Mobile app monetization is the process of generating revenue from a mobile app’s user base. For businesses and developers, it is critical to ensure sustainability and growth. By effectively monetizing a mobile app, businesses can repay development and maintenance costs, improve the app, and gain profits.
With the help of our experts, we’ll explain everything you need to know about mobile app monetization, its benefits, and strategies for successful implementation.
Key Takeaways
- Mobile app monetization methods include in-app advertising, in-app purchases, subscriptions, sponsorships, freemium models, and more.
- Choosing the right monetization approach requires a deep understanding of your target audience and current market trends.
- The best platforms for app monetization are Google AdMob, AppLovin, Unity Ads, InMoby, and ironSource.
Table of Contents
Best App Monetization Strategies for 2024
To achieve your app monetization goals, follow these top mobile app monetization strategies and models:
- Free trial
- In-app purchases
- In-app advertising
- Subscriptions
- Paid app model
- Partnership model
- Affiliate marketing
- White labeling
- Comprehensive approach
1. Free Trial
Offering a free trial period allows users to experience all the features of your app for a limited time. This helps them decide whether to upgrade to the premium version.
Pros of free trials:
- A free trial attracts many users to download and try the app.
- Users who enjoy the free trial are more likely to upgrade to a paid version.
- By offering a free trial, you can showcase the app's features and unique value to potential users, encouraging them to pay for the premium version.
- During the free trial period, you can gather feedback and identify areas for improvement.
Cons of free trials:
- There is no guarantee that users who try the free trial will upgrade to a paid version.
- A free trial may require additional development costs and resources.
- If users have a negative experience during the free trial, they may leave negative reviews, harm the app's reputation, and deter potential users from downloading it.
2. In-App Purchases
In this model, the app is offered with basic features for free, while users can purchase additional features within the app. These in-app purchases can range from one-time upgrades to recurring subscriptions, providing flexibility for different user needs.
Karan Rawal, Sr. Digital Marketing Specialist at Ace Infoway, strongly advocates this practice. She especially recommends this revenue-generating strategy to apps with a large user base: “Once you have a substantial audience, consider a freemium model with in-app purchases and limited ads to initially generate revenue from both free and paying users. Offer a subscription for full access to advanced features.
In-app purchases are a highly effective monetization strategy. Users willingly spend real money on digital items, such as in-game coins, outfits, power-ups, or the option to eliminate ads permanently or for a set duration. A prime example is Pokémon Go, which generated over $2 billion in the first two years through in-app purchases.”
Pros of in-app purchases:
- In-app purchases provide additional revenue beyond initial app purchases or downloads.
- Users can choose the features or content they want to buy, which customizes their experience with the app.
- In-app purchases can improve user engagement and retention.
Cons of in-app purchases:
- Some users may not be willing to pay for additional features.
- Users may become frustrated if they feel that in-app purchases are necessary to enjoy the app fully or are constantly pressured to spend money.
- Implementing in-app purchases may require additional development costs.
- In-app purchases can complicate the app's design and user interface, which affects user experience (UX).
3. In-App Advertising
In-app advertising involves displaying ads within the app to generate revenue. These ads can come in various formats such as banner ads, interstitial ads, rewarded video ads, or other formats. The app owner earns revenue each time users click on or view an ad.
A popular approach is to offer rewards, like extra energy to complete a game level, encouraging users to voluntarily click ads.
Anastasiia Savytska, Territory Sales Manager at Svitla Systems, advises: “Consider in-app advertisements and strategic partnerships for revenue diversification. Regularly analyze user feedback and app analytics to refine and enhance the app. Invest in robust marketing strategies to increase visibility and attract a larger user base. Balancing monetization with user satisfaction is key to long-term success in the competitive app market."
Pros of in-app advertising:
- Users don’t have to pay for additional features, which positively impacts retention and engagement.
- In-app advertising can scale with the user base, providing a consistent revenue stream as the app becomes more popular.
- Ads can be customized and target specific audience demographics or interests.
Cons of in-app advertising:
- In-app advertising can negatively impact UX if the ads are intrusive or disrupt functionality.
- Some users may use ad blockers to avoid ads.
