Why 2011 was the year of app monetisation

Everyone does it so why fight the trend. Reviewing the previous year as the “The Year of something or some other,” is almost mandatory nowadays – so as 2012 begins we take a look at the last 12 months.

The year started out with predictions for the “Year of the App” or “The Year of the Smartphone”. Both are true, but in reality, 2010 was the year that both began to dominate the mobile market.

What really changed in 2011 was that app developers started to make money – and some serious money. The model changed from premium apps to “Freemium” with the rise of interactive advertising and in-app purchases.

This shift was so strong, that according to IHS Screen Digest Mobile Media Intelligence Service, 96% of the billions of apps downloaded in 2011 were free. Additionally, 45% of the top-grossing apps in the iPhone App Store and 31% of the top-grossing Android Market apps were free.

And remember, these figures do not include advertising which would push the revenue of free apps even higher.

However, it’s the future potential of mobile advertising that is most exciting. Time spent on our mobile surpassed time spent reading print media in 2011 and is rapidly approaching radio. However, advertising spend on mobile only makes up 1% of total media spend compared to 10% of time spent.

This contrasts with 25% of ad spend for print and 10% for radio. The potential growth for Mobile ad spend is huge as mainstream advertisers begin to realise mobile will eventually be the most pervasive form of media – maybe even passing TV in the future.

Already the percentage of ad spend on mobile doubled from 2010 while the others remained static or declined. Take-up of mobile advertising is tracking the early days of the internet in terms of the differential between time spent and spend, although adoption of mobile media is much more rapid than the internet was.

So we say, 2011 was definitely the “Year of App Monetization” but maybe we are jumping the gun because we suspect 2012 will be more so.

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