Study: Social Virtual Goods Sales Overwhelm Advertising Revenues On iOS

A new study of iOS social games and networks shows in-app sales of virtual goods bringing in significantly more revenue than in-app advertising. The study, by mobile analytics company Flurry, found that in-app purchases have been the driving force in the explosive growth of per-user revenues for iOS social apps in the last year. Such revenues include an average of just uned $8 per user from virtual good sales in September 2010, according to the report, up from less than $0.50 in September 2009, just after such purchases were opened up to free-to-download iOS apps last October. Advertising revenue on iOS social apps, meanwhile, has remained stagnant at just over a dollar of average revenue per user, according to the study, after a brief uptick surrounding the 2009 holiday season. This despite the launch of Apple's iAd initiative alongside the launch of iOS 4.0 this summer. The shift means that virtual good sales now represent roughly 80 percent of the revenue generated by free-to-use iOS social apps in September 2010, compared to roughly 18 percent in September 2009. Despite in-app advertising's relatively poor performance, Flurry's Peter Farago thinks the segment may be set for a comeback in 2011 as advertisers get over their skepticism regarding the value of social gamers. Major advertisers currently "appear to be missing a meaningful opportunity to reach a mass market of consumers who have adopted new platforms and forms of content," Farago argues. But Farago also predicts growth in revenue from mobile social good sales, which are projected to make up a significant chunk of the projected $2 billion in virtual good sales across the industry in 2011. Flurry's study is based on "data collected from a sample of leading iOS social networking and social gaming applications, with a combined reach of 2.2 million daily active users."