Mobile app monetization strategy

  • 07 / 06 / 2024
  • Alicja Graczyk
Mobile app monetization strategy

With a steady stream of revenue, mobile app owners can maintain product usability and attractiveness, expand their reach by investing in further development, and much more. However, there are many mobile traffic monetization strategies, and sometimes, it might be hard to choose the ones most suitable for your needs. So, if you ask yourself questions about the profitability of monetization with mobile ads and whether you should opt for a paid or a free app, you should read this article!

source: https://giphy.com/

What is mobile app monetization?

Mobile app monetization is all about generating revenue from mobile apps. You can choose to pursue only one monetization strategy, but you can also consider incorporating several approaches simultaneously. It’s worth remembering that success in this field depends not only on your app profile and advancement but also on users’ behavior and even worldwide trends and seasonality phenomenon.

Do you need many app monetization strategies?

If you’re not sure about the efficiency of one chosen method, it’s crucial to diversify income streams since if one source underperforms, alternative avenues can yield profits. Additionally, users demonstrate different attitudes toward paying for downloading apps or engaging in in-app purchases. Developers can broaden their app revenue streams by going after multiple monetization methods, catering to a wider audience, and enhancing overall profit potential. What we deal with when employing more than one app monetization model is called a hybrid monetization strategy.

Hybrid monetization strategy

The most successful mobile apps on the market utilize a hybrid monetization strategy. Of course, whether you monetize your digital product or not, its quality is crucial for it to succeed! An attractive app increases the likelihood of users downloading your application or even opting for subscriptions and making in-app purchases, while others may continue using it despite encountering ads. Just keep in mind not to bombard your users with too many ads to avoid banner blindness and general annoyance. After all, your ultimate business goal should be to keep Customer Lifetime Value (LTV) as high as possible, meaning striving for the highest average revenue for one user. Serving ill-considered ads or too many of them may result in discouraging people, potentially leading to app abandonment.

Ways to monetize your app

There are many app monetization strategies – find ones that suit your digital product, business objectives, and capacities best:

  • Paid app – the main idea behind paid apps is to collect money before users start to utilize the product. Once the one-time payment is made, users should have access to all features without any further charges. Most often, these kinds of apps don’t include ads. From an app developer’s point of view, it might be profitable to include screenshots that illustrate an app profile in the app store and a thorough description so users are more aware of what they are buying;
  • Free app – sharing your app for free basically means letting users download it without any charge. Of course, these kinds of apps are downloaded way more often than paid ones since not everyone wants or can allow themselves (like minors) to pay for a mobile application. To generate revenue under this model, it’s essential to contemplate integrating one of the following strategies into your app;
  • In-app purchases – one of the ways to earn revenue is to offer items or subscriptions (we will discuss this in more detail in the next segment) that are available after users make a relevant purchase. What’s important, users have to pay with real money, not, for instance, with in-app currency. Two main in-app purchase types are:
    • consumables – are meant for singular usage and can be repurchased again (like additional lives in a game),
    • non-consumables – are features that are usually bought only once and can be used many times (like a new vehicle in a game).
  • Subscriptions – nowadays, in an era of streaming services like Netflix, Prime Video, Disney+, and more, people are getting more used to paying for subscriptions. In the world of apps, this monetization method, if applied correctly, might also be profitable. Your audience just has to know what they are signing up for, which means properly communicating what benefits they will receive and what are other terms of usage (like the number of devices the user is allowed to log in). Be sure to include information like auto-renewal or conditions for canceling a subscription. While some may opt to pay for an app simply to avoid seeing advertisements, others may be enticed by access to exclusive content, such as valuable specialist insights or hard-to-find knowledge. Usually, a typical app user decides to purchase the subscription if he has already heard about the app or someone recommended it. It’s a good way to monetize your efforts because it can provide a steady income, but on the other side, initially, it may be challenging to convince users to pay, especially at the beginning, when your app has few downloads;
  • In-app advertising is one of the most popular ways to monetize a mobile application. An app owner sells the ad space to advertisers so that the user can enjoy a free product. However, it’s essential to strike a balance between maximizing earnings and preserving a positive User Experience, meaning not showing too many or too invasive ads. There are various in-app ad strategies that allow for seamless integration of ads without disrupting user engagement. One effective approach involves presenting ads during natural app breaks, such as loading times. If you’re interested in exploring this revenue-generating method, you should get familiar with these mobile ad types:
    • Sticky ads are an ad type that has a fixed position in an app that doesn’t change even if the user is scrolling. The main benefit of this solution is predicted longer focus on an ad, as these days, users are inclined to scroll quickly. Sticky ads come in various forms; they can be displayed horizontally or vertically, on the top or the bottom of the screen, or even on opposite edges, mirroring each other;
    • Interstitial ads occupy the full screen and are particularly well suited for loading breaks or interludes (like pauses between game levels). What’s more, they are often interactive, making them more enjoyable for the user. Naturally, this ad type offers good visibility and engagement, oftentimes reflecting in a higher click-through rate (CTR);
    • Native ads were created to match the ad surroundings. However, it’s crucial to note that they must still be clearly labeled as advertisements to prevent any confusion with the app’s authentic content. Well-designed native ads have many benefits. Because they blend well with the content, they don’t disrupt the User Experience, even for most of those who don’t like ads. They are widely applied and can be displayed in many different areas of an app;
    • Banner ads are one of the most popular and oldest ad types. They are rectangular and cover only a portion of the screen when displayed. Banner ads can be static or animated, they come in many sizes and are easy to implement. Just as native ads, developers apply banners in various places, for instance, at the top or the bottom of the screen;
    • Static ads don’t change when served to different users. They display the same ad creation to all the users and are fixed in format and design. It means that such advertisements are easier to produce but might not be as effective as the ones we will describe next;
    • Dynamic ads, as opposed to static ones, can change when displayed to different users. These ads represent a more modern approach because they adapt to individual user preferences and change their size to fit different available spaces. They are often used when a company has a wide array of products or services;
    • Video ads are usually more engaging when compared to typical ads. Importantly, the ones embedded in the publisher’s video content are usually played automatically, whereas regular video ads – displayed independently – can either be auto-played or users have to click or hover over them for the ad creation to start. There are two basic types of Video ads:
      • Out-stream Video ads allow users to view a video within an ad,
      • In-stream Video ads are displayed within the publisher’s video content. There are:
        • Pre-roll Video ad is displayed before the content,
        • Mid-roll Video ad is played during the break in video content,
        • Post-roll Video ad is served after a video stream;
    • Rewarded ads let users earn in-app items by engaging or simply watching an advertisement. One of the most popular subtypes is, for sure, Rewarded Video ads. Overall, this ad type is a win-win for both users and developers, as it offers in-app perks for the first group and high engagement for the second one. Oftentimes, it’s implemented in mobile games or, for instance, learning apps, to which app developers added gamification, so the learning experience seems more encouraging.
source: https://giphy.com/

