Pros & Cons: In-App Purchasing Vs. Mobile Ads

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With smartphones bursting into homes across the world at an astronomical rate, it is only natural that companies of all types should attempt the monetization of that landscape. The same types of techniques for making money in the digital age that work exceptionally well on desktop or laptop computers (pop up advertisements, for example) don’t fit the architecture of a smartphone at all. Businesses have looked to two different methods to make the most of their money in this environment: in-app purchasing and mobile ads. Both methods have their fair share of benefits and disadvantages that can’t be ignored.

In-App Purchasing: The Pros

One of the major benefits of in-app purchasing is just how easy it is to do. When you set up an app with in-app purchasing on the iOS operating system, for example, all a user has to do to purchase whatever they’d like is tap a few quick buttons with their finger. Depending on their device settings they may also have to enter their password – that’s really it. They don’t even have to enter their debit or credit card information, as the price of the content will be automatically charged to the associated iTunes account automatically.

In-app purchasing is also a great way to pursue the monetization of the mobile landscape in the most unobtrusive way possible. Users don’t have to deal with advertisements at all – businesses are simply making additional features available for a price that users can choose to purchase if they deem it necessary. Users are more likely to initially download the app because it’s free, which means that you’ll have a greater opportunity to increase your conversion rate by offering up enticing additional content for your desired price.

In-App Purchasing: The Cons

The major disadvantage of in-app purchasing is that it is essentially a business model that many people question the ultimate sustainability of. Studies have shown that the vast majority of in-app purchases are made by a very small percentage of the user base of a particular application. Software developers who use this method essentially depend on a very small number of people who spend a large amount of money within the app. If that small group of people should suddenly move onto the “next big thing,” the app will dramatically lose profitability almost instantly.

Mobile Ads: The Pros

The major benefit of mobile ads is that they have a massive penetration rate. Instead of quietly making additional content available through in-app purchases and hoping that a certain segment of your user base will offer up additional money, you’re essentially putting an ad in front of the eyes of every user of that app on the planet. You can also more easily track the total number of ad views based on the size of your user base. If you know 100,000 people downloaded an app, you can also reasonably guarantee that almost all of those people will see the mobile ad when it loads.

Mobile Ads: The Cons

The major disadvantage of mobile ads is that they generally disrupt the user experience in a significant way. If a user is using a particular app to look up movie times, a mobile ad needs to go in one specific place for maximum effectiveness: after the user has requested information but before that information has actually been provided to them. That is essentially the best place to guarantee that the user will view the ad at all. However, doing so disrupts the user experience and may make them look for other apps with less ads in the future.

Stephen L