Mobile advertising has long been sought to monetize mobile applications that are offered free to users, but a new study by analytics firm Flurry indicates a better option might be the addition of virtual goods.
According to the data, mobile virtual goods accounted for 80 percent of revenue from iOS apps in September, far outpacing advertising. In fact, January, 2010 was the last month that advertising revenue was greater than virtual goods. Since then, it’s been nothing but micro-transactions of toys, coins, weapons and levels, just to name a few. Flurry conducted the research using data from social networks and social gaming applications with a combined reach of 2.2 million daily active users.
Virtual good and social gaming in general have gotten wildly popular lately, with sales of virtual goods already representing the primary source of revenue for social gaming on Facebook. Michael Pachter, Wedbush Morgan Securities video game analyst, reports that social gaming has grown from approximately $600 million in 2008 to $1 billion in 2009. Further, he forecasts that social gaming will generate nearly $1.6 billion this year, and grow to more than $4 billion by 2013.
Users respond better to virtual good offers over advertising because its directly relevant to what they’re doing inside the app. Still, it’s surprising that it generates such a substantial amount of revenue over mobile advertising. I wonder when we’ll see a combination of the two?
19 ways to monetize or improve monetization of mobile, social, and casual games | Electronic Scribble
[…] Percentage of paying users is among the important metrics tracked by the game developers that utilize freemium as the predominant business model for their mobile/social/casual games. Typical value of this metric is between 1% and 3%, implying that only about 1 to 3% of a game’s user base is the paying user base. In other words, at least 97% of a game’s user base is not making any in-game purchases or paying to play the game. The popular way in which the game developers monetize this 97% user base is through in-game advertising, which in itself is not the best way to monetize because the ads distract from the game experience and the revenue from virtual goods is 4x higher than that from advertising. […]
Authority Mobi
Yeah, I agree wineware1, and the developers are going to make a fortune with this virtual product dev.
Mobile is getting really fun and interesting to say the least.
I still think there is a great amount to be gained on the Mobile Advertising though.