App monetisation player Tapjoy published a report detailing the key signs an app is on track to generate $1 million in revenue, enabling developers to tailor apps to stand the best chance of success.
According to the company, reaching a “critical point” of 1,000 users who make three-or-more in-app purchases is a “good indication” that an app will top $1 million in revenue.
Some 84 per cent of apps with 1,000 or more users who completed three purchases within the first 83 days broke the $1 million barrier, with apps that had 4,000 users completing three buys hitting $1 million “100 per cent” of the time.
The company noted that while the three purchases alone do not guarantee $1 million in revenue, it is a threshold that can be used as a signal of potential success.
With this in mind, it advised: “If we see that audiences are falling short in reaching three in-app purchases, we should strive to understand why, sooner rather than later.”
But this is easier said than done. Tapjoy also noted that “new users are less reluctant to make a first purchase than they are a second or third”.
Analysing conversion rates for first, second and third purchases, it identified “dramatic drop-off rates at every stage”, meaning that first-purchase rates are “potentially misleading as indicators of whether an app will reach certain performance thresholds”.
In order to hit the $1 million level, a 35 per cent conversion rate from first to third purchase was the “critical number” – the “vast majority” of apps achieving this hit the threshold, while “hardly any” that had a less than 35 per cent conversion rate hit the target.
Tapjoy’s study also found that average session times are an “important signal for loyalty and satisfaction”, with the top 10 per cent of games (by revenue) having an average playing time of over 25 minutes, which is 40 times higher than average gameplay sessions among the bottom 10 per cent.
But sessions of over 25 minutes are rare: average gameplay sessions last between two and eight minutes, with only 13 per cent in the sample having an average session higher than 10 minutes.
And the bulk of in-app purchases also come from a few “best selling” items – in over 50 per cent of mobile games, the best-selling item is sold 20 times more than the worst selling. This means it is “crucial for app developers to identify what’s popular, early” – as something that “sticks” with customers is likely to be a major revenue driver in the future.