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Ultimate Guide To Mobile App Monetization

I NEED A HUGe amount of money.

That’s every app owner during their initial stage- when their app is out in the market and they are yet to make profits.

What is Mobile App Monetization?

Summarizing the concept in one line-app monetization means generating revenue from mobile applications. Though we can sum it up simply, it is crucial to understand the app monetization process to leverage it strategically best. A well-thought app monetization plan ensures you deliver a great user experience, successfully retaining and expanding your user base. 

As a consumer yourself, you might now be confused. 94% of apps on the ios app store & 97% of apps on Google Play Store are free. It is what you see every day and suddenly introduced to app monetization. Before we go further with this alien concept, let us walk through the free apps.    

Making your app free has several advantages that can help you eventually make more money because it reduces the risk associated with checking it out. Free apps demand very little dedication, which makes them more affordable to attract new customers. Even if the bar for free apps has increased, there is still a lower bar than for commercial ones. 

Paid apps primarily rely on a well-known brand, specific content, and reliable reviews. When users decide to pay for an app, they naturally have higher expectations, especially regarding the user experience. As a result, options for monetization strategies are constrained, and possible long-term revenue losses may result.

But remember- things were not like this always. Not all apps were free. When app stores started operating, many well-known apps had a price. The only option for developers to make money at the time was to request an upfront commitment because there was little to no data on how to create income. 

Stakeholders were aware that in-app purchases & advertising with other monetization strategies proved significantly more lucrative as data became more readily available. With this- free apps have become the standard.

mobile app monetization strategy

Common Mobile App Monetization Strategy

There are numerous options available for monetizing mobile apps. In this article, we’ll study five common app monetization techniques and talk about how they could affect app growth and engagement.

How to implement monetization methods & please your clients and gain a market worthy- income? Our specialists are prepared to assist you in determining the best method of monetization for your application.

In-App Advertising:

The growth of mobile sales started to pick up speed after the Apple App Store opened in 2008, a period when online digital advertising as a monetization approach was already well-established. Due to the early adoption of app banner advertisements by app developers, it was necessary to scale down the size of the ads to match the limited screen space of mobile devices. At that time, banner ads evolved to offer a range of options specifically designed for the mobile environment, such as text, video, and native ads. In-app ad revenues are expected to nearly treble by 2025 and reach USD 226 Billion.

  • Advantages: 
    • Better Results: Many individuals equate online banner advertisements with in-app advertising. Despite similarities, they take a distinct approach. In-app advertisements also perform better than banner ads.
    • More Specific Audience: With in-app adverts, your marketing is more successful if your viewer decides to download the app and if you promote relevant apps to a specific target population.
  • Disadvantages: 
    • Reduced Engagement: Despite the captive audience, there might not be many clicks. These advertisements are not likely to generate a lot of engagement, as banners have an average CTR of 0.1%.
    • Promotions made by rivals: If one of your rivals appears in the in-app advertisement, viewers may click the link and download the app.
Freemium Subscriptions:

Following the free app download, customers are presented with in-app purchases that grant them access to premium features, extra material, or digital products. Spotify is the best instance of a freemium app subscription strategy. An alternative to iTunes’ pay-per-song business model and the widespread illicit downloading of music at the time was Spotify, a music app created in Sweden in 2006.

  • Advantages: 
    • Scalable: One of the biggest benefits of this monetization strategy is that it enables startups to grow and build a user base without the high costs associated with conventional marketing and sales operations.
    • A trial before purchase: With freemium subscriptions, consumers may test out your app before choosing to buy it.
    • Wide User Base: You can get money from users who might otherwise not be willing to pay for your app by offering freemium subscriptions.
  • Disadvantages: 
    • Limited Upsell: If consumers choose not to purchase the paid version of the app, revenue may decline.
    • Impacts on User Experience: If users experience a constant barrage of advertisements, they may grow annoyed with the app.
    • Careful Implementation: Users may find freemium subscriptions confusing, which causes them to cancel their subscriptions or stop using the service altogether.
Premium Subscriptions:

Premium mobile applications are subscription-based premium apps, however, to access all features, customers must sign up right away for a predetermined fee. It suggests that the number of downloads directly affects revenue. Paid apps have been found to have higher user engagement and customer retention rates. Disney+ and Tinder are two well-known services that use premium membership models.