- In-app advertising typically generates less revenue than in-app purchases or subscriptions.
4. Subscription
In this monetization strategy, the app is free to download, but users must pay to unlock premium features. The best example of a subscription-based app is Spotify. While users can enjoy music for free, they must subscribe to access an ad-free experience, unlimited skips, and offline listening.
Pros of subscriptions:
- Subscriptions often generate more revenue per user than other monetization strategies, such as in-app advertising.
- Offering subscriptions can improve user engagement and retention by providing additional value.
- Users can subscribe for monthly or yearly services. This flexibility allows them to choose a plan that fits their budget and needs.
Cons of subscriptions:
- Some users will not be willing to pay to subscribe for premium features.
- This model is not suitable for all apps. The app must offer lasting value or content that justifies the recurring cost.
- Users cancel their subscriptions if they feel the value is not worth the ongoing cost.
5. Paid App Model
With paid or premium apps, users pay a one-time fee to download the app. The app owner sets the price based on the app's features, functionality, and value.
To successfully monetize a premium app in today's market (where most apps are free), it must offer unique and compelling features that users are willing to pay for. A free trial or limited app version can entice users to try it before purchasing.
Pros of paid apps:
- Paid apps are a direct source of revenue.
- Paid apps have a high-quality user base. Users are engaged and committed to the app they pay for and are more likely to provide feedback and long-term support.
- Paid apps do not rely on ads or in-app purchases to generate revenue. They provide a better user experience without overwhelming or irritating users.
Cons of paid apps:
- Users may be less likely to download and try an app if they must pay first. This can be especially challenging if apps with similar functionalities are available for free.
- Users who pay for the app expect high quality and service in return, which means the app developer must deliver exceptional features and functionality. Not meeting these expectations can result in negative reviews and revenue loss.
- Paid apps do not generate recurring revenue. Once a user has paid for the app, the app owner must continue to attract new users to maintain a steady income.
6. Partnership Model
When an app is popular within a specific niche market, developers can partner with relevant companies to promote their brands within the app. The app can be monetized through acquisition, partnership, and brand sponsorship if the user base is considerably large.
While similar to in-app advertising, the partnership model is different. Developers don't need to rely on ad networks to show ads. Instead, ads are usually static and customized to match the sponsor's brand. For example, a partner's logo can be displayed on the loading screen.
Pros of partnerships:
- A partnership strategy can generate additional revenue through partnerships with relevant companies or organizations.
- App owners can rely on different revenue sources instead of a single monetization strategy.
- This strategy can attract new users through cross-promotion or other collaborations with partner companies.
Cons of partnerships:
- It can be time-consuming; the app owner must identify and negotiate partnerships with other companies or organizations.
- Integrating the partner’s visuals into the app requires additional development efforts and might affect UX.
- The app owner might have to give up some control over how the app looks or feels.
7. Affiliate Marketing
Affiliate marketing involves promoting other mobile apps within an app. Marketers earn a commission for each installation or conversion resulting from the referral. While commissions may not be high, you can choose the best apps to promote, which can enhance your brand image and boost user engagement.
Pros of affiliate marketing:
- Affiliate marketing requires minimal investment.
- It doesn’t turn users away since it doesn’t require paying for an app or in-app purchases.
- Affiliate marketing builds relationships with relevant brands.
Cons of affiliate marketing:
- Many companies compete to find the top-performing affiliates, which can create high competition.
- Income from affiliate marketing can be inconsistent, as it depends on conversion rates.
- Poorly chosen affiliates can risk losing user trust.
8. White Labeling
This mobile app monetization strategy involves selling the rights to a fully functional app, allowing other businesses to market it under their brand name. The app is fully customizable so clients can apply their own branding, such as logos, color palettes, and content. While the core functionality remains the same, the outward appearance is tailored to the client’s needs.
Pros of mobile app white labeling:
- App developers can license the same app to multiple businesses, increasing revenue without additional costs.
- Developers can charge an ongoing retainer for app maintenance and troubleshooting.
- By partnering with established brands, developers can expand their reach across multiple regions and industries.
Cons of mobile app white labeling:
- The brand developer may not get any recognition for their work, as the app is marketed and distributed under another name.
