Mobile / News
Maximise Your Return on App Development: Sell it for Free
- 3rd February
- Campbell Phillips 154
Every man and his dog wants to market a killer app these days, but statistics show it’s not easy turn a profit.
The global information company, IHS, recently estimated that 96% of all smartphone apps were downloaded for free; highlighting that mobile users are shunning paid apps. Of course, many free apps are still monetised through advertising, while others are moving towards the new ‘freemium’ model.
Freemium apps are downloaded free of charge, but contain paid in-app content, whether it be product to buy or expansion content for the app itself. IHS suggests in-app purchases will become the new standard for mobile app revenues, projecting a rise to 64% of total app revenue in 2015. That’s up from 39% in 2011.
The pervasiveness of free apps is supported by research by AndroLib, which analysed the Android Market App Store from September 2010 to December 2011, where it found 65% of all Android Market apps were downloaded for free.
For Paul Wilson, Managing Director of White Labelled, an e-commerce consultancy, the issue is all about value.
“If I use the example of a hypothetical barbecue retailer,” Wilson says. “A customer won’t see the value in purchasing an app if all it does is advertise their product. You have to provide a service, or information. Perhaps barbecue specific recipes would be an example of something that might work in that case.”
However, apps aren’t necessarily an ideal marketing solution for every brand, regardless of whether you follow the freemium model or otherwise.
“Apps aren’t for everyone,” Wilson says. “Again, if we’re talking about barbecues, that kind of product has a very slow sales cycle. People don’t buy them often, so they would only want to look at the app once in most cases. In that scenario, a mobile optimised website would be much more effective. On the other hand, apps can work very well for fashion companies or other brands with a high cycle of products, or seasonal products, where push messaging works well. These businesses can also do well with geo-location functions in their apps, things that web optimised sites could never do.”
It all comes down to app ‘stickiness’, a term that refers to the amount that an app is reused by a customer. The more times it is reopened after download and the longer it is used, the stickier the app is. Localytics, a mobile analytics company, found that loyal app users generate 25% more in-app purchases than average customers. They also discovered that 44% of smartphone users didn’t actually make a single in-app purchase until they had interacted with the app at least 10 times.
For 2011, Localytics found that as many as 26% of all apps were only used once after download, falling into the less sticky end of the spectrum. This data highlights the need for app developers to create apps that promote positive user experience and engagement. For information on how to do this and more, see Power Mobile.
