With more and more apps going free, mobile ads are here to stay, says report

App analytics company Flurry has outed a report earlier today pointing towards a continuing trend of apps gone free. Showcasing how pricing of apps has been changing the past four years, the authors of the report offer an insight into why, and this one is actually a no-brainer – people like free stuff, so naturally – more free stuff is becoming available.

Choosing the iTunes Store over Google's Play Store for its seniority, Flurry's analysis reinforces this notion:

As you can see, 90% of all iOS apps are now offered for free, with 6% going for $0.99 a pop while the remainder is split among the higher price tier. “But why?” is a natural thing to wonder, and on this account we have to agree with the report – consumers have made their choice. Yes, ads are annoying, but they're a necessary evil and, as this turn of event exemplifies, preferred over paid content.

With Android aiming to reach consumers across the entire price spectrum, the next finding of the report should be of no surprise to anybody: Android users, on average, are less willing to pay for content. In fact, when compared to their iOS counterparts, they spent three times less on apps:

What's more, iPad owners really are the cash-cows that iOS devs should be targeting – and they do: according to Flurry, iPad apps on average cost over two and a half times more than iPhone apps, and over eight times as much as Android apps. The company notes that this is, at least partially, due to the higher income class iPad owners usually belong to.

No one likes getting skinned for their money, and the company's research agrees. According to an experiment it ran, many previously paid-for apps went free after significant testing of the price elasticity of demand for their apps. In simpler terms, that's simply how much demand for apps fluctuates according to a price change. The results indicate that an increasing amount of paid apps, even the ones that cost as little as $0.99, have decided to go free after testing the waters and finding out that even a dollar is a significant roadblock to demand. Demand that they can otherwise monetize via ads.

So what does this all mean? The guys behind the company put it plainly: 

While consumers may not like in-app advertising, their behavior makes it clear that they are willing to accept it in exchange for free content, just as we have in radio, TV and online for decades. In light of that, it seems that the conversation about whether apps should have ads is largely over. Developers of some specialized apps may be able to monetize through paid downloads, and game apps sometimes generate significant revenue through in-app purchases, but since consumers are unwilling to pay for most apps, and most app developers need to make money somehow, it seems clear that ads in apps are a sure thing for the foreseeable future. Given that, we believe it’s time to shift the conversation away from whether there should be ads in apps at all, and instead determine how to make ads in apps as interesting and relevant as possible for consumers, and as efficient and effective as possible for advertisers and developers. 

source: Flurry via TechCrunch

Courtesy: PhoneArena