App Economics Getting Harder for Developers, says Gartner

How do apps make money? Most of the time it’s not by selling mobile apps.

A plethora of mobile apps and fierce competition means that most mobile app developers have to give their apps away for free to acquire users.  And this trend is only going to continue: “By 2017, Gartner predicts that 94.5% of downloads will be for free apps.” (via TechCrunch)

So how do app developers make money when they’re giving away the goods? Short answer: “Freemium”, In-App Purchases and In-App Advertising.

Last year, Gartner projected that nearly 83 billion downloaded apps would be free — or 91% of all downloads. So freemium app business models which rely on monetizing a free download after the fact via in-app purchases (IAP) will continue to grow in importance for developers. (As will app advertising.) Gartner previously forecast that IAP will account for 48% of all app revenues, up from 17% in 2013 and just 11% in 2011. (TechCrunch)

The good news for developers that rely on advertising is the options are getting better. Whereas a couple of years ago your options were limited to irrelevant banner ads that annoyed users and barely paid, today’s developers can find brands that are aligned with their app context and new ad types (including native advertising) which pay more and integrate into, sometimes even enhance, user experience.

 

Read the rest of TechCrunch’s: App Monetization To Get Tougher Still, With Gartner Predicting 94.5% Of Downloads Will Be Free By 2017

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