When is in-app advertising ok?

A popular sports-app provider this week (we won’t name who) released a new version of their app in readiness for the upcoming football season in Australia. In previous years, this app and its associated website have been one of the more popular among sports fans Australia-wide. However, in less than 7 days, this app has earned them a substantial amount of negative reaction and press. Why?

Well, it all comes down to the idea of advertising. The app provider in this case is charging $2.99 for the app on both the Apple App Store and Android Market, which in terms of sports apps is quite a high amount. But the sticking point is that the app, even though it is a paid app, still contains a considerable amount of advertising. Now, for free apps, it’s easy to understand why there may be advertising in the app. The fact that the app developer is taking no revenue for each sale of the app means that they have to offset that loss by making earnings from advertising revenue. And, more often than not for a free app, users are quite understanding of that, and are prepared to suffer the tradeoff of advertising for a free app.

So, how could this company have approached the idea of in-app advertising differently?

  1. Offer a free app with less features and a few ads, as well as a full feature paid/premium app with no ads, and allow the user to choose which app they want
    This is the approach that many companies take. If you offer a free app, which the user can simply download with no hassles from the App Store or Android Market, then it gives the user the opportunity to try it out first before purchasing the premium app. That way, if they like the free app, but want the fully featured app without any ads, they can simply upgrade for $2.99. The app is still earning advertising revenue from everyone who uses the free app, and you are also earning sales revenue from those who want to upgrade to the premium version.
  2. Offer the paid app for $2.99 without ads
    The idea of advertising in apps is that it is there to offset the loss you are taking by offering an app for free. If you are charging for an app, you are essentially saying that this is the amount we think is right to charge, and the amount that will allow us to be profitable from the app. The only form of advertising that should even be considered in a paid app is cross-promotional advertising for other apps by the same developer, and even then it should be unobtrusive and in no way ‘in your face’.
  3. Offer the paid app for $3.99 instead
    Instead of trying to make up a piece of the app revenue pie with advertising, just make the app slightly more expensive. Users are going to be far happier to pay the extra dollar for the app without advertising, than they would be to put up with advertising in a paid app.
  4. Offer the app for free with advertising
    The fact remains that where there are two similar apps, and one of the two is offered for free, that the free app is going to garner a substantially larger amount of downloads than the paid one. Therefore, if the developer in question is so keen on having advertising in the app, offer the app for free. Why? Because by offering the app for free it will be downloaded more, and your advertising in the app will reap more impressions, more clicks and more revenue, possibly offsetting the loss taken by offering the app for free.

As you can see, there is no point 5 to the above list. No ‘paid app plus advertising’ option to choose. And that’s why the app in question, in less than 7 days, has been rated 52 times on the App Store, with 39 of those ratings being 2 stars or below. And we won’t even start on what the feedback on the app looks like…

Posted February 27th, 2012 in General.

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