App monetization defines your interaction with customers & business success. Whether to go for In-app purchases, a subscription model, advertisements or a combination of strategies depends on preference, product & industry.
There are millions of applications on the Google play store & iOS app store, competing for user’s attention and hoping to make big profits with a groundbreaking app. Many people wonder how apps even make money? There are many subtle & direct methods of app monetization that are often combined together to increase earning potential.
What is monetization? Simply put, a way to make money. Mobile applications can be monetized by including various revenue-generating strategies.
According to the sensor tower, global app revenue reached $50 billion dollars just in the first half of 2020.
Before monetizing an app, you should understand popular revenue-generating trends in your specific domain and how you can combine the best strategies that don’t disrupt the user experience and help you earn more.
Apps like Spotify, Netflix & Tinder generate huge revenues from their users but that’s not the only way to make money from your app. Many strategies don’t rely on customer payments and still convert user presence into big bucks.
Direct Monetization: A straightforward method to make money from applications where an app makes no excuses for charging the customer, for the product or service.
Indirect Monetization: This is a more subtle approach to make money that doesn’t necessarily reflect app usage.
This article will provide strategies and different approaches on how to monetize an app idea.
There are many mobile app monetization techniques at your disposal. If you are wondering “how to monetize an app?” to sustain your startup then read all strategies and decide the best combinations to implement.
The benefits and ways to implement these strategies have been mentioned here in detail.
A very popular mobile app monetization strategy for applications that have multiple features to offer. This way certain features can be freely accessible while encouraging users to pay for additional ones.
They can be in the form of an extra video recipe, new character access in a game, an extra collaboration feature in a design app, etc.
–The application remains free to use while encouraging loyal users to pay for additional access.
–It is one of the least risky app monetization strategies because the users can still use the majority of the app without interruptions.
– Large profits can be made with an in-app purchase model.
– Increases customer loyalty from users who have made a purchase. People tend to stick around to use the app they have invested in.
Mobile games monetize largely by providing free downloads with a large scope of inside app purchases.
PUBG Example: Free users have full access to the game. It also offers a wide range of additional character and weapon skins along with dance moves that can be purchased inside the app.
A common mobile monetization strategy by News forums that give access to basic content to freemium users & unlocks all access after the subscription purchase.
It is similar to In-App purchase but with one major difference:-
In-app purchase provides bonus features or items that don’t interrupt the core offering of the app.
The in-app subscription model provides very basic & restricted access to free users. Only after the purchase of a subscription is a user allowed to access the core offering of the app.
Wall Street Journal Example: The mobile app for wall street journal is free to download but uses a “paywall” on most tabs. They are essentially providing a very basic version of their app. Paying for the subscription lifts the paywall for full access.
Monetizing an app with an inside app subscription is very common for news & magazine companies.
Video streaming services like Netflix, Prime Video function on a subscription model. This just means that the app download is free but a paid subscription is required to use even basic app features.
Granted that both Netflix & Prime Video provide free access for a limited time but it is important to note that once the free limit is over, no feature is accessible, unlike the in-app subscription model.
It works well for certain types of applications with completely unique content not available anywhere else.
A simple looking strategy which is a bit challenging to successfully implement.
A paid download is when a user pays an upfront charge to download the app. Each download adds to the revenue stream.
The only challenge here is convincing people to download the app in the first place. There is very strong competition from free apps these days and a truly one of a kind app with a pre-existing brand presence can pull off a paid download strategy.
One of the most popular methods of monetizing an app; advertisements. Many applications on the app store are free to download & free to use. Advertisements serve as an important tool to make money for free apps.
The only critique of this form of money-making is the interruption of user experience. This is being solved by ad providers by pitching more relevant ads & using native ads.
Tinder Example: The popular dating app, tinder uses smart ads by introducing an add as a person’s profile. Swiping right on the app means showing interest in that ad & it directs you to the product page or to an in-app section providing more information on the ad.
If you are still in an exploration phase and haven’t created your app yet then remember to also think about other pre-development criteria. Developing a mobile app in your budget, providing a seamless user experience, increasing downloads are also very important business objectives.
An effective app monetization method is successful only when the app is high in performance, quality, UI/UX and there is a steady flow of people using the app regularly.
Making users pay isn’t always a good option. Free app monetization takes the burden off of the user and still helps you make money.
