In-app purchases outpace in-app ads for developer revenues

Anne Freer | October 2, 2020

App Business

App developers have noticed a boost in revenues from in-app purchases versus in-app advertising.

As in-app ad placements dropped during the pandemic, in-app purchases have grown during the same time frame.

According to an overview provided by eMarketer, it marks a shift in how developers are making money from their apps.

App revenues from purchases increased 23% during the first half 2020 compared to the previous year to $50 billion. The majority of revenues came from games at $36.6 billion.

What’s interesting is that fewer games are now using hybrid monetisation models – i.e. advertising and purchases.

There was a 11% drop in ad revenues during H1 2020 while in-app purchase revenues rose 15%.

Meanwhile, subscriptions are contributing significantly to non-game revenues and 97% of consumer spending on iOS and 91% on Google Play.

Of the top 250 iOS apps, 94% use subscription models compared to 79% of Google Play apps.

The top 100 non-game apps in the US generated some $4.6 billion in subscription revenues in 2019 as the trend seems to be catching on.

Many consumers are becoming increasingly comfortable with purchasing subscriptions of apps. But there’s a limit as most people aren’t willing to purchase a large number of subscriptions without cancelling others.

The findings could impact in-app advertising trends in the future.

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