The IAP Stigma: Why Consumers Are Embarrased By Micro Transactions

IAP psychologist thing

So tell me; why don’t you admit buying IAP?

I was fortunate enough to attend the 3MG: Marketing and Monetisation event on behalf of The App Show yesterday to talk about the ins and outs of mobile marketing and monetisation. In a schedule filled with incredibly interesting talks and opportunities to network, perhaps the most interesting part for me was the afternoon discussion pod where I was lucky enough to chair a micro focus group dedicated to answering the question “Is freemium always the right route for monetisation?”.

In terms of what we found, the answer to the main question proved broadly functional (freemium vs premium depends on what kind of product you’re offering). But, more interestingly, I felt that we collectively unearthed some fascinating insights into the psychology of In App Purchases (IAP) which sheds light on why freemium may have a broadly negative perception from consumers that it doesn’t necessarily deserve.

It only happened because, before turning to the issue at hand, we pondered who had actually made any IAPs within the group as a route into the broader conversation about whether it was “one model to rule them all”. It turned out that in an eight strong, all male cohort, seven people admitted to having made an in app purchase within a freemium title.

So, within a select group of clued up developers and marketers, the vast majority had made a decision to actually purchase something within games such as CSR Racing or Clash of Clans to expand their experience despite their knowledge of the industry and, more importantly, that most had arrived at that decision in a rational way that justified the purchase.

Such information challenges the assertion of some within the industry that IAP monetisation is simply driven by a compulsion within certain players who aren’t as clued up as they should be. Talking around the table about why people felt they were able to make purchases, it was obvious that a number of people were making a clear value for money analysis before making an IAP to ensure they traded off their outlay with the potential enjoyment on the other side. Rather than splurging in the way that the average whale is supposedly conditioned to, the respondents made it apparent that they had rationally considered things like the price of going to see a movie or reading a book and weighed up the hours of fun they would derive from their purchases in that light.

Therefore, the 100 euros one respondent spent playing League of Legends was good value for money for them, despite the seemingly shocking cost, the hours of enjoyment he had derived out of it had made it worthwhile in comparison to other things; a rational assessment made by a consumer who was well aware of how the freemium model works.

However, despite that rationality, there was also a clear sense around the table that making an IAP was something to be embarrassed about. The reasons for that seemed to be two fold. The first was that the collective experience within the people around the table meant they were all well aware of the horror stories of gullible consumers racking up enormous bills within rapacious titles; something which they associated with the practice of IAPs and which they sought to be distanced from in case they were tarred with the same brush.

As for the second reason, related quite closely to the first, people felt it was difficult to explain their rationalisation to other people who were close to them as virtual purchases are less tangible than physical ones. So despite one respondent paying £20 to enjoy a sports game more, he felt he couldn’t tell his girlfriend as he was certain she wouldn’t understand why he made it. While they felt an IAP was value for money, socially it seems to be considered unacceptable to owning up to making one.

That means therefore there exists a certain section of gamers who understand IAPs, consider them value for money but are potentially inhibited from spending simply through fear of embarrassment of being exploited or looked down to by people who don’t see value within IAPs. While post purchase rationalisation may be behind the VFM analysis of some individuals, within the context of the conversation the tone when discussing each section suggested that embarrassment and purchasing analysis were two separate parts of the process.

Therefore, it seems clear that a psychological stigma exists over IAPs  which stops people from purchasing even if they are broadly happy to make them. What this means for mobile developers and marketers is  that they should be making conscious efforts to reshape the discourse around micro transactions in the media to emphasise that IAPs aren’t there simply to exploit vulnerable users but because rational game players appreciate, within certain games, the opportunity to progress faster or improve their game play experience. The reason it is important to do this is because I believe that the stigma is broad enough that it is now heavily affecting the IAP discourse, with articles every week seemingly breathlessly talking about a new development in the “evil” money grabbing world of freemium.

So, if you have research departments and PR teams, it is time to start considering doing qualitative and quantitative research into this concept and disseminating. Whether I am right on a broader scale or not is difficult to ascertain (it was only one small focus group after all) but I think that it is worth investigating this potential stigma. Because, if you can consider the broader human aspects to your users behaviour and remove the social inhibitions that stop people from admitting to spends or feeling embarrassed, there could be an opportunity to ensnare an even broader audience of users to drive your monetisation further by rebuilding the reputation of the humble in app purchase.

The 3MG: Marketing and Monetising Games event was a two day event dedicated to mobile monetisation and marketing. If you’d like to sign up for their January event, head to their website here. You can listen to the highlights from the event in next month’s The App Show on the 30th July.

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