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    Monday
    Nov082010

    iPhone Niche App: Ad Supported or Premium Download?

    It was my day off and I was traveling to a wedding with my wife out of state when I received an emergency page from work, customers were reporting that they were unable to access our web sites. Without my laptop, I only had my iPhone available to do some tests. The reports indicated that it was only limited to customers on the west coast, but that everyone else could access the sites fine. Immediately I started doing some google searches for looking glass sites on the west coast. This yielded nothing but broken links and sites that did not work well on the iPhone.

    My frustration with this experience gave me the motivation to produce a mobile looking glass application, that would make my life much easier. I spent the next few weeks aggregating ISP’s looking glass devices, writing code, and eventually came out with an app that I was happy with. I really wanted this application to be widely available so that no one would have to deal with the same frustration as I did, but I also wanted to be able to cover my costs. I thought that the best way to handle this would be a free application, supported by ads.

    Apple approved “Traceroute” (LookingGlass was taken) on October 1st and with excitement I watched as the downloads accumulated each day. Traceroute was being downloaded across the world, and by November 1st it was being used in 57 different countries. Yet each day when I checked in on my iAd performance, it was disappointing. The number of impressions to the number of requests was abysmal. Traceroute has a very diverse international user base approximately 60% of the users are outside the US, and as of writing this iAd support is just starting to trickle out internationally. Each day hundreds of people were using Traceroute but I was only getting credit for a small population of these users. On one hand I was happy because I had produced a useful niche application, but on the other hand I was hoping to be able to at least be able to cover my apple licensing costs.

    Come late October and only having generated enough revenue to purchase a few Americanos, I decided to start thinking about other ways to monetize the application. I never liked it when developers put out free but crippled versions of an application to push people to convert to a paid application. Although if you could get the same functionality in the free version as a paid version who would choose the paid version? I shrugged my shoulders and with nothing to lose thought I would give it a try.

    I got to work and stripped out all of the code for Ad support in Traceroute and published Traceroute Pro, to the app store.

    Results:

    Apple approved Traceroute Pro on November 2nd, and in the one week since that approval Traceroute Pro has generated very low double digit downloads. Although comparing the revenue of Traceroute Pro vs. Traceroute, the 99c downloads have yielded more revenue in a week with very low volumes than the Ad views on the thousand plus applications of Traceroute that are in use.

    Given the revenue numbers in just one week it would seem that it would be better to release future applications as a paid applications instead of the ad supported model, although I think that there are some variables to watch before I come to that conclusion.

    • Its difficult to tell if the paid downloads are current Traceroute users who upconverted to Traceroute Pro to avoid ads, or are these new users?
    • If I integrate a secondary Ad platform to fill in when iAds fails to generate an Ad will that have any impact on revenue?
    • As Apple roles out iAd international support will the fill rate increase significantly to impact revenue?

    I plan to explore using Admob to step in when the iAd requests fail. I’ll follow up with a new blog entry for if this works and how well it performs in comparison to iAds.

    I’ll keep an eye out on these variables and report back as things progress but at this point the best recommendation I could produce for utility application developers is to utilize both application types and see what works for your audience.

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      iPhone Niche App: Ad Supported or Premium Download? - Blog - Remarkable Pixels

    Reader Comments (2)

    My experiences have been pretty similar - my apps are very niche like yours and at most they would make $5 a month with AdMob. One variable to think of when considering ads is what reach you think your app could possibly have. If you think everyone will want your app then ads can pay off.

    But, an app like yours or mine that only a very small could want it makes much more sense to charge. I would even charge more than 99c especially if there are no other real competitors. My app did best when I charged $4.99 (initially a few thousand in revenue each month). My brief experiment with ads yield $5/month revenue.

    November 8, 2010 | Unregistered CommenterMattjDrake

    I've experimented with AdMob on one of my simplest niche apps, and even after 2 years it still only earns about $30/mo in ad revenue.

    When I released my two paid apps, I experimented a bit with the pricing model. For the first month I released it for free, which resulted in a huge number of sales, but looking at my Flurry analytics those users quickly stopped using the app. When I increased the price to $1.99, my number of downloads dropped off, but it remained at a respectable level.

    After a while I thought perhaps my pricing was too high for some users, so I dropped it down to $0.99. What I found was that my number of users purchasing my app didn't change in the slightest, but I was making have the revenue from their purchases.

    What I've hard from other developers, as well as my own experiences, is that you should charge what you think your app is worth. The $0.99 price-point makes it appear to users that you, as a developer, don't value your app, and therefore they shouldn't either.

    Try cranking the price up, and see how it does. You might also want to add some Pro-only features that differentiates it (e.g. history, a chart of response times, etc) that encourages people to upsell.

    November 8, 2010 | Unregistered CommenterMichael Nachbaur

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