Saturday, May 25, 2013

Mobile Users Would Rather Engage an Ad Than Pay for an Upgrade

The psychology behind how we spend our money is a wondrous thing. I’ll gladly throw down $1 a day for a Diet Coke, but I’m reluctant to spend $1.50 on a box of pasta that would feed my whole family when I can get it for less than that on another day. I’m also reluctant to pay for additional levels on my iPad games. I’ve done it once or twice, but it’s not an easy button push.
For whatever reason, mobile users will do almost anything to keep from paying for an upgrade – including engage with ads.
tapjoy free content
The data comes from a new study by the Yankee Group called “Redefining Virtual Currency.” It’s an informative read and it’s free, so you should check out the whole report if you’re in the app biz. Disclaimer time: the survey was paid for by Tapjoy, a company that is in the mobile advertising biz. Not saying the data is biased, I just want to be clear.
The report says that 1 in 3 mobile owners are downloading 2 to 3 apps per month. 1 in 5 are downloading 4 to 6 apps a month. Almost all smartphone owners and more than 85% of tablet owners have at least one free app on their device.
When it comes to paid apps, the numbers drop. 63% of smartphone owners and 64% of tablet owners have paid for an app. Smaller, but still, very good numbers.
It gets better. 54% of smartphone owners and 41% of tablet owners have paid for an upgrade to an app.
So, we know they’ll pay – but the flipside is, they’d rather not. Free is better, of course. Even if it means watching an ad in order to get a reward.
What kind of reward is worth the effort? This is my favorite chart from the study:
tapjoy content
71% would watch an ad in return for a free coffee! LOL. Make that a Diet Coke and I’m in. I also find it fascinating that “paperback book” was the second most popular choice. Who says people don’t read? At the top of the list is the tablet app, coming in 7% higher and a smartphone app. Why? It’s not that tablets are more popular, it’s probably because tablet apps cost more. I haven’t seen a study but that’s been my experience.
Mobile users are already warming up to the idea of exchanging time and information for digital goods. 53% of tablet owners in the survey said they already viewed commercials in exchange for a free app download. I don’t think I have but I probably would if the opportunity presented itself.
Which brings me to the point – this is an opportunity for marketers that hasn’t been fully explored. Pretend you like to hike. You get a free hiker’s guide app but to get more hiking trails in your area you must pay an additional .99. Or you can submit your email address to a company that sells hiking gear and get the upgrade for free.  It’s a three-way win. The customer gets a personalized upgrade. The retailer gets a targeted email to add to his mailing list. The app developer gets a kick-back for every email he collects.
According to the study, The virtual currency market is currently sitting at $47.5 billion in the US. By 2017, it’s expected to rise to $55.4 billion. Who doesn’t want a piece of that?


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