Mobile App Monetization Model–Virtual Goods Scores better than Advertising

Mobile advertising industry has witnessed consolidation in the last few months and while apps have taken over the devices, majority of app developers find it tough to monetize their apps.

A study by Flurry reveals that the sale of virtual goods is overtaking advertising in top categories on the iOS platform (doesn’t takes Android into account, as Android doesn’t support in-app purchases_Virtual_Goods_Mobile_Advertising

What’s interesting is the change in trend since 2009 – Virtual goods sales was an insignificant part of mobile advertising, but over a period of time it is turning out to be the most significant (do take care of the fact this study was done for iOS platform and is representative in nature).

Social gaming drives majority of Facebook revenues and it seems mobile app monetization follows the same route, unless agencies start looking at mobile as an independent media platform (and not an alternative one).

One factor responsible for low advertising levels may be advertising agencies’ slow acceptance of mobile as a media platform, with skepticism about the viability of social games and social mobile media as a channel for advertisement.  With these agencies representing and guiding the biggest brands, they appear to be missing a meaningful opportunity to reach a mass market of consumers who have adopted new platforms and forms of content [source].

What’s your take?

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