Move over paid downloads and ad support, IAP is taking a seat at the head of the monetization table. Smarter and more dynamic than paid downloads, and best of all it plays well with others. The numbers don’t lie, IAP revenue has nearly doubled on iOS over the past year to account for 69% of revenue at the end of 2012, up from 51% last January. During the same period, premium download sales were nearly flat. Smart doesn’t mean easy though, IAP monetization programs can be significantly more complex compared to ad support or premium app sales.
To help navigate the added complexity of pricing, managing, localizing, and maintaining IAP content, we have decided to make in-app purchases the focus of the first full length Apptopia Mobile Strategy Guide. The App Developer’s Guide to In-App Purchasing can be downloaded for free at insights.apptopia.com. The guide provides actionable strategies to build a successful IAP monetization program, combining insights drawn from data on 1.4M iOS and Android apps with best practices as seen in highly successful examples that make millions today.
Whether it is a game adding new levels and features instead of releasing a sequel, a Newsstand app that sells lots of different types of content rather than using an array of standalone apps, or an app to learn math that lets students buy just the content relevant to classes they are taking, IAP provides a clear alternative to the common practice of having lots of similar apps, so you can have a few apps that pack a big punch. IAP driven consolidation also allows you to focus 100% of downloads and direct revenues on a single app rank, providing a clear alternative to lite/full versioning.
Consolidating functionally compatible and thematically relevant apps can be the difference between a few moderately successful apps and one highly successful app. Developers make more money off one app ranked #10 than ten apps rated around #100. Plus by selling new content within an app, developers can extend the life of successful properties, with clear insights into the content that users attach a high value to, voting with their dollars.
Keep in mind though, for an app to sell effectively, you have to give it the tools to do more than shove a generic list of premium content in users’ faces. Imagine walking into a car dealership. If a salesman goes for an immediate hard sell as you walk in, the likelihood of you buying drops near to zero. That dealership invested marketing dollars to get you through the door, but blew the shot at a sale. The structures should be in place so customers who want to buy immediately can, but it isn’t worth ruining an opportunity to sell to the 5% of customers who will convert if the stars align trying to quickly sell to the 0.5% who are very likely to make a purchase.
Instead dealerships are designed to support early customer discovery of primary offerings. Cars with the widest market appeal and low friction to convert are placed closer to the door. The test drive (read your free-to-use features) adds the emotional connection and demonstrates value. Once customers are interested, a pitch that is subtle, calculated and persistent will drive results among a large portion of the customers that are legitimately in the market to make a purchase, and the window shopper types (read non-paying users) will leave with positive things to say. That on its own has real value.