More than half of smartphone users spend no money on smartphone apps, whether its on paid-for downloads or in-app transactions, according to a Gartner survey.

However, for users who do make purchases, spending on in-app transactions is on the rise, up 26 per cent from 2015, while spending on paid-for downloads only increased 4 per cent in 2016 (click image to enlarge).


Mean spending on in-app transactions was $11.59, while mean spending on paid-for downloads reached $7.67.

Respondents who spent $15 or more over a three-month period were more likely to have done so through in-app transactions.

“This is largely because the vast majority of paid-for mobile apps have a price tag of $1.99 or less, while the activation of in-app transactions usually means that the user has found value in an app and will be happy to spend more on it,” explained Stephanie Baghdassarian, research director.

Age and gender also influence spending levels, the study found.

The 18-to-24 age segment showed low average spending on paid-for downloads and high average spending on in-app transactions, at $3.80 against $12.10. “This trend is likely to continue as these young millennials grow older,” the study observed.

Older millennials (aged 25 to 34 years) are the biggest spenders, with in-app transactions generating an average of $19 per quarter and paid-for downloads an average of $13.40.

The second-biggest spenders are people aged 35 to 44, who spend more on in-app transactions than on downloads.

The survey also found that women spend less money on apps than men and are likely to try a “freemium” approach that lets them test an app before deciding whether to spend money on it.

“Consumers’ increased preference for in-app transactions is a clear sign that technology product marketing leaders working for app providers should invest in this model to provide flexibility in how they engage with app users,” said Baghdassarian.

Brands should also investigate new ways of delivering content to users such as bots and virtual assistants as apps may not always represent the best user interface, the report said.