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A successful mobile application is not only about cutting-edge mobile application technologies and a unique selling proposition. Without a viable app monetization strategy, your best app idea will likely fail due to the lack of funds for new features, releases, and bug fixing. Any seasoned software development company would agree that establishing a steady and consistent app revenue stream is vital for the long-term viability of any application.
However, the challenge lies in selecting an app monetization strategy that doesn’t betray your values and delivers the utmost user experience while also creating an income stream. In this article, we will take an in-depth look at the best app monetization strategies and consider their advantages and disadvantages.
Mobile app monetization refers to generating revenue from a software solution. All types of monetizing can be divided into two groups: 1) revenue acquired from app end users and 2) through advertisements. Companies that deliver mobile app-building services conduct market analysis to identify the most suitable app monetization plan for their clients. Comprising of various factors such as target audience, app category, functionality, and purpose, businesses can choose one or several strategies to generate revenue.
Whether you choose cross-platform development or native, regardless of the type of product you create, you can find an effective way to monetize it. Establishing income through a software solution not only benefits app developers and the business but also the end users. Through acquiring cash flow, app owners can improve functionality and design to deliver a great user experience.
Choosing between multiple app monetization strategies can be challenging. Do you create revenue with advertising or opt for in-app purchases? In this section, we will delve into the ten most common mobile app monetization methods as well as their benefits, drawbacks, and best practices.
In-app advertising is among the most popular and effective methods of mobile app monetization. If executed well, it can seamlessly immerse users in the ad without interrupting the app experience. Let’s explore the various types of in-app advertising and their benefits, as well as cover some best practices that will help you maximize efficiency.
Interstitial advertisements are full-screen ads disguised as regular app content. The most common example is interstitial ads in a gaming app. Users have to watch an ad before playing the next level but they can usually skip after a few seconds.
This type of monetization strategy circumvents banner blindness and is more likely to engage the user in exploring the ad’s content. Paired with user data that allows app developers to offer personalized suggestions, you can tailor these ad formats to particular customers. As a result, you can increase the efficiency of each advertisement without annoying app users with unwanted content.
Native ads seamlessly integrate into the app’s design, tone of voice, and graphics to practically become a part of it. Commonly used in communication, lifestyle, and social media solutions, you can often see such ads in your feed. They look indistinguishable from other posts in the feed which incentivizes the viewer to engage.
The best quality of native ads is maintaining the flow of the app experience. In other words, these app monetization methods do not interrupt the interaction and come off as more organic. This can also increase user retention as customers tend to abandon applications with intrusive ads. Furthermore, the seamless nature of these ad formats makes it more likely that users will perform the call to action.
Mobile app banner ads are typically small rectangular ads displayed in the corner or at the top of the screen. This ad format can be a static image or text, a short video or a GIF, or an interactive piece of content. Commonly displayed throughout the user’s entire session, banner ads are likely to be seen or interacted with.
Although not a solid standalone app monetization strategy, banner ads can be a great low-cost addition. Moreover, they are quite easy to integrate since they don’t require any customization to fit into the mobile app design and flow.
Among the most enjoyable ad units, video ads have become integral to coherent monetization models for mobile apps. Short entertaining videos can be a great way to generate app revenue without overwhelming users with information. This ad format can also be used as an in-app reward system. For example, you can allow users to replay the level after watching a video ad.
Video ads increase engagement since videos are played outside of the app experience. Either between lessons or mobile games levels, high-quality video ads are likely to be watched in full or at least until the skipping option becomes available.
As the name suggests, playable in-app advertising allows users to interact with the ad to experience the offered service. This monetization method is especially common in gaming apps and provides a short demo version of the full playthrough. Companies strive to be creative when it comes to playable ads and utilize sound, visual elements, and device features to immerse users in the app’s experience.
Offerwall is a type of in-app advertising that rewards users for watching an ad, taking a survey, or offering their information. For example, an application only allows you to lose mobile games three times per day. Instead of waiting until the next day, users can simply watch a short video ad and win an extra heart to continue playing. Not only do you acquire income from the in-app advertising but also increase user retention and satisfaction.
In-app ads can be a suitable mobile app monetization option for virtually any application. However, organizations need to conduct a thorough investigation into their services and target user base to choose the correct type of ad.
Much like with any type of advertisement, it’s highly recommended to test frequently and across platforms. When you monetize an app with ads, make sure your ad type and pricing model generate the best results for your application. Both for customer retention and satisfaction and your app revenue, the chosen ads should create this balance.
Additionally, companies that achieve success with in-app ads invest in quality. Non-watchable in-app advertising will significantly decrease the overall appeal of the application. Create high-quality advertisements that are easy and entertaining to watch. Besides that, focus on the creative part to offer visually appealing content.
Another popular app monetization strategy includes in-app purchases. This approach allows app developers to acquire income by selling virtual items and services within the app functionality. From literally obtaining in-app currency to unlocking additional mobile app features, in-app purchases are a viable way to monetize mobile solutions across industries.
The in-app purchases model can be applied to practically any application, including gaming apps, eCommerce, social media, tools, and more.
Instead of dividing all features into free and paid, a seasoned app developer offers multiple tiers of in-app goods and services. This type of in-app purchase strategy helps you to reach a wider range of users and provide them with a unique experience. Furthermore, keep track of user behavior to measure user engagement and discover why people choose to buy or opt-out.
Finally, it’s imperative to ensure that your app remains usable even without making additional in-app purchases. In other words, every in-app purchase should make the experience more interesting and enjoyable without becoming necessary.
Freemium is an app monetization strategy that breaks down the entirety of the application functionality into two parts: free and paid apps. Free users have access to a limited set of features while premium users are granted full access. This approach lowers the bar to entry and allows anyone to benefit from your services.
If users like your solution, they have the option to pay a monthly fee for additional features without risking investing in something new and unknown. Paid app features may consist of enhanced functionality and upgrades, unlimited storage space, monthly credits, full-fledged support, and others.
The freemium subscription model is suitable for businesses that regularly deliver content such as dating, fitness, video streaming, and productivity, news, and entertainment apps.
Much like in the in-app purchases model, in order to perfectly execute the freemium mobile app monetization strategy, you need to figure out which features should go into the free app version. You can monitor data usage to learn about customer behavior and pinpoint what value they are getting. Additionally, you can offer short-term access to a full-featured paid version to show users what they are missing out on.
Another common practice involves offering discounts to long-term users to further incentivize them to upgrade. Finally, make sure to regularly remind users about the paid version and its capabilities without getting on their nerves.
Similar to the previous monetization app approach, a premium subscription model operates without a free app version. Instead, it offers a trial for newcomers with access to all premium features. Subscription-based apps can usually be paid weekly, monthly, quarterly, and yearly, with each tier unlocking additional discounts. One of the most popular mobile app monetization strategies among streaming services, this approach is used by Netflix, Disney+, Hulu, and others.
The most appropriate app categories for this app monetization option include content apps such as video streaming, music, and new services, as well as service apps like social media scheduling and digital storage.
One of the most common tips for this app monetization model is delivering several tiers of service. It’s recommended to identify your target groups and provide different options to each of them. Make sure to remind your users of other tiers and allow them to up or downgrade at any time. Finally, establish robust security measures to protect financial app user data.
The most old-school mobile app monetization model is pay-per-download where users are asked to pay a one-time fee to gain full access to the application. Unlike the in-app purchases approach, this model enables all features at once. Developers may also create a separate, free version of the app that works as a free trial or ‘lite’ version for users to try before purchasing the paid version. Although the market is shifting toward subscription-based solutions, some applications can still benefit from a paid app download model.
Companies that will benefit from the pay-per-download app monetization models are businesses with recognizable brands and one-of-a-kind products or services.
Before even considering this monetization method, make sure you are a market leader in your sector with a widely known brand name. Additionally, do market research to identify potential competitors that offer their apps for free or significantly cheaper. It’s also recommended to apply ASO techniques to improve your ranking.
Affiliate marketing is an app revenue model that rewards affiliates for referring customers to the company’s products. Affiliates could be both individuals and other businesses that have a platform to promote your product or service. Commonly using a link or promo code, affiliates can display it in a blog post, social media account, banner ad, etc. The link is individually generated for each promoter to track their leads and conversions to appropriately reward them for referrals.
This model is vastly different from in-app purchases or advertising techniques as it involves third parties in the promotion. Here, you have to rely on other actors to describe what benefits your solution can bring.
Monetization models for mobile apps that include affiliate marketing work best for new products that want to reach wider audiences through partnerships.
First of all, choosing the right affiliate is key to maximizing the success of your marketing campaign. Consider their audience, industry, content, and general values before hiring them to promote your application. Furthermore, provide your affiliates with extensive product descriptions, promotional materials like banners and graphics, as well as full access to the app. Lastly, keep track of how well your affiliates are performing to ensure timely payments.
Email marketing remains one of the most effective monetization models for apps and beyond. The vast majority of internet users still conduct a big portion of their communication over email. Commonly, businesses collect user email accounts to send out reminders, bills, newsletters, and important announcements. In conjunction with personalized suggestions, this type of monetization strategy can yield great outcomes.
Anyone can add email marketing to their strategy, regardless of the app category.
Before launching a campaign, make sure you are exclusively using emails collected from customers who opted for receiving emails. Additionally, take advantage of various marketing tools to identify the best time to send letters as well as to add personalization to the content. To tailor your email content more precisely, consider audience segmentation techniques. Finally, add visuals to your emails in the form of native or video ads to grab user attention.
Licensing is a suitable mobile app monetization option for solutions that aggregate large amounts of user-generated data. This information can be utilized to build other tools and software. However, collecting and selling user data requires explicit consent from customers paired with approval from app stores like Apple and Google Play store. Additionally, the accumulated information needs to be anonymized to protect the identity of your user base.
Data monetization is a viable mobile app monetization method for any company with at least 50,000 daily active users who generate data.
When looking for a potential buyer, pay attention to their demands related to demographics. For example, if you are largely operating in Germany, search for a data collector that is interested in the German audience. Additionally, always ask for user’s consent before capturing their information to avoid lawsuits and reputational losses. Finally, evaluate how you gather and share data to ensure compliance with data protection laws like GDPR.
How can you create a mobile marketplace that generates consistent revenue? Transactional fees are widely used by various marketplace, online payment, and eCommerce organizations. A taxi app like Uber can also be considered a marketplace since it offers an array of services in exchange for a fee. Another example is fintech businesses that take a fee for each transaction.
Transactional fees can be used in a variety of apps such as fintech, eCommerce, travel, marketplace, etc.
Developing a marketplace application is a big challenge that requires extensive market research and analysis. To learn how much delivery app fees are and what to charge to individual vendors, you need to investigate your main competition. Additionally, it’s recommended to combine app monetization models to generate income before you build a vast user base.
Crowdfunding is the process of generating investment from people who are interested in your app business idea. Businesses that raise money through crowdfunding commonly reward their “backers” with early access, discounts, and other perks. This app monetization strategy is especially beneficial for organizations that lack initial capital to build or revamp their software application.
Any application that offers something unique that will grab people’s attention can benefit from monetization models for apps that utilize crowdfunding.
Let’s find out how to monetize an app using crowdfunding? Start by developing a story that tells funders about your application. The story should include why you decided to create this solution and how it can benefit the potential funders. The best way to grab people’s attention is by making a high-quality engaging video about your company and product. Finally, invest some resources into promoting your crowdfunding page across social media, Google Ads, and other app monetization platforms.
Most companies don’t stop at only one monetization app strategy. Commonly referred to as hybrid app monetization, app owners can combine in-app purchases with ads or transactional fees. However, make sure you are not overwhelming your users with constant in-app advertising and upselling notifications. It’s crucial to find the right balance when mixing different app monetization strategies and to continuously prioritize user experience.
Before delving into various methods to acquire money from launching an application, you need to evaluate your software, target audience, and the market. This preliminary analysis will aid you in selecting the most appropriate app monetization models to drive sales from your app.
In order to properly implement mobile app monetization strategies and measure their performance, it’s imperative to learn the main metrics. Let’s dive into the top KPIs every marketer needs to know.
As you can see, there is no shortage of mobile app monetization options. Take into consideration your functionality, target audience, app business model, and performance metrics to identify the best strategy to generate income. If you need assistance in this challenging process and want to learn more about how to monetize an app, reach out to the NIX team.
We are software development professionals who can offer an end-to-end experience. Having handled thousands of successful projects, we can provide support at any of the stages of mobile app development, from conceptualizing and market research to post-release maintenance. Our decades-long journey makes us a reliable and knowledgeable partner. Get in touch with NIX app developers to discuss your own app idea and choose the best app monetization method to maximize your revenue without jeopardizing user experience.
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