Mobile Apps Show Significant Increases in Average Revenue Per User
Christmas 2012 was officially the holiday season of the app, as multiple reports claimed record numbers of app downloads and installs. With all this new data confirming positive momentum for apps, we looked at Apsalar’s data set to see how these new users affected revenue for mobile app developers.
As a leading provider of free mobile analytics, we have insight into 400M+ user devices . For this report, we turned to our Big Data Lab to analyze how lucrative last holiday season was for developers.
ARPU LEVELS ARE UP
First, we analyzed how the 2012 holiday season compared to 2011 in terms of in-app purchase dollars. We looked at average revenue per user (ARPU) against a baseline to see whether the 2012 holiday season was more or less effective than the 2011 holiday season at driving in-app revenue.
Our data shows an 11x increase in ARPU in December 2012 when compared to the previous year. One likely explanation is that, as of last year, in-app purchases became recognized as one of the best ways for game developers to generate meaningful revenue. This was a major inflection point in the industry, as the freemium model’s efficacy was proven, and companies like Natural Motion generated $12M+ worth of in-app purchases in August 2012.
Another key insight from our data is that users began making in-app purchases earlier in 2012 than they did in 2011.
One possible explanation for this is that consumers have developed a higher willingness to make in-app purchases over time. This means they do not require as strong an incentive to make a purchase as they previously did. Last year, it may have taken an iTunes gift card or holiday promotion around Christmas to incite an in-app purchase, whereas users may have been willing to make these purchases even without promotions in 2012. It’s also possible that mobile app companies started promotions earlier this year, due to increased competition in the app market.
DECEMBER STILL KING BUT THANKSGIVING WEEK STEALS THE SHOW
December is historically the strongest month of the year for retail sales and ecommerce, so we also looked to see how last December compared to the previous 3 months in terms of ARPU for developers.
Our data uncovered that the week of Thanksgiving, and not the week of Christmas, had the highest average revenue per user in the past four months. This is an interesting data point for developers, as many apps release major updates before Christmas or typically increase marketing around the holidays. There may be an opportunity for savvy marketers to further focus app promotion around Thanksgiving, since app marketing costs are traditionally lower than in December.
Finally, while the week of Thanksgiving had the highest ARPU, we also looked to see how ARPU changed month-month since September.
December experienced a 370% increase in ARPU vs. September and a 40% increase vs. November. This positive trend is great news for the app industry and mobile app developers worldwide.
For developers looking to capitalize on the higher ARPUs found during these time frames, the data recommends focusing promotion around Thanksgiving and during the first half of December.
In order to best capture users’ in-app spend in the 2013 holiday season, marketers may want to keep the above findings in mind when planning for promotions in Q4 and beyond.