Study: No Ringing Endorsement for In-App Ads

The majority of young adults aren’t crazy about the idea of in-application mobile ads, finds a new report from the Dallas-based research firm Parks Associates.

According to the report, Monetizing Downloadable Mobile Applications, 54 percent of adults 18-34 do not welcome ads within mobile apps. The remaining 46 percent of respondents claim to be either indifferent to in-app ads or willing to endure ads in free mobile apps.

So does that mean that Apple and Google’s efforts to push the mobile ad business forward will be hindered? Not quite, given the nascent stage of the market”, said Parks Associates analyst Heather Way. “While majorities don’t welcome in-app ads, how will consumer attitude shift especially among young mobile users who are more open to ad targeting tactics?” she asked. “Particularly due to the fact that ad buyers and sellers have the ability to deliver more relevant in-app ads, ones that are innovative and more engaging.”

More innovative, engaging mobile ads are one of the main drivers behind Apple’s emerging iAd strategy, noted Way.

Regardless of users’ early attitudes, Parks Associates sees steady growth for mobile ads, in-app ads, and the application economy as a whole. The mobile app market in North American will reach $2 billion by the end of 2010, says the report. By 2014 in-app ad revenue will exceed $860 million.

That’s not an insignificant sum, but paltry given the current estimates for online advertising as a whole—which net out around $25 billion in the U.S. this year.

The big money in mobile, per Parks’ estimates, will be in paid mobile apps—which by 2014 should enjoy profits in the neighborhood of $4 billion. Typically, 30 percent of paid app revenues go to distributors (such as Apple) while 70 percent of those dollars go to app developers, according to Parks report.