Do apps deliver ROI?

Posted on December 3, 2010


research is showing the drop off rate in app usage continues to be high, with the complexity of getting visibility getting even larger as more apps are added to the store. An interesting analysis by pinch media (presentation below) is that due to the low reuse of apps, very few of them ever make any money from advertising as they would need a eCPM of $7.85 based on an average number of uses and CTR – which means you might as well just charge for your app. obviously this is an average and your app wont be like that 🙂

what is interesting too is that revenues from virtual goods are growing and eclipsing advertising as a revenue source, so this may become another income stream for mobile apps (like affiliates online).

in app revenue shift

also, the rapid growth of android is something to keep in mind, see the article below the presentation for some more insight into the topic.

iPhone AppStore Secrets – Pinch Media

View more presentations from Pinch Media.
from the music void
Whether a mobile app delivers an adequate ROI is dependent on what the app owner is trying to achieve. Certainly, yes numerous apps have made serious amounts of money for their owners. There are over 100,000 apps in the iTunes store and more than 75,00 in the android marketplace to name a few, with new entries every day. Yet how many are regularly used one month after a user actually downloads them?What is often overlooked due to the over hyped app marketplace, is the high drop off rates (users who stop regularly using the apps they have downloaded), experienced by numerous apps. Whilst initial uptake can be great, consumer bordem with the limit of what can be achieved in apps generally lead, to quick consumer usage drop-off rates. Is such a high churn rate in terms of lack of use viable over the medium to long term? Obviously, companies and individuals continue to develop apps and TMV do not see that slowing anytime soon.Viewing apps as purely a money making exercise can often be wrong, as competition is extremely high and TMV are yet to see any significant figures which detail high level profits in terms of income received from charging users to download mobile applications. Yes there have been the odd exceptions, but these are more the exception than the rule. We have seen lots of hype surround iPhone and iPad newspaper applications…yet very little in the way of actual usage figures (by this I mean actual subscription uptake levels) in terms of mobile applications.

Usually, if companies generally do not release uptake figures – it is because they are rather disappointing. We all hear about it when usage figures are great as the companies are ramming it down your throat. In these circumstances silence speaks louder than words. Please do feel free to inform TMV of any music subscription based mobile applications that have sold more than 1 million mobile applications?

Another way of measuring ROI is the level of consumer interaction a mobile application brings to its users. It can help to increase satisfaction with your product or service, prevent churn and drive consumer loyalty. In TMV’s view this is where the real value lies in mobile applications. Although a generalisation, most uptake and regular usage occurs in free apps that have a utility emphasis in terms of everyday work environments, like dropbox, a weather application or the like.

In reference to music and artists, using a mobile application to drive pre-sale activity and creating a social element within a mobile application is a dynamic method of keeping application users interested and coming back to regularly use your application. Obviously, this does necessitate actual artist interaction and it does not have to be much, 5 – 10 minutes a day.

Apart from T-pain, placing a cost on downloading your artist app for fans is only going to result in limited uptake. Make it free with dynamic features and analyse the usage patterns of your fans to attain a better perspective on marketing to give them what they actually want. Ensure any marketing campaign engages across all platforms.

DO NOT place all you apples in one basket (pun intended). On most recent figures android handsets are outselling iPhones in Australia at 2.5:1, in the UK it’s around 2:1 and in the US we have unconfirmed reports that android handsets are outselling iPhone at a ratio of 2.3:1 (all of these figures have been given in direct communication with operators and handset manufacturers in each of the aforementioned territories). Ensuring, your application is cross platform is of paramount importance, as it will mitigate any potential fan backlash.

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