In-app advertising still a bad model for mobile apps

News Zach Epstein 11:39, Feb 12 2010

A new study reaffirms low retention rates for iPhone and iPhone touch apps; Android usage patterns follow same trend

A new report from Flurry Analytics this morning tells the same old story where mobile app retention rates are concerned. For developers, the best way to make money in the mobile app ecosystem is to take the money and run.

Flurry's retention data shows that only about 40% of iPhone, iPod touch and Android users continue using an app one month after downloading it. After two months, the usage rate drops below 15% and by month six, app usage site around 5%. Flurry's data for this report was collected over a six-month period and 100 apps were studied. In total, over 800 million user sessions are represented in the data.

With mobile advertising CPM rates as low as they are, free ad-supported apps are clearly not the best way to make money on mobile apps. While adoption rates are almost always much lower for paid applications, taking up-front money from a smaller number of users will often pay off much better than hoping customers will continue to use an app and generate ad revenue.

As flooded as both Apple's App Store and Google's Android Market are, apps come and go very quickly. For developers hoping to turn mobile applications into an effective part of their businesses, a quality app with a nominal fee is clearly a better option than a quick ad-supported free app.

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