Friday, May 25, 2012

How U.S. Consumers are Spending on Mobile Apps

According to the latest market study by ABI Research, about two-thirds of U.S. mobile app users have spent money on an application on at least one occasion. Among these paying users, the mean spend was $14 per month.

Behind the seemingly high average amount there are, however, some striking findings.

Senior analyst Aapo Markkanen at ABI said, “The median amount among the consumers who spend money on apps is much lower than the average, just $7.50 per month."

This reflects the disproportionate role of big spenders as a revenue source. The highest-spending 3 percent of all app users account for nearly 20 percent of the total spend, while over 70 percent spends either nothing or very little.

The numbers also reflect certain trends in different app categories. Thus far, the releases that have best succeeded in making money have typically been utility apps often used for business purposes, or iOS games monetized through strings of in-app purchases.

In both cases the money comes from a remarkably small base of customers. Is there anything developers can do to boost the conversion rate from free to premium?

Markkanen has two recommendations. "First, don’t get obsessed by mobile and apps, but remember also the web,” he adds. “Most of the successful app concepts either support, or are supported by, a web component."

Second, he says it's best to see your product through a long-term lens, asking yourself what could convince your customers to still engage with the app in two years' time.

Evernote, for example, has excelled at both. It has skillfully combined the web and the mobile, and at the same time it has also managed to become a habit for many of its users.

It demonstrates that the longer its customers stick around with a free version of an app, the likelier they're going to convert to its premium version.

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