Mobile advertising will grow from 18% to 23% of revenue generated by iOS and Android apps, according to a new analysis by app advertising and analytics firm Flurry. The firm forecasts app ad revenue will more than double in 2012 from $980 million to $2 billion. The bulk of the $8.7 billion in projected revenue this year, up 60% from 2011 will still come from paid apps and in-app purchases.
The Flurry study also predicts long-tail apps will also account for a growing share of app revenue. To reach that conclusion, the company compared app rankings on iOS and Android in 2010 and 2012 in three segments: the top 25; those ranked 26-100; and those below the top 100.
By the end of this year, Flurry estimates revenue from the top 25 will contract from 28% to 15%, and those in the mid-tier will shrink from 27% to 17%. Conversely, revenue generated by the long tail of apps beyond the top 100 will grow from 45% to more than two-thirds (68%).
“Combined with a marketplace that reduces the power of brand recognition (e.g., apps are free for consumers to try risk free), market wealth unexpectedly continues to shift to the long tail, funding continued R&D, advertising budgets and other activities that increase their competitive strength,” stated a Flurry in a blog post today. “The age of middle-class app developer has arrived.”