There is a lot of competition in the app market and most of the apps are downloaded for free. Executing an aggressive paid strategy might backfire, someone else can give the same service for free.
Some ideas to monetize your mobile app without any direct charge to the customer:-
There are many ways to monetize an app and many of them can be implemented simultaneously. For instance, advertisements and affiliate programs can be run simultaneously.
Ads have proven to be a successful app monetization approach for companies that want to keep application usage free for their users.
There are varying advertisement types to choose from. Depending on the nature of your business & successful industry practices.
Here is a look at the ad options available.
An old school monetization technique that has been very effective in making good money for businesses.
Although there has been a move by Google and apple to ban “bad ads”. Mild-mannered and relevant banner ads still make their presence felt.
Advertisements shown via banners become even more relevant when they relate to application offerings.
In today’s day and age, sophisticated and engaging ads are the only ones that make an impact on users and inspire clicks.
A very popular type of advertisement. These interstitial ads come in between pages and articles, in the form of a banner or video.
These ads show a timer and users have an option to close these ads after a few seconds (generally 5 seconds).
These ads are friendlier as the power resides with the user who can decide to either click on the ad or use the “X” button to close the window.
Native advertisements are a smart version of ads. They blend into the native atmosphere of the application and are often not exposed as ads.
They don’t appear to be ads & have a very good chance of drawing user’s attention.
Facebook’s native ads are gaining popularity with businesses. A smooth advertisement that doesn’t disrupt the user experience or application interface.
Video ads are amongst the most popular forms of advertisements because they are able to convey lasting information in a matter of seconds.
An ad video between 10 to 30 seconds is enough to get the user interested without boring him/her and without the risk of an increased bounce rate.
A very successful method of integrating advertisements. Rewarded video ads incentivize watching an ad for free application access or some other in-app feature.
Spotify has nailed the use of rewarded video & audio ads. They have placed these ads carefully and between an appropriate amount of intervals.
Each ad comes is preceded with a message conveying “The next 30 minutes are ad-free after a brief ad from the sponsor”.
This is a good incentive for free access to a vast library of music.
Spotify has connected this with a pitch to buy a paid subscription to avoid advertisements completely. A win-win scenario for the app.
When you approach an app development company to create an application, they will tell you about the importance of user experience with a smooth app interface. While using ads to monetize an app makes economic sense, it is important to always consider how it affects the user’s experience while using the app.
It has been established that ads are great app monetization methods & there are many options to choose from.
A list of top 4 ad providers in the mobile industry right now-
A Google service with more than a million users, Admob is a great option for businesses. 81% of Android Top 100 use the Admob service.
A Facebook tool for both advertisers and publishers. A high conversion rate and social access make this an effective ad provider.
Facebook audience network has paid $1.5 billion to publishers & developers since 2018.
A monetization provider brought to you by Twitter, MoPub is a demand-side platform (DSP) for efficient mobile monetization.
It assists advertisers to have their ad listed on a wide network for the most relevant audience set.
This results in competition from advertisers which can mean higher bids for space & more money in your pocket.
A very popular and powerful tool to grow businesses. Google Ad Manager is another product by google to help you place ads on your application.
Google Ad Manager gives access to a very big chunk of advertisers from google ads, DSP’s & trading desks.
An effective mobile app marketing strategy integrates related & relevant advertisements to increase user engagement & brand loyalty.
There are many app monetization techniques and choosing the right one depends largely on the industry and the product/service.
No one answer can fit all types of apps. One has to factor in user experience, feasibility, and long-term effects of the monetization.
– In-app purchases are very successful for Gaming & E-commerce applications.
– If the offering is truly unique and can be very valuable to the user then a subscription model can work well.
– Ads can disrupt the user experience on the app so if you plan to use ads make sure to moderate it accordingly.
– Tracking user data on the app can give an amazing sense of which strategy is working and which one isn’t. This can help in shortlisting a long term monetization technique.
Making money from an app isn’t that difficult but it is essential to distinguish short term gains from long term profits. Make use of user data to weed out unsuccessful monetization strategies.
Remember, user experience is a big factor for customer retention & it won’t be wise to lose a big chunk of customers for short term profits.
Find the right balance between an app monetization strategy and customer experience to come up with a long term money making plan.
A mobile app development company is responsible for transforming business ideas into reality. This blog enumerates points and factors to keep in mind before hiring one.