Okay, so you’ve developed and released your business app to the world. Now, what? Well, the natural answer is to figure out exactly how to monetize it. App monetization is a straightforward concept: it’s the process by which you convert your app users into revenue.
Haven’t been paying close attention to mobile app statistics? No worries, we have you covered. Here are some main points to consider:
App downloads are skyrocketing, and mobile apps are generating billions of dollars. There’s never been a better time to turn your mobile app into a revenue-generating machine. Are businesses interested in doing that? The answer is probably a resounding “Yes!". No matter the industry, monetizing your app can be an important catalyst for generating and diversifying your business revenue.
Of course, this now leads us to newer questions. How exactly should you monetize an app? In this piece, we’ll answer that question in detail, explore different app monetization strategies and models, and provide actionable advice to ensure your mobile app can start making money for your business.
Thinking about the app monetization strategy that makes the most sense for your business is essential. What target demographic are you serving? What ads have worked for your company in the past and could you potentially replicate that success with similar in-app ads? What app monetization strategies will you combine for the best possible user experience?
There are many different mobile app monetization strategies in the marketplace, creating an incredible opportunity for businesses and app developers. Some of these strategies are more solidified than others, and some may do more harm than good to your brand. Before jumping in headfirst to use the first app monetization approach that catches your eye, there are some considerations.
Let’s look at some of the most common app monetization strategies and how they stack up.
One way to monetize your app right out of the gate is to offer a free and a paid version. The idea here is to provide a free app (or freemium app) that will get your target audience interested enough to pay for the premium version, which will, of course, offer premium features or an ad-free option.
Once users get a taste for the basic features, they can upgrade to the paid version of the app to access more features or make their user experience (UX) more convenient. The free app can act as a “funnel” to gradually persuade users toward your paid app offering. The difficulty is striking a balance between what content/features should be free and what benefits your paid app should provide.
Candy Crush is a free-to-play puzzle game famous for implementing the freemium model all the way to the top of the app charts. The game has now been downloaded billions of times and is widely considered a global phenomenon. Spotify, the biggest music streaming app in the world, also boasts a freemium business model.
The most important aspect of the freemium model is to focus on improving conversion rates. Your app might attract a large user base of free users, but it should also ensure enough users are converting to the paid offering for the app to succeed. Even though 70% of Candy Crush player never spend anything on the game, it still attracts and converts enough users to generate billions of dollars in revenue.
If you aren’t interested in the freemium model, you could go the paid app offering route. This is much more challenging since users will have to pay to download the app. However, many successful apps can charge anywhere from $0.99 cents to $99.99 to download.
As the mobile app landscape evolves, paid apps are becoming a rarer and rarer option. Still, with the right app, features, and market research, a paid app can be an incredibly convenient way to monetize your app.
In-app purchases, or IAPs, are gaining popularity as an app monetization strategy. The concept is to offer either a free or paid app with a set of base features while offering in-app purchases to enhance the user experience, app functionalities, or both.
Consumers who make IAPs do not have to navigate outside the app to complete a transaction.
What are some popular examples of in-app purchases?
If your app targets children, you’ll also need to consider the Children’s Online Protection Act (COPPA) of 1998 and the General Data Protection Regulation (GDPR) of 2018. These laws apply differently depending on each user’s country, but they both include rules regarding data protection for children under the age of consent. More regulators are interested in kids making accidental IAPs, so this may be a concern to address with your app monetization strategy.
In-app purchases can help drive revenue in several ways. First, in-app purchases can help incentivize a mobile app ecosystem to build community, like a mobile gaming app where users can trade tools, skins and other items.
The subscription model is very similar to the in-app purchase model. Here, businesses offer their mobile app to be downloaded free via an app store. Once the users subscribe to the app, they gain access to premium features, bonuses, and rewards.
Users are then typically charged a recurring fee to subscribe to the app. The challenge here is to keep users engaged and interested enough in their features to remain subscribed. These are known as renewal subscriptions. Some apps offer non-renewal subscriptions, where users can access additional features and content for a limited time.
