No one knows that better than the American tech market, because we are constantly seeking things for free. The irony is that our constant search for free downloads, free games and free updates — sometimes to the point of illegally pirating tech — is what artificially drives up the prices we pay for that tech. If not for the billions lost through tech piracy, software, games and apps would probably cost a lot less than they already do.
But let it not be said that corporate America is ready to do away with the free tech lunch. According to Juniper Research, a tech marketing analyst group, advertising will be the magic wand that app-makers will wave to keep consumer costs down.
According to Juniper’s report, revenues for app makers from in-app advertising will hit $2.4 billion by the end of the year. By 2015, that figure will soar to $7.1 billion.
In-app advertising is viewed as a win-win because it enhances the revenues for app makers at the same time it makes an app a lot less expensive for consumers. Mobile users are increasingly less apt to buy apps for their devices when so many are available for little to no money at all.
But here’s the rub. While consumers like free or cheap stuff, they don’t like ads. According to Nielsen Research, the folks responsible for tracking TV ratings, more than half of all DVR owners fast forward through commercials when they watch recorded shows. Consumers don’t like ads, so it will be a balancing act for manufacturers and consumers to figure out where the tipping point will be. How many ads, and how intrusive the ads are, may convince consumers to go to a higher-priced app of a similar style in order to avoid the advertising.
Here’s what Juniper’s Charlotte Miller had to say about it.
“Mobile advertising gives marketers the chance to reach consumers on a more personal level than any other type of advertising,” Miller said. “Creating immersive and entertaining experiences to attract the attention of the consumer is essential for marketers wanting to take advantage of the massive increase in app usage.”
And she does have a point. We may not like ads that much, but we love the funny ads, or the interactive ads, or the ones that offer us chances to win prizes by videotaping vicious pranks we play on our roommates. American Express did a very successful, if not costly, campaign a few years back involving hybrid live-action/animated commercials for its cards starring Jerry Seinfeld and Superman. The commercials teased a longer version of the commercial on the AMEX site, and site visits quadrupled over normal levels.
So, keep an eye on your apps as time marches on. And check out the ads. If the app-makers follow the analysts’ instructions, you might like what you see.