Free iPhone Apps’ Ad-Revenue Still Steadily Increasing

Despite criticism that free iPhone apps are much harder to monetize when compared to paid apps, one company begs to differ.  AdWhirl, an iPhone-based advertising platform, says mobile ad impressions as well as overall revenue has been steadily increasing and will soon match that of paid apps in no time.

The debate has continued since Pinch Media released a report a few months back describing some of the trends it had seen as developers tried to monetize their apps.  They found that advertising on free applications simply couldn’t match the payoff from even the least expensive paid applications, and would require an outrageous $8.75 CPM to reach the same income per download/install.

AdWhirl, who launched just last month, says its already signed over 10% of the top 50 applications in the App Store and is serving 250 million ad impressions per month.  Interestingly enough, AdWhirl has already called out the report from Pinch Media stating that it based its information on the fact that a user only produces one ad impression per interaction, when this is far from the truth.

In its short existence, AdWhirl is already reporting that it sees between 3-5 ad impressions per user interaction, which changes things dramatically.  When you take the $8.75 CPM Pinch Media suggested to be on par with paid app revenue, and divide that by 5, the CPM becomes much more attainable and realistic.

To defend its stance, AdWhirl has also released a new report outlining its new findings and statistics.  The report reveals that applications that crack the top 100 in the Free Apps list make $400-$5000 a day – a wide range yes, but even at the low end, it works out to around $12,000 a month.  Among these top apps, AdWhirl is reporting an impressive $1.90 eCPM and 2.6% CTR.

I’ve always maintained that from a revenue standpoint, it makes much better sense to provide your app free of charge to consumers to spread usage as far as possible, and then monetize with mobile dispaly advertising that’s heavily targeted and optimized.  This way, your app makes into the hands of as many people as possible without discouraging some with a price tag, and your revenue is on-going instead of surging and evenutally dropping as is the case with paid apps.