There are all sorts of mobile app subscriptions that businesses might offer. Some subscription apps might include a music streaming app you pay a monthly subscription, a fitness app where your subscription gives you access to virtual workout classes, or an educational app where users subscribe for lessons and courses.
Some of the most popular apps in the world are monetized through the subscription model. An app that operates under the“freemium” model technically becomes a subscription once the user chooses to upgrade. Many apps also offer discounts on long-term subscriptions to increase customer lifetime value and attract new users.
While it might not be the most obvious app monetization method, there are many mobile apps that have been able to monetize thanks to strong partnerships and sponsorships with other brands. This monetization strategy makes the most sense for successful apps that have already gained traction in the marketplace.
Once your app is successful, you can leverage that success to charge sponsors that may want to place a prominent placement in your app. Of course, the amount of money from the sponsorship will depend on metrics like your user base and demographic. Securing sponsorships can be an incredible app monetization opportunity if you are armed with enough users and data.
Your business app could form strategic partnerships with other businesses, as well. Find brands and influencers with similar user bases to yours, and you may have just found an excellent way to cross-promote together. With the right partnerships, you can monetize your apps while connecting users to brands they might already find interesting, ,relatable, or relevant. With influencer marketing expected to be a $16.4 billion industry by 2022, you can expect more mobile apps to team up with influencers from Youtube, TikTok, and Instagram.
These sponsorships and partnerships might not be the most popular method for monetizing apps, but they still drive significant growth for many mobile apps worldwide.
We should point out that in-app mobile advertising deserves its own piece since it is the prime generator of app revenue for today’s businesses. To put things in perspective, in 2020, mobile ad spending reached $240 billion and is projected to cross a colossal $300 billion by the end of 2022.
For the most part, in-app advertising is the most popular app monetization method along with in-app purchases and the subscription model. So if you’re looking to monetize, in-app advertising is probably the easiest way to do so. But, before you commit to in-app advertising, it’s important to understand how various ad formats influence user interaction.
Unlike other options on this list, in-app ads are a monetization model where user choice is removed. With in-app advertising, you don’t have to convert a free app user to a paid app user. The choice is ultimately in the hands of the user. Right? With in-app advertisements, the situation is much different: users will get an in-app ad via a banner ad or pop-up whether they like it or not.
This, of course, is going to create dependable revenue projections based on the size of the app user base, however, if users get fed up with the ads they may delete the app. So, before running a bunch of video ads, banner ads, or ad notifications; remember that the type of ad plays an incredibly important role in maintaining active users and building strong dependable app monetization revenue streams.
Luckily, businesses that wish to go the in-app advertisement route have a win-win-win. Yes, three wins! It’s known as the survey wall. Survey walls work by prompting users to engage in an in-app survey, and in doing so, they receive some type of reward.
Here’s how it’s a win-win-win. For users, they’re happy to engage in an in-app survey since they will receive some monetary or in-app reward. For businesses, it’s a win because they gain critical insight regarding how users know or interact with their brand. And last, it’s a big win for app owners because it means dependable in-app revenue without scaring users away with unappealing in-app ads.
With inBrain, you’ll be able to connect your users with brands they love through the highly tailored inBrain Survey Wall - or any of our other integrations. Here, users can pick a survey that aligns with their unique preferences.. We make it easier to monetize your non-paying users and manage the inBrain Publisher Dashboard in real-time.
Apps can be incredible successes, but they can also be complete failures. With tools like inBrain, you can help keep users in your app to drive more in-app revenue. Survey walls are a convenient and frictionless way to find out more about user behavior and tweak your strategies accordingly.
With this information, your business can learn more about its users and leverage that feedback to improve the user experience. At the same time, you’ll be rewarding your users who participate in rewarded surveys, keeping them engaged and interested in your app. Signup to find out more about inBrain and how we can help you increase revenue today.