New Year, New Revenue Models

by / Friday, 23 December 2011 / Published in Airpush Mobile Advertising Blog

One of the challenges that developers will continue to face in 2012 is the rise of freemium. eMarketer predicts that the proportion of revenue made up by paid apps will fall from 92.5 percent in 2010 to just 12.3 percent by 2014. With the percentage of paid apps that have been downloaded less than 100 times worldwide standing at 79.3 percent, it is increasingly challenging for developers to make paid apps work as their main revenue stream. As more free apps appear on the market, developers will increasingly turn to advertising tools as a way to monetize their work.

The most common avenue for advertising at the moment is in-app banner ads, but there is a sense that mobile advertising can offer more than static ads. Rich media and video ads improve the user experience by giving users the information faster and more precisely than static in-app ads. Different ad units such as toasters and push-notifications improve user engagement and performance for advertisers.

It’s no secret that mobile advertisers are looking to location-based ads to leverage mobile media, and paying premium prices for them. In fact in the last three months, it is estimated that mobile publishers and developers are getting 3.8 times higher CPMs for users with location data. These ads offer a way for advertisers to zone-in on potential customers and drive them to their nearest location.

Real-Time Bidding (RTB) may also make a move in 2012, as many advertisers look for an efficient way to purchase certain types of inventory. Mobile RTB offers transparency across each individual impression and greater targeting parameters (such as ID, location, demographic), allowing for effective campaigns that are increasingly appealing to advertisers.

When seeking out higher CPMs to bolster revenue, developers are increasingly drawn to innovative ad formats such as push notifications and icon ads. With new platforms and revenue models expected to emerge, 2012 is shaping up to be an exciting year already.