"App Annie has tracked the growth of the mobile economy since its infancy, and we're really starting to see publishers hit their stride with mobile in-app revenue growing 1.7x last year," said Bertrand Schmitt, CEO and co-founder, App Annie. "The continued innovation in mobile apps, monetization models and mobile advertising have driven significant growth in freemium and in-app advertising revenues. The space has matured significantly and publishers have the required 'know-how' to monetize off the significant app usage they're generating."
Some key takeaways from the report include:
● Freemium drives mobile app revenue growth: Freemium app revenues grew by over 70 percent, while paid and paidmium app revenues declined by 19 percent and 24 percent, respectively. The maturity and general success of the freemium model are clearly evident in freemium's dominance of direct app revenue models. Mobile app revenue per device (including advertising) is projected to grow 2.5x by 2018.
● Mobile in-app advertising set to overtake online search advertising: Mobile in-app advertising revenue also grew by 70 percent, outpacing both mobile and PC browser-based ads. By 2018, spending on mobile in-app advertising alone (in the 10 key countries measured*) will be greater than spending on online search advertising, today's digital advertising juggernaut.
● Geography matters and it's not one-size-fits-all across countries: Revenue generated through app stores versus in-app ads widely varies across countries—India brings in 70 percent of its app revenues via in-app ads while Japan makes more money via app stores (81 percent). The US and Japan are the largest markets for mobile app revenue, but emerging markets such as Brazil, India and Russia are projected to quickly grow through 2018.
"Both freemium and in-app advertising will continue to be great opportunities for developers to make money out of their apps," said Karsten Weide, IDC's Vice President of Media & Entertainment. "In the ten key markets we looked at, in-app ads will grow by a factor of 3x by 2018, and app store sales by a factor of 2x."
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