Free Apps & High Profits: Mobile Advertising Trends
Published by Maxwell Wunderlin [ 2.4.20 ]
As stated in the 2018 IAB Mobile Advertising Revenue & Usage Report, mobile users spend roughly 71% of their internet time on mobile devices, accounting for nearly three-quarters of daily time online.
Two years later, it is easy to infer that this percentage has only increased, as our lives have become more increasingly dependent on mobile devices year after year.
The massive amount of time spent staring at our mobile screens does not go unnoticed by advertisers. If anything, the accessibility of potential consumers on mobile devices allows for more opportunities to make money, as the same 2018 report later states,
““advertising delivered on a mobile device now makes up 65.1% of total internet advertising revenues.””
With such a high potential to make money through mobile advertising, how are people getting rich from free applications?
Free applications and games have been popular since the very beginning of mobile device downloads. Users are enticed to download these apps because they are completely free, but how can they be available at no cost?
Free applications easily generate high profits in number of ways, some of which may even go unnoticed by users. The main three, or most well-known, strategies to monetize free apps include advertising (varying types), referral marketing, and in-app purchases.
Some basic variants of mobile advertising include banner ads, which are often non-intrusive text or images at the top or bottom of one’s screen, and native ads, which are more integrated forms of sponsored content that can blend in and seem inconspicuous among other content.
If integrated properly, advertisers can create revenue streams from non-intrusive ads that sometimes go unnoticed by mobile app users.
In Webs of Influence: The Psychology of Persuasion, author Nathalie Nahai discusses how people often become frustrated with ads that disrupt their online experience. Nahai asserts, “not all pop-ups have to be annoying.”
““Those that gently slide into view at the bottom of the page, without obscuring content or completely disrupting the visitors experience, can provide a good balance between attracting attention and minimizing irritation.””
Free vs. Paid Downloads
App developers and advertisers make an incredibly high profit margin by offering their app for free and relying on other means of monetization to make money.
A Statista report published in December 2019 by J. Clement highlights the distribution of free and paid apps in both the Apple App Store and Google Play store. The study found that only 5-10% of users are willing to pay for an app, even if it is of high quality.
The majority of app downloads, accounting for 90+% of download revenues, come directly from free applications.
Paid applications are less likely to be downloaded by users, as free apps that offer in-app purchases have made up most of recent mobile app downloads.
With so many free apps available, a paid app must be truly unique or important enough for users to download.
Advertisers frequently choose to include mobile ads directly into free mobile applications, as the basis for most revenue streams. The strategy has been effective for years and can be seen across almost all online platforms.
Interstitial Video Ads
One of my favorite free games, both available on mobile and desktop, is Paper.io. It’s an addictive and fun game which emphasizes the concept of a free application that makes money through advertisements.
The game frequently uses another variant of mobile advertisements, commonly seen online—interstitial video ads. A short 10-30 video advertisement usually plays in between rounds of the game, taking up the entirety of the screen in order to show the video.
Although sometimes annoying and overly attention-commanding, frequent players are so invested in the addictive game that they sit through the video just to play again.
This type of mobile ad is frequently seen across mobile and desktop devices, with ads on YouTube being one of the most highly successful way to making a profit.
Free Apps are Consistently Successful
The concept of making profits, solely from in-app purchases or advertisements on free applications, has actually been used consistently for years.
In fact, all the top grossing mobile applications of all time are free.
Tinder, Clash Royale, YouTube, Candy Crush, and Pokémon GO are just a few examples of the highest grossing mobile applications, each available to download for free.
Games continue dominate mobile app downloads, consistently becoming some of the highest grossing applications, with revenues increasing daily.
Many apps on the App Store are able to stay at little to no cost because much of their revenue comes from in-app ads and purchases, rather than from the app download itself.
With 90+% of app downloads coming from the free section, it is clear that most users’ priorities include paying as little as possible for their application downloads.
In-app purchases and advertising through free application remain some of the most effective strategies for mobile advertising. This continually emerging form of advertising is so frequently used in today’s digital world due the amount of various mobile ad types that one could choose from.
Finding the balance between gaining advertising profits, while remaining non-intrusive to users’ experiences and upholding their integrity, is an important factor of which advertisers should be aware.
Works Cited:
Webs of Influence: The Psychology of Persuasion, Nathalie Nahai
IAB Mobile Advertising Revenue & Usage Report 2018
“How Do Free Apps Make Money?” Anastasiia Lastovetska, November 9, 2018
“What is Mobile Advertising and How Does it Work?” MobileAdsBlog