or other app after it has already been downloaded. The research firm IHS found that last year 39 percent of the total revenue from apps, or $970 million, came from in-app purchases. Furthermore, they predict that by 2015 this number will jump up to 64 percent of the market.

These figures should be enough to convince any app developer to offer additional content for a price within their apps. To make the most out of the situation, however, they would be best suited to offer apps initially for free. Apps that can be downloaded for free and then upgraded for a fee, known as “freemium” apps, may be the key to conquering this market. Research from NPD found that 40 percent of people that purchase freemium games will continue on to make an in-game purchase.

The freemium idea has taken off already and only looks to get bigger from here. Want some proof of their popularity? NPD found that 38 percent of the U.S. population ages two and up plays some kind of freemium game. Yes, you read that correctly, ages TWO and up. Rarely, if ever, has there been a market for non-essential goods that affects such a broad spectrum of the population. Developers would be wise to take advantage of the situation before the market skyrockets over the next few years. To put it simply, design a game, offer it for free, charge for something to make it better, and finally, decide what to spend your new income on.

Sources:

http://news.cnet.com/8301-13506_3-57379364-17/mobile-app-revenue-set-to-soar-to-$46-billion-in-2016/

http://news.cnet.com/8301-1035_3-57418833-94/freemium-games-are-the-ticket-to-app-profits-study/

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Written by Ad Buzz

The American Advertising Federation Illinois Chapter brings to you Ad Buzz, a blog dedicated to all things advertising related, from our favorite campaigns to trends going on in the industry.

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