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In-app purchases to transcend mobile ad revenue: Flurry

In-application purchases are likely to surpass revenue derived from mobile advertising, while more consumer time is spent within apps than viewing television, confusing advertisers even more on where they should focus their marketing budgets, according to research from Flurry Insights.

The advertising and entertainment industries are in constant upheaval in the digital age, as consumer behavior is continually shifting and driving marketer’s decisions. Flurry’s report indicates marketers and developers will have to readjust again, with researchers predicting in-app purchases to exceed $33 billion this year, compared to ad revenue only generated $31 billion.

“This certainly matches the belief that mobile marketers are shifting more and more from acquisition to engagement,” said Jeff Hasen, co-founder of Gotta Mobilize, Seattle, WA. “If this forecast holds up, it speaks to success in delivering relevant and contextual experiences that generate a response.

“And not just any response,” he said. “One that leads to sales.”

Shift to apps
Mobile apps are generating a significant amount of revenue resulting in $21 billion from in-app purchases and mobile advertising with $23 billion last year. It is probable that these two revenue sources will switch places for this year.

Consumers have gotten more comfortable with spending money on the mobile space, due to popular gaming apps. The game apps largely dominated the top grossing space within app stores but now entertainment companies such as Netflix, Spotify, Pandora, HBO Now and Hulu are surpassing them, as consumers on a whole become more comfortable purchasing services within mobile.

These apps are rising in popularity, and are now dominating as the primary place where consumers have been occupying their time, transcending television viewing. Consumers in the US are spending 198 minutes using mobile apps not including mobile browsers, compared 168 minutes watching television programming.

The total time consumers are spending within mobile in general has reached 220 minutes a day.

Apple TV disruption
After Apple’s announcement with improvements to its Apple TV has been announced, the shift away from traditional television programming and cable will be even greater. Standalone services that offer a subscription fee for their services will be seen more and more, as consumers are interested in spending money still, but want to be able to pick and choose what they want.

Apple TV will allow app developers to bring their content to the television screen, which can increase in-app purchases even more.

“The smartest marketers are turning to new technologies like mobile marketing automation to tie into CRM programs and to not only follow the customer journey, but to react to it in personal ways,” Mr. Hasen said. “It is a road that serves all in the equation, most notably the mobile user.”

Final take
Brielle Jaekel is editorial assistant at Mobile Commerce Daily