The practice of offering applications free of charge but then charging as the user opens up more advanced features, functionality or extra content is known as the ‘freemium’ model. Allowing users to try out an application in this way without having to pay is becoming the preferred method of getting an application to a wider audience and building critical mass.
The real experts at this are the gaming companies. My seven-year old child regularly hijacks my iPad to check out the latest free games in the app store – it’s the equivalent of an online sweet shop! These commercially savvy gaming companies release engaging and production rich games for free, and nearly all require in-app purchases to unlock features or to help progress through the levels.
The Smurfs game is a very good example. As more children became aware of the movie through the aggressive above-the-line marketing campaign, the idea to create a game was obvious. The tablet and mobile games are free and very well produced, but they aren’t free to play for long. So far pester-power has meant I’ve bought £11.96 worth of Smurfberries to assist my sons Smurfdom domination. I probably wouldn't have bought the application if it was over £5 in the app store (that’s two weeks pocket money), but we all know that once you’re playing and have made the emotional investment it’s so much harder to leave, especially when a relatively small amount can open up additional levels and enhanced features.
So can other businesses adopt this 'freemium' model? Of course, content makers are already becoming more astute at doing this and are offering subscriptions after some form of free trial. Surely it's better to have lots of people trying out your application for free – rather than hesitating at the point of purchase and relying on ratings and feedback to influence the buying decision. If your app is well designed, has a good user-experience and does what it says on the tin then people will use it, and more importantly spread the word through their social networks about how great it is.
Many businesses are just dipping their toes into the mobile application market at the moment, with most still grappling with how best to charge for their content, but we’re sure to see some interesting new approaches emerge.
At ORM London, we do a lot of work for the TV industry, and we're sure in the very near future we’ll be watching VOD on our tablets and be able to click on items in the video to find out more about the products and where we can buy them; or while we’re watching broadcast TV the products within the show will appear on our companion devices ready to buy.
These affiliate in-app purchases could drive a whole new revenue stream for businesses who own content – I just hope that my kids don't know my password when it happens!
Peter Gough is founding partner of ORM London.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members