  • Advantages: 
    • Reliable: For app creators, app subscriptions provide a steady and predictable revenue stream.
    • Development Scope: Premium subscriptions can assist in financing and continuing the upkeep of the app.
    • Longevity: Premium subscriptions can aid in ensuring that an app’s users continue to find it helpful and accessible over time.
  • Disadvantages: 
    • Expensive: Users may find premium subscriptions to be too expensive, especially if they don’t frequently use the app, which will result in a drop in user base.
    • Inflexible: Users may not be interested to benefit from exclusive deals or discounts due to the rigidity of premium memberships.
    • Turn Away: Before using the app frequently, users could find it difficult to determine value, which might be unsettling. Additionally, some expensive subscriptions might be challenging to cancel, leaving consumers feeling stranded or trapped.
In-App Purchase:

In-app purchases are another monetization method that is becoming more and more common in the digital environment, particularly in the gaming sector. Setting up payment for in-app purchases is also very simple. To pay for any in-app purchases or other app-related costs, users have the option to add a credit card when they register an account on the Google Play store or the iOS App Store. Unless your mobile app is sufficiently popular to be able to negotiate an alternative commission schedule, when a customer decides to make an in-app purchase, it is simply charged to their credit card, with app retailers getting a commission of typically 30%.

  • Advantages: 
    • Effective: Applications that aren’t games now heavily rely on in-app purchases for income. After rewarded videos, in-app purchases are regarded by developers as the second most successful revenue strategy.
    • Convenient & Flexible: Because they enable users to make purchases without leaving the app, in-app purchases are well-liked by users. Developers can provide a range of services and content to users through in-app purchases, providing them with a versatile monetization strategy.
  • Disadvantages: 
    • Alienate the users: Users may feel as though they are being treated like a small-scale, petty brand if they are frequently encouraged to make purchases. If the developer of the app is not careful with the types of transactions offered, the app may be branded as a “pay-to-win” app.
    • Harm brand name: A negative brand image could occur from users making in-app purchases and then being dissatisfied with the outcomes, which could lead to negative reviews and fewer downloads.
Affiliate Marketing:

There are affiliate programs available to app developers from several large technological corporations, such as Google, Apple, and Microsoft. These affiliate programs will promote other mobile applications within your app. Although the commissions given in this kind of app monetization are often not significant, the fact that app developers can choose which apps to market can persuade users to associate their app with related businesses.

  • Advantages: 
    • Less Expensive: Via affiliate marketing, an app can generate revenue without requiring users to pay for downloads or in-app purchases.
    • Aids in brand building: Within an app, affiliate marketing can be utilized to advertise and sell goods and services.
  • Disadvantages: 
    • Competition: Affiliate marketing can be quite competitive as companies vie for affiliates who can successfully promote their apps.
    • Time-Taking: Since affiliates must be continuously hired and managed, affiliate marketing can be time-consuming.

How to choose a Monetization Model that suits your app the best?

What is the most effective mobile app monetization method for me? Like anything in digital marketing, there are several considerations to make when deciding which of the many app monetization strategies an app owner should use for their app. To monetize their apps, app developers typically decide to combine the aforementioned methods. But, with marketers planning to spend more than $600 billion on digital advertising by 2022, in-app advertising is certainly still one of the most effective and lucrative methods for monetizing apps.
The following factors should be taken into account before choosing a monetization strategy:

  • App Purpose: The purpose and role of an app should be carefully considered. What problem does the app address, and how? The possibility to make more money varies depending on the app. Compared to news and entertainment apps, which profit from subscription plans, gaming applications are better suited for in-app advertising.
  • Competition: Like with all product development, competitor analysis is vital to understanding how an app fits in the market. By researching comparable apps already on the market, developers can discover which revenue strategies will be most successful.
  • Target Audience: App developers need to be aware of their target audience. They — who? What do they want? What matters most is what they are willing to spend money on. By identifying the aforementioned criteria, developers may try to create a plan—or several plans—to ensure ongoing success.

The user base, the ad network, and the selected revenue model are just a few of the variables that affect how much money an app will make. A popular app may frequently generate hundreds of dollars each month in revenue.

The optimum app monetization technique for your app can be chosen in no one-size-fits-all manner. While in-app purchases might be a good way to fund a gaming app, for instance, in-app advertisements will be a better option if your app offers news content. The decision-making process also heavily weighs the user experience. Will your target demographic be suited to the app monetization strategy? To suit the platform and audience, various tactics may be needed for Android and iOS apps.

Closing Thoughts

Now that you know why mobile app development is important, we are a call away. Our ad technology is clever and strategic, yet easy to use so that you can get the most out of your advertising budget. We use a variety of ad formats specifically tailored to the requirements of our clients to monetize apps. Since its inception, Black Widow Tech has used cutting-edge programmatic advertising technology in conjunction with unbiased and moral guidance to assist our clients in realizing an average 50% increase in ad revenue.

To find out more about how Black Widow Tech can increase your ad revenue and expand your business, get in touch with us right away!