Ads vs paid apps: the result of the experiment

A bit ago I decided to run a little experiment to compare the performance of an application when published as ad based and paid. I intended to wait at least a month to grab a bigger amount of data. But the experiment has been abruptly terminated, and I'll tell you all about it, since it's part of the experiment!

I published two versions of the same application. One, GPS Capture Pro, is the paid app, at £0.50. The other was GPS Capture Free, and made use of Admob ads. So I published them, and "sat down" to wait for things to happen.

During the following three weeks I kept having a look at the Admob panel daily, quite intrigued by the results.

It surprised me that there were a few users of the free application in places that hardly ever get a mention as 'important' in market speak, such as some countries in Africa or Middle East. I'm sorry I can't really remember which countries those were. They certainly weren't in the list of countries where Google Checkout is available, but the fill rate for those countries was insanely low, and the same for the click through rate. So even if an ad-based app could potentially earn you money in those countries, the probability of that happening was almost zero.

Moving to the "emerging markets", where paid apps are not available yet but people can buy Android phones already in all shops, yes, the number of people downloading the application was higher, and the fill rate was slightly higher. But the click through rate was again low, super low. Zero in many cases.

Surprisingly, the countries with higher number of everything (installs, fill rate and click through) were exactly the same countries where paid apps are already available. This can be explained because evidently there are more Android phones in those countries, so that increases the chances of someone either downloading the app, or getting an ad, or clicking on it. The market is more mature in those countries, after all.

But is it worth it?, I hear you say. And I'll answer: no. For starters, the ad earnings were small. They simply amounted to a ridiculous $1.30. But wait, because that was before AdMob decided to unilaterally disable my account for reasons that I still cannot understand (and that of course they will never disclose). It's funny because I didn't even have the free, ad-based app installed on my phone, and when testing I always used test ads, but anyway... too bad for them. They have lost me as a user :-D

Not only the earnings were small, but I didn't get them at all. That's an important risk to consider if you depend on ads: your ad provider might decide to disable your account and not pay you a single cent. I'm glad they disabled mine before they owed me more money--I have read about people being owed thousands and their account getting disabled. Wow!

Also you have to think about the maintenance problem: you have to take care of double the amount of apps if you offer ad based and paid apps. Which means you have to test twice, upload twice, update twice, etc. And while making two apps based on the same code base is relatively easy thanks to library projects, there's always that extra overhead that you have to consider (I mean in development terms, not in runtime terms).

There's another issue, the you-work-for-free perception with the free apps. When someone pays for an app, they are investing their money in exchange for an expected utility. If someone pays for an app, they are truly interested on it, so their approach to the app is more positive-constructive, so to speak. In contrast, when an application is free, it seems like it has no value whatsoever, and you published it because you don't have anything better to do with your life. So you'll get absurd feature requests, harsh comments and what not. Having to deal with these is an additional expense for you.

So in light of such small returns and with the high cost they have in comparison, I don't think the ad-based apps are a good idea.

In addition:

  • I personally avoid installing apps with ads, since they need the INTERNET permission to load the ads and I'm such a paranoid (and I don't think I'm the only one to think like that)
  • Having ads in such an small screen is super intrusive
  • They "dirty" our precious apps
  • With new markets/stores coming (such as the Amazon store), and more carriers implementing direct carrier billing there shouldn't be more but I cannot pay for apps in my country excuses
  • plus being able to return an app in 15 minutes frees you of having to offer a free trial version :-D

In the meantime I have unpublished the free app and I don't think I will be offering another free app in the foreseeable future. If you downloaded the free GPS Capture application and want support or new features, feel free to buy the Pro version :-)