With ten days to go for Mobile World Congress, 2016 to be held in Barcelona, Spain, we are getting little nostalgic and excited, simultaneously, as the best and the new of the smartphone world will be revealed. What amazes us is the evolution of the smartphone, especially in the last couple of years. As the penetration of smartphones has increased dramatically across the world, we find that companies have moved away from the hardware rat race to providing a complete user experience. At the center of this user experience, lies the apps and no matter which Mobile Ecosystem we choose to focus our attention to, their app stores play a crucial part in setting the design language. While in the past, we have had various trysts with App Stores and Revenue Models from the perspective of the respective platforms, Android, and iOS; today we try to shake things up a bit.
Our focus for this article will be on the developer’s point of view and compare two OS’s, as two competing platforms with an engrossing evaluation of the pros and cons of both, Android and iOS. The recent report by InMobi, shows us some fascinating facts, not only about the developer demographic as a whole but also of the way apps will be shaping up in the future. Along with highlighting the challenges of monetizing an app, this report has also managed to provide insights into ad networks and why developers choose to focus more on the freemium model, then go for paid apps. Looking at the mobile app industry from this unique insider’s perspective, gives us a glimpse at how these trends will impact the smartphone scenario, which will form the crux of our analysis for this piece of information.
Choice of Platforms: Android Comes Out on Top
When it comes to mobile app development, choice of platform to develop is often, the first hurdle that developers encounter. Traditionally apps on the Apple App store have been known to generate more revenue, as we have seen in previous reports that not only are conversion rates higher on Apple devices; Apple Store generates more revenue than the Play Store. However, monetization seems to be less of a factor for developers as we see 86% of them prefer Google’s App Store for ease of use as well as Android’s potential to reach a much larger audience.
However, this preference for Android over iOS interestingly seems to be skewed geographically, as the disparity between the two platforms is maximum in Asia Pacific region while in North America, they’re at a level pegging. This seems to be a reflection of the maturity of the smartphone markets and the dominance of Android in most regions, comes down to a few factors
- The low cost involved in getting into Android development as the Play Store charges only $25 compared to $99 for the Apple App Store.
- Android devices tend to be cheaper which lowers the initial investment for a test device. As a result, more than 42% of developers have 1-3 apps on the Play Store compared to only 28% on the App Store.
- Java, the language on which Android apps are made, remains by far the most preferred language for coding apps; with 65% of developers preferring to use it compared to 30% for C# and 18% for Swift on Apple’s side.
Nevertheless, creating apps is about building a sustainable business and hence, our next segment focuses on the monetization aspect of apps.
Struggles of Monetization: 55% of App Developers Earn Below $1000
Even though, the global monthly average for per-app revenue varies from $5000-$11000, they’re not representative of the earnings of most of the developers on the block. A vast majority of app developers, languish below the $1000 per month mark, and very few games and apps reach the zenith, like that of Angry Birds or Candy Rush. Indian developers are stuck with revenues that hover around the $1,5000 mark, while big studios make around 30 times more.
As previously indicated by the choice of OS among developers, the geographical conditions play a vital role in determining the revenue generated by the developers. The mature markets of North America provide the highest revenue, as is to be expected from a region of high smartphone proliferation. Substantiating this further are the download numbers of apps in these geographic regions. North America and Europe top the leaderboard, each with 20% and 18% of apps crossing the 1000k download mark in download numbers from the app stores, for the last 12 months.
Another interesting piece of the monetary puzzle lies in the distribution of OS-s and the average earning in revenue from the apps on their ecosystem. As astonishing as it may sound, Windows wins the title here with an average of $11,4000 per app per month. We dissect this development briefly in our next paragraph.
Windows has a niche audience, and due to the less number of apps in the ecosystem, app discoverability is not a problem. This is why, we find that quality apps in the Windows store have a lot more downloads than on any other store, which leads to higher average revenue per app. The situation in Apple’s App Store is slightly different, where due to the average higher spending capacity of iOS users, they tend to spend more on the apps thus driving up revenue to $8.1k per app per month. Visibility, however, remains the biggest problem for most developers in Android and iOS as one-third of the developers have less than 10000 downloads, across all regions. This is why, in the next segment, we take a look at the tools that are available to the developers to make money off their apps.
Revenue Streams: Developers Lean Towards Mobile Ads
One of the most interesting things to emerge from the survey, was the increasing percentage of developers who choose to peddle their apps for free and depend on ads and in-app purchases as their primary source of revenue. A whopping 63% of app developers choose to go the ads route while another 33% also responded as depending on IAPs for monetization. Now, while we did deal with in-app purchases in detail in a previous article, the breakdown of the types of advertisement offered inside the apps provides an interesting avenue for discussion.
67% of app developers are using ads to monetize their apps, and this number will only increase as another 18% are looking to jump on the bandwagon, in the near future. Banner ads have proven to be the most popular, because of their mass reach and as well as easy implementation. However, the growing trend of using native ads show that, developers are evolving with the demands of their audience for more interactive and targeted ads. In a recent article, we discussed at length how ad blockers have effectively killed off banner and other text and image ads and in our closing segment, we will discuss how mobile developers can continue their revenue streams with innovative advertisements in the times to come.
The Future of Mobile Advertisement
The majority of app developers are hopeful of increasing their app revenue on the platform(s) of choice in the near future, with almost than 3 out of 4 developers expecting an increase in revenue from much loved, Android ecosystem. However, as our earlier investigation has revealed, most app developers need to upgrade their methods of advertisement to see a significant improvement in their conversion rates from ads.
Navigating this maze of advertising ‘Do’s and Dont’s’ can be quite tough for an indie developer and this is where mobile ad networks come to the fore. Before diving headfirst into any mobile ad network, there are a few things encapsulated below, that developers must keep in mind to ensure that they get the most revenue out of their products.
Other than these, there are three other important factors that developers should be wary of when choosing an Ad Network. Revenue potential/eCPM, Ease of integration and Fill rate are the top priorities as each of them have a direct impact on the revenue generated from the ads. Among them, higher ePCM becomes a deciding factor, as the higher the conversion rate from traffic, the more effective the ads become at generating income for the developer.
Wrapping up this entire analysis, we can summarize on some important points, that both developers and ad networks, need to look into as we head towards a smartphone-centric future.
- To remain competitive in the changing mobile landscape, ad networks will need to work towards implementing newer technologies and developing a mobile first strategy like InMobi.
- As we find businesses as well audiences move away from traditional forms of advertisement, Ad Networks and developers both, must seek to implement content based and contextual ads.
- With the advent of wearables, developers must develop apps for this new segment. As for the Ad Networks, they should look to use the contactless payments and proximity features of wearables to push even more relevant ads to get higher conversion rates.
- And finally as a cumulative effort on the part of brands, developers as well as Ad Networks, apps must encourage more user interaction to increase user retentivity as well as time spent within the app.
With a wealth of data and new avenues for monetization of apps opening up in the near future, the app industry has a very promising future ahead. How well the can the traditional Ad translate itself from the Internet to Apps and into nouveau invention of Wearables? We will keep a close eye on it as this transition will determine the rate of growth for the mobile ads industry in the coming years.