Freemium, in-app ads pass paid apps as the preferred way to generate mobile app revenue

Freemium and in-app advertising are outpacing paid apps as the preferred way to generate revenue for the mobile app industry, according to a joint study by App Annie and IDC.

The mobile app industry has surpassed 102 billion annual app store downloads and $26 billion in revenues, and "companies who properly leverage advertising and monetization strategies will see massive revenue growth," says an App Annie blog.

From 2012 to 2013, freemium saw 211 percent revenue growth and in-app advertising saw a 56 percent revenue growth, while paid and paidmium revenue declined, according to the report.

The United States and Japan are the leaders in mobile app monetization, but mobile device growth is expected to come from emerging markets in the coming years, says Karsten Weide, Program Vice President of Digital Media and Entertainment at IDC.

"India is a prime example with 8.7x revenue growth from 2013 to 2017, which appears to be largely driven by rapid smartphone adoption," Weide notes.

Mobile app-related revenue is projected to experience a more than threefold increase over the next three years, predicts the joint study Mobile Advertising and Monetization Spotlight 2012-2017: The Economics of Free.

"In-app advertising is a rapidly growing source of revenue, with over 40 percent of publishers we surveyed, many of whom are users of our Analytics platform, using it to monetize," says Bertrand Schmitt, CEO of App Annie. "Add to that a 1.6x growth in in-app advertising revenues from 2012 to 2013, and it's clear that it is beginning to rival freemium as a way to generate revenues," he adds.

For more:
- see the IDC/App Annie release
- check out the App Annie blog
- read the report (reg. req.)

Related Articles:
Mobile can be a business driver, say panelists
Mobile World Congress brings new ideas, products to mobile marketing
What is your firm's mobile 'app-titude'?