Total mobile app revenues from pay-per-download, in-app purchase, subscriptions and in-app advertising will soar over the next five years, growing from $8.5 billion in 2011 to $46 billion in 2016, according to a new report from ABI Research.

The report also reveals that mobile application revenues from in-app purchases will pass pay-per-download revenues this year. However, app developers and Google need to do more to support in-app purchases if it is to expand successfully beyond gaming-related purchases.

“While there has been a lot of discussion of in-app purchasing, it is a very narrow group of success,” said Mark Beccue, senior analyst for mobile services at ABI Research, New York.

“The dollar amounts are huge, but they are coming from a small number of subscribers,” he said.

“These are super users who are playing games and spending money and skewing the numbers. We do not think that most people will go this way.”

Moving beyond games
The report focuses on the various revenue models for monetizing apps, which include pay per download, in-app purchasing, in-app advertising and subscriptions.

Despite the limited scope of appeal for in-app purchasing at the moment, ABI believes the model is going to expand over the next few years thanks to an explosion in in-app purchasing outside of gaming.

In particular, ABI Research expects to see more app developers get creative and realize they can monetize their app directly with in-app purchasing as opposed to paid downloads.

The report also points to the bigger role that Google needs to play in supporting app revenue. While iOS enables pay-per-download, in-app purchasing, in-app advertising and subscriptions, Google currently only enables pay-per-download and in-app advertising.

Google behind the ball
Google did not introduce in-app purchase to Android Market until July 2011 and only recently added 17 mostly-European countries in December 2011. Additionally, pay-per-download is not an option in all markets for Android and subscription billing is not offered at all. “

“It is amazing how big app revenues are today in spite of the fact that Google has not done a lot to enable the ecosystem,” Mr. Beccue said. “I think that Android is severely under revenued.

“Google is behind the eight ball in enabling their developers to monetize their apps,” he said. “If Google were more aggressive in enabling monetization, we would see revenues jump quite a bit.”

One of the interesting findings in the report is how many tablet users are downloading apps.

“The initial thought was that because these are larger products, they lend themselves to the Web,” Mr. Beccue said. “However, a lot of people are consuming apps for both iPad and Android tablets.

“I think we are going to see momentum behind media tablet apps and what they can do,” he said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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Google is building up its Google Offers database via a new mobile advertising initiative within Pandora’s iPhone application, pointing to the company’s growing commitment to take a spot at the top of the mobile deals space.

The company is running expandable mobile ads that encourage users to sign up for its Google Offers program. The initiative is a great way for Google to build up its mobile database and get more consumers who are interested in the company’s deals service.

Deal of the day
The expandable Google mobile ad reads “Google Offers beta. Deals on the best places to eat, shop and play in your city.”

Below that, there is a “sign up now” tab with a fingerprint.

Users are encourage to sign up for the service. When they press the tab, a push notification comes up that alerts users that in order to get daily deals, Google Offers would like to user their email address and ZIP code.

Users can opt-in to join Google Offers

Users can tap OK to let Pandora share their information.

From there, users can either tap No Thanks or OK.

If they opt-in, the expandable mobile ad turns into a banner ad that reads “Thanks for Signing Up.”

Users get this message when they opt-in

An initiative such as this is a great way for Google to get users to learn more about Google Offers and get them to opt-in in a seamless way.

Pandora already has information about consumers who are using its service.

Additionally, the Pandora iPhone app offers advertisers a way to run targeted mobile ad campaigns to better reach consumers.

Mobile offers
Over the past year, Google has been strengthening its Google Offers service.

Last year, Google Offers teamed up with Gilt Groupe’s local experience site Gilt City to offer its subscribers weekly deals on the company’s Web site, mobile app and email distribution list.

This is the first collaboration between Google and Gilt Groupe. The partnership lets Google Offers subscribers experience offers that are available to Gilt City members (see story).

Most recently, Google’s introduced an Android mobile application for Google Offers.

The Google Offers app enables users to discover, buy and redeem deals on the go. It also notifies users about offers that match their interests (see story).

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Fox is letting “Family Guy” fans buy ringtones and wallpapers, as well as engage with the show’s characters via a new mobile application.

Fox worked with Cellfish to develop the mobile app. The Family Guy Fun Pack app features official graphics and audio from the popular animated show.

“Personalization is the badge of honor of fan – it gives the fan an opportunity to proudly display his passions on one of the most personal devices,” said Julien Mitelberg, cofounder and chief operating officer of Cellfish, New York.

“Cellfish is passionate about connecting fans to what they really care about,” he said. “Whether it’s our NBA, NFL or Family Guy apps, they all give fans a great way to have a little passion hit throughout their day.

“It may surprise you, but our ringtone of Stewie’s classic Mom Mom Mom was the No. 1 overall ringtone in the App Store in January – people are clearly very attached to this show.”

Family fun
The Family Guy Fun Pack app features character wallpapers and downloadable ringtones. The app is available on iPhone, iPad and iPod touch devices.

The freemium version of the app lets users download their favorite wallpaper for free.

However, users can make in-app purchases to buy more character wallpapers.

For example, for $0.99, users can add four more wallpapers from any character or unlock all 40 for $4.99.

Additionally, there are a variety of audio clips from the show that users can buy for $1.29 and use as ringtones.

Consumers can purchase ringtones via the app

“Personalization is a way to extend the fan experience beyond the show, ensuring continuing engagement,” Mr. Mitelberg said. “Fans are an integral part of the Family Guy story – remember, it was overwhelming fan demand that brought the program back to television in 2004.

“People feel a part of the show,” he said. “And who does not want to have something on their phone that makes them smile every time they look at it or get a call?”

Family fanatics
The app takes advantage of the show’s distinctive visual style and quotable nature.

“We know the fans love to share their passion,” Mr. Mitelberg said. “As such we strongly believe in grass roots marketing – word of mouth and social buzz will play a big part in our strategy, but we also count on support from the App Store and our partner, Fox.”

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Catalogue is available for Kindle Fire as well as other tablets

Best Buy, Crate & Barrel and Williams-Sonoma are letting consumers check the real-time availability of their inventory at local store via version 2.0 of the Catalogue app on Kindle Fire, Android tablets and large screen Android phones.

Catalogue by TheFind is the only catalog shopping app on the Kindle Fire and has amassed more than 150,000 Android users. The real-time inventory functionality will roll out to additional stores in the coming weeks.

 ”Clearly, consumers are interested in shopping from their tablets, our user data is pretty consistent with what we’re seeing across the industry,” said Ramneek Bhasin, vice president and general manager of mobile at TheFind, Mountain View, CA.

“Tablet shopping is still a new field, but it is one that shoppers are quickly gravitating towards,” he said.

“ Catalogers, and all retailers, need to focus on having great product imagery. They should also be rethinking their catalogs for the digital space.”

Camera view
Other new functionality includes camera-view, which makes it possible to “place” catalog products into a living space and share photos of what a new couch might look like in a shopper’s home.  

Catalogue is also available for the iPad. Across devices, the app has been downloaded onto nearly 1 million tablets and has more than 150 catalog titles.

The average Catalogue user spends about 14 minutes per session in the app and looks at an average of 5-6 different catalogs.  The peak user time is in the evening, which fits with the idea that consumers are shopping via tablets at home from their couches.

“Also worth noting is that our demographics on both iPad and Kindle Fire skew towards the more affluent shopper, as 65 percent of these users have an income of more than $100k,” Mr. Bhasin said.

The tablet is a new and more immersive type of shopping experience that lends itself to print catalogs, which are designed to help shoppers discover new items. However, on a tablet there are more tools to help shoppers make their purchases quickly and easily.

Tablet optimization
However, because tablets provide a new kind of shopping experience, catalogers and retailers need to make sure they are optimizing the experience for tablets.

“Essentially, catalogers shouldn’t just think about tablets as simply a digitized version of their print catalogs… it is that, but it has many more possibilities,” Mr. Bhasin said. “Also, retailers need to take a look at their sites optimize them for tablets, e.g., using HTML5 for hand gestures and other tactile inputs tablet that users have come to expect.

“We think Catalogue has been particularly popular simply because of the  immersive nature of catalogs,” he said. “The retailers showcase their best in catalogs and allocate huge budgets to print versions.

“We’ve provided them with an elegant platform that enables them not only to bring their catalogs to digital medium, but to actually make shopping interactive and entertaining.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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