App profit model: Free Value Added is kingly, but built-in ads are growing wild

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The free value-added of mobile apps rose 211% per cent last year, according to a new survey published by Mobile Analytics Inc. App Annie and IDC. Obviously, free is very effective.

The vast majority of app apps are profitable through the free value-added model, which is very large, with 83% of apps in the iOS App Store and Google Play top 1000 choosing free value-added, if we expand the statistics a little more, Extending to the top 2000 app apps, you'll find that the app that chooses the free value-added profit model is larger, reaching 92%.

The free value-added profit model includes a variety of app-built purchases, such as buying virtual items, upgrading or speeding up in games, buying additional features (buying more games or adding game content), buying more time to use apps, paying to delete ads, and more. For example, the New York Times app allows users to view a certain number of articles, but some articles are not open to free users unless you are a subscriber.

According to research reports, the most common option for consumers in the free value-added profit model is to buy additional app apps, and half of the app developers surveyed by apps Annie say it is their favorite way of doing it to offer consumers the extra functionality to buy app apps.

Obviously, for app developers using the free value-added model, the key to success is expanding the number of free users, and then naturally some of them will pay to buy what they want. But the challenge is not small, for example, in all app applications, less than 5% of app apps with more than 30% paid subscribers.

In fact, 80% of app developers say less than 5% per cent of users are completing a built-in app purchase.

The US is still a leader in app revenue rankings, where revenues rose 1.7 times-fold last year, but Japan and South Korea grew more multiples, 2.2 times and 2.3 times times respectively. India, with its low starting point, has grown three times-fold in app revenues and is expected to grow 870% from 2013 to 2017.

Interestingly, less than half of app developers surveyed say they use app-built ads, and 58% app developers say they've never used ads in their app apps. In the profit process, the advertising business has a sharp turn, in an application developer development of all app applications, advertising revenue only 10,000 dollars a month.

According to App Annie, only a handful of the apps that stand out will get more than 100,000 dollars in advertising, such as the Flappy Bird, which exploded before.

Although the number of app developers that choose the ad revenue model is not large, according to the research report, the revenue from mobile app ads will exceed those of PC advertising by 2017. The figures cited in the IDC report suggest that by the time the node was 2017, the share of mobile advertising in all major mobile markets would have increased. Mobile ad revenues in the US market will reach 60%, while mobile ad revenues in Germany, Britain, France and Brazil will also grow significantly, though only South Korea and Japan will be below 50% per cent.

App Annie and IDC have investigated more than 2000 game app developers to complete the research report.