If you’ve perused our website you may have noticed that we use the phrase in-app an awful lot. In-app chat, in-app files, in-app feeds, what can I say: we’re big fans. Much to my surprise, a lot of people have asked my team members and myself what “in-app” really means. But in-app is a lot more than what goes on within the confines of an app.
In-app is exactly what it says on the tin: what happens in an app. As one might expect, the term in-app has been appended to just about everything that could be made functional within an app. Direct messages and group chats have become in-app chat, activity and object based feeds have become in-app feeds, file uploading, management, and organization have become in-app files, notifications (for reasons that continue to elude me) have become in-app messaging. But the one feature that truly got the in-app ball rolling was microtransactions, which you may know as in-app purchases.
Microtransactions, the exchange of real world currency for virtual goods or services within a software application, have their earliest roots in video games. While some arcade games and online games dabbled in microtransactions as early as the 1990s, microtransactions didn’t become a fixture in video games until 2006 when Microsoft launched the Xbox Live Marketplace, which allowed for the sale of downloadable content that supplemented games on their platform.
It wasn’t long before Microsoft began offering APIs that allowed developers to integrate Microsoft’s payment services directly into their games. Just like that, in-app purchases went mainstream, and game developers offering additional content through in-app purchases became a standard practice. In the intervening 15 years, in-app purchases became one of the primary revenue streams in the games business, and even paved the way for the games as a service (GaaS) business model.
That being said, the first time most consumers heard of an “in-app purchase” probably wasn’t shortly after the word app was popularized by Apple and the iOS app store. In 2009, Apple announced APIs that allowed iOS app developers to offer in-app purchases. This created a seismic shift in how developers could monetize their applications, especially developers who couldn’t afford third party payment processing. It also came with a catch that still ruffles the feathers of major music streamers and bird app happy billionaires alike: the 30% service fee that Apple collects on all in-app purchases. A move that Google also made with the Play store on Android.
Despite such steep fees, an estimated 48% of all mobile apps offer in-app purchases.So why would developers put up with this? To be blunt: the money is good. Consumer spending is estimated to reach $270 billion annually by 2025, and iOS users alone make up about 78% of all app subscriptions. It’s not hard to understand why: moving purchases from a dedicated storefront and directly into an app that users are interacting with significantly reduces friction. Once you understand how powerful in-app purchases are at driving revenue, it’s not a leap to understand how bringing other common user behaviors and actions into your app can increase metrics like engagement.
When I was in college, I probably spent 80% of my computer time on one web app: Gmail. This was not because I was an avid emailer (I was), or found a distinct joy in setting up new filters and automations (did and still do). No, the reason I, as well as my friends, were spending most of our time in Gmail was because it had in-app chat. It was simple, it was easy to use, and most importantly: it was just there. With one simple additional feature, Google was able to turn their free email service into one of the stickiest web apps.
Facebook followed suit with the introduction of Facebook chat, which would go on to become the Messenger that connects all Meta products. This wasn’t the first time Facebook made a massive play to increase user engagement. In 2006, Facebook introduced a feature that I personally believe changed the way we interact with information and each other: the news feed.
Prior to the introduction of the feed, users interacted in two places: public and private notice boards known as groups, and by writing on each others’ wall: a feed that existed on each profile page. The news feed compiled all these interactions, including those of friends, into a never ending feed, consolidating the whole of online social life in one space. This simple change supercharged in-app engagement.
Leaning away from the social and towards productivity, Google converted Gmail’s free storage to a file management service called Google Drive. Much like its competitor Dropbox, Google Drive allowed users to upload, store, share, and download their files using Google’s data centers. The convenience of storing files in the same space as your email client made it easy for users to adopt. Once in the ecosystem and actively storing files, a user is much less likely to churn for fear of losing access to their files.
Companies like Google and Facebook had the advantage of having deep pockets and large user bases when they made their first in-app features. Today, with the software as a service business more competitive than ever, and low-code tools like APIs are democratizing development, smaller developers have inexpensive alternatives to developing features like in-app chat, in-app feeds, and in-app files in house.
Better yet, API providers like Weavy exist solely to develop specific in-app products like in-app feeds. By focusing on these offerings, they have more time to develop quality of life features like in-app image previews, in-app file-sharing options, and interactivity features like polls. This mindset of integrating features end users have come to expect or rely on within your app is really what in-app means. In-app isn’t just a description, it’s a design paradigm oriented around logically consolidating your tools into a central location. It’s a way for developers to make their app have value and be indispensable to their users. In-app means convenience, in-app means engagement, in-app means retention.