Ad supported vs $.99 – My experience

I love football, and I can’t tell you how excited I am that it is back on this week. I love playing fantasy football even more, and have even made an iPhone app for fantasy football drafts the past few years.

This isn’t my day job, and I know I’ll never get rich doing it. My main goals are to get some more experience developing for iOS, earn back my expenses, and help pay for NFL Sunday Ticket.

Last year, my app was sold for $.99, and I made a small, but reasonable amount of money (something between $400-$500). This year, I decided to see what the results would be like if I offered it for free, but monetized it using advertising. At the last minute, I decided to make another version that cost $.99, but was identical except for the fact that it lacked ads – ads are sometimes kind of annoying, and as a user I’ll often opt to pay $.99 rather than deal with them.

Now that the fantasy football draft season is over, I thought it would be kind of interesting to take a look at the results. The limited shelf-life of this app (drafting season is at most 2 months long, and the average user won’t use it more than a few hours per year) makes a less than ideal case study for ad-supported vs paid, but I think there is some interesting data anyway. So, here is some stuff I learned from this:

1) Free apps get downloaded way, way more than even $.99 apps

This is obvious, of course, but the magnitude of the difference is worth pointing out. The free version of my app was downloaded 11,450 times, whereas the $.99 version was downloaded only 239 times.

My takeaway from this is, if you’re going to try to sell an app that is going to have free competitors, you’re really going to have to work hard to differentiate yourself from the free versions. Free apps are simply going to eat up the lion’s share of the market.

2) But they don’t make nearly as much, per-user

Those 11,450 downloads translated into several hundred thousand ad views, resulting in total revenue of $111.25 for me. This is very slightly less than $.01 per download. The paid version brought in $167.34 from its 239 downloads – despite having roughly 1/50th of the downloads, it actually out-earned the ad-supported version by ~$55.

I almost certainly made a lot less money this year by offering a free version supported by ads – if even 2% of the users who downloaded my free version would have shelled out $.99 for the paid version had it been the only option, I would have come out ahead.

Had this app been something people would use year-round, it might have worked out a little better.

Lessons for next time

Despite this not being the ideal outcome, I learned a few lessons from this. Your app has to be immensely popular to make any sort of worthwhile revenue from advertising. I don’t think niche apps or apps with limited lifespans are good candidates for ad-supported versions. Also, I think there are probably better ways to utilize a free app than just throwing ads on it.

Probably the best use of an ad-supported app is to use it to promote additional, paid functionality. You could do this through In-App Purchase or by selling a different version of the app altogehter. The important thing is to differentiate the two beyond just advertising – the paid version should also offer more features. I would have done something like this, but I given the short life-span of these apps and my late decision to offer both versions, I didn’t have time.

Going this route gives you a chance to use your likely more popular free download as an opportunity to promote the paid functionality. Just be careful to offer enough functionality in the free version to make it worth downloading – free apps that are utterly useless platforms to promote paid functionality get (rightly) harsh reviews in the app store.

  1. One thing that you may not have thought of or just didn’t point out in the article is that you will may have the same 11,450 user next year and will make ad revenue from them again potentially doubling what you have already made plus adding to that user base and more money. The paid version will no longer make you any more income unless you add in app purchases for even more features.

    Thanks for the articles and data. I like seeing that data especially with an app that has a small usage window each year.

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