In-App Advertising Opportunities Poised to Grow

Fewer Mobile Users Are Willing to Pay for Apps

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Mobile users prefer free, ad-supported apps, and that's creating more in-app advertising opportunities.

Despite a growing number of app users, the number of U.S. mobile users willing to pay for apps will actually decline in the next four years. About 80 million people will pay for mobile apps at least once this year, according to a new forecast from eMarketer. That represents about one-third of all mobile users.

Yet these gloomy numbers might not be bad news for marketers. Nearly 93% of smartphone users and more than 90% of tablet users will download and install apps, according to eMarketer, signaling more in-app advertising opportunities.

"I think the whole market is shifting. What's happening now is people are testing the various business models," said Cathy Boyle, senior mobile analyst at eMarketer. "More app developers are pursuing monetizing, and marketers as well as consumers are embracing it,"

With the lackluster paid app marketplace, developers have been seeking other monetizing models such as in-app advertising, subscription or in-app purchase. They are also experimenting with more sophisticated formats, Ms. Boyle said, including video ads.

Still, the effectiveness of in-app marketing has been hard to measure. Although most advertisers depend on clickthrough rate, Ms. Boyle said using this metric alone is "risky" because accidental clicks are still common among smartphone users.

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