- Clients may ask for complex customizations to the app.
- This strategy involves complex legal agreements to ensure proper compensation and protect the developers’ intellectual property.
9. Comprehensive Approach
To maximize mobile app ROI, you can combine several monetization strategies. Choose the options that best align with your app and target audience, ensuring you have the resources to invest in improving its features and functionalities. Your app can become more creative and innovative, attract a large user base, and generate increased revenue for a continuous cycle of improvement.
Daniyal Vadsaria, Head of Marketing and Sales at Virtual Reality Creators, recommends a comprehensive approach:
- Offer a freemium model that lets users experience the app, get hooked, and then pay for full access or continued use
- Use in-app ads in the free version to increase revenue
- Opt for a subscription model instead of a one-time purchase model
- Create a referral program with rewards for user recommendations
- Start an affiliate program and get a sales team without having one
- Monetize anonymized user data by selling it to advertisers and marketers
Regardless of the mobile app marketing strategy you choose, you can attract more users to your app and generate revenue.
Best Platforms for App Monetization
Monetizing your app can help you acquire new users through functional and profitable improvements. These can lead to more downloads and increased user engagement, ultimately boosting your app's ranking and visibility in app stores.
Here are some of the top platforms for app monetization:
1. Google AdMob
The best app monetization platform is Google AdMob. It allows developers to monetize mobile apps by displaying in-app ads in various formats, including banner, interstitial, native, and rewarded ads. Developers can target audiences based on user demographics, location, and behavior, to increase ad relevance and user engagement.
Key Features
- Numerous automation tools for monetization
- Real-time analytics and reporting
- Multiple payment options
- Various ad formats
Pros
- Beginner-friendly, intuitive, and simple
- Advanced targeting capabilities
- Android and iOS integrations
Cons
- Strict content policies
Pricing
Google AdMob is free.
2. AppLovin
AppLovin is another excellent mobile app monetization platform that offers developers a variety of ad formats and targeting options to help them monetize their apps. Supported ad formats are banner ads, interstitial ads, instream video ads, rewarded video ads, rewarded interstitial ads, lock-screen ads, and native ads.
Key Features
- Advanced targeting and personalization
- Programmatic ad exchange and hybrid monetization
- Comprehensive reporting and analytics
- Broad global reach
Pros
- Beginner-friendly and easy to use
- Diverse ad formats
- High effective cost per thousand impressions (eCPMs)
Cons
- Complex learning curve
Pricing
Undisclosed. Contact the AppLovin sales team for pricing details.
3. Unity Ads
Unity Ads is a mobile ad network and platform developed by Unity Technologies, the company behind the popular game engine Unity. It allows developers to monetize their mobile apps (especially games) through various ad formats, including banner ads, interstitial ads, playable ads, and rewarded video ads.
Key Features
- Integration support for gaming apps built on the Unity platform
- High-quality ad formats
- Detailed analytics and reporting tools
- Simplified in-app purchases
Pros
- Intuitive dashboard
- Minimal disruptions to the gaming experience
- Cross-promotion within the Unity ecosystem
Cons
- Monetization features can only be accessed through all-in-one app development plans
Pricing
- Personal: Free
- Pro: Starts at $2,040/year
- Enterprise: Custom pricing
- Industry: Starts at $4,950/year
4. InMobi
InMobi is a great mobile app monetization platform for advertisers and publishers looking for a flexible, user-friendly solution with various ad formats and advanced targeting options. It supports banner ads, instream video ads, native ads, playable ads, rich media ads, interstitial ads, and carousel ads.
Key Features
- Advanced audience filtering based on OS, device, GEO, and channel
- Ad preloading support
- Real-time ad analytics to monitor performance
- Comprehensive suite of ad formats
Pros
- Regularly updated software development kit (SDK)
- Access to 200+ demand-side platforms (DSPs) and over 5,000 programmatic buyers
- Dynamic pricing and campaign optimization
Cons
- Complex advanced features
Pricing
InMobi SDK is free to download.
5. ironSource
ironSource is a mobile advertising and app monetization platform focusing on rewarded advertising. Using this platform, mobile app developers can earn revenue from