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Would you like to know how much increase in revenue your mobile app can add?

Let’s come to the fact, mobile apps are built for much more than simply fun. Nowadays, building apps contributes largely to the revenue generation of a business. According to a market researcher App Annie, the mobile economy could balloon to twice its size to $101 billion by 2020.

The greater development of apps is driven by increasing usage of smartphones with each passing year. The report from App Annie aims at providing app developers, investors, agencies and brands deep insights into the potential opportunities to arise in next five years. Some interesting facts are: in 2015, games generated about 85% of the app market revenue or $34.8 billion globally. This is expected to grow to $41.5 billion by 2016 and to $74.6 billion by 2020.

Mobile app development is an expanding field. Developers need to understand how much revenue from advertising and other sources can be generated in order to set their expectations.

1. Basics of mobile app advertising

Most app-based ads work in similar nature to that of the traditional web advertisements. Developers join ad networks that sells ad spaces to advertisers, who then buy spots to reach the target market. Each time someone clicks on the ad, the advertisers pay the network for ads. The network then passes a fixed portion of revenue to the developer whose app displayed that ad.

2. Total market

Ads-supported apps brings in an ample figures of profit. This encourages the developers to develop free download apps in order to gain maximum users and value. By looking at the revenue figures, you can estimate how much money a single app can make from advertisers.

3. Market share calculation

A single mobile app’s revenue generation does not exceed than what is spent of mobile advertising. Mobile portion contributes a large chunk of overall add spend each year.

4. Ad network payouts

While the most common way for ads of mobile apps to cost advertisers money and paying to app developer through clicks, that are other ways around too that pays for views. The effective cost per thousand impressions (eCPM)—a method that equals the advertising revenue of apps with various click-through rates, was in the range of $0.53 to $1.12 in 2012. As a new ad appears to the user a new impression occurs. So if daily around 1000 users run an app and see two ads each at an eCPM of $0.5, then the app would generate about $1 per day.

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