October 16, 2010
Opinions about the the inclusion of in-app purchases fall into two categories: those that love them, and those that think it’s just another way for developers to make more money. Regardless of your personal take on them, in-app purchases are now the leading source of revenue for social networking and social gaming apps. This information comes from a Flurry study. It used data collected from a sample of the leading iOS apps, which reach a combined 2.2 million daily users. Amazingly, in-app purchases have now overtaken advertising on the iOS platform by 80% to become the leading source of revenue. study:
Reviewing the chart above, the majority of revenue generated from advertising occurs during the 2009 holiday period. During 2010, however, revenue increasingly shifts from advertising to virtual goods sales until reaching a proportion of more than 80% from virtual goods. Admittedly, the idea that consumers acquiring virtual swords, gold coins and respect points can outperform advertising seems counter-intuitive; however, this phenomenon is neither new nor unique to the iOS platform.And the reason in-app purchases have overtaken mobile advertising?
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.Just remember: the next time you buy that gold coin through the Facebook app, you aren’t the only one!