Benefits and drawbacks of paid app and free app models

  • One of the advantages of paid apps is that this business model can prove lucrative, especially for niche products or in specific markets such as education. However, it can be challenging to set an appropriate price, it should attract users without dissuading them, while also ensuring long-term profitability. A relevant disadvantage of paid apps worth remembering is the fact that it means fewer downloads, and people tend to have higher expectations for something they paid for. In consequence, you have to rise to the challenge and prepare a product that’s nearly perfect and not forget about frequent updates and give place for your customers to share their thoughts about your app (for instance, take a look at your application’s comment section in the app store from time to time);
  • We could say that a con of free apps is that this approach requires implementing additional monetization methods to generate profit for the publisher. On the other side, the pros of free apps include a broader potential user base as opposed to paid ones. Most people are used to free apps and ads displayed in them. This is why ad monetization is often applied to free applications, as it can bring extraordinary income-generating results! You can also consider a freemium model, in which you offer the basic features of your product for free, but any additional ones are paid (for instance, in the case of gaming apps, you can enable buying additional armor or character improvements). An advantage of this solution is that it converts people who already like your app, which, in addition to a potential big client base, can result in satisfactory revenue.

Best practices for mobile app monetization

  • Whether you own an Android or iOS app, you must prioritize the application’s quality. Whether the app will be paid or free, you really have to make sure it’s good and safe, there are no bugs and potential errors, and users will potentially want to download and enjoy it. Remember that unhappy users might leave negative comments about your app, discouraging others to use it;
  • What also matters is the app’s visibility in the app store. Your potential users should be able to find your app with ease. One way to achieve this is by implementing ASO (App Store Optimization) strategies. These tactics can also help you enhance your app’s ranking. They include finding the right keywords and including them in the app’s name, its short and long description (in the case of Google Play Store), or in the app’s title, subtitle, and dedicated keyword field (when you use Apple App Store);
  • Additionally, try to describe your app as best as you can. This will let you minimize the likelihood of users uninstalling your app due to discrepancies between their expectations and the app’s actual features;
  • Another good piece of advice is to consider the app store’s characteristics, the tendencies observed in it, and users’ needs when choosing where to add your mobile application. For instance, if you have a paid app, you should probably consider the Apple App Store rather than the Google Play Store, as iOS users tend to purchase more in-app goods or pay for the apps. On the other hand, more people are using Google Play Store. Just choose what works best for you!

Future of mobile app monetization

  • In the near future, developers will try to direct more of their offers to new emerging markets like Egypt, Pakistan, or Vietnam. Users from these regions can provide additional revenue streams that will most probably grow in time. However, to benefit fully from such opportunities, apps will also have to adapt to restrictions like, for example, slow networks or limited data plans;
  • More and more app owners will likely trust artificial intelligence solutions when it comes to monetization optimization. The analytical powers of AI, among others, can facilitate the accurate tailoring of advertisements within mobile applications;
  • Mobile app developers will look for ways to monetize VR/AR apps. As virtual reality (VR) and augmented reality (AR) technologies become more easily available through mobile devices, many will likely want to capitalize on immersive gaming experiences.

Entrust your mobile app to experts

Another factor developers have authority over and should not underestimate is the optimization of their monetization endeavors. This involves maximizing the returns from deployed ad units, regardless of the current global situations and trends. Fortunately, help can come from specialists in the field! Look for new emerging options that adjust to the market reality and needs, such as the latest Bidlogic solution that focuses on the optimization of minimum eCPM floors which helps to increase ad revenue in particular countries and mediation groups. This method of bidding optimization, has gained popularity, especially since when Google has shifted to real-time bidding auctions. However, you can still benefit from algorithms that manage waterfall eCPM instances, that eliminate the need for manual control over ad mediation. Don’t wait – make your app earn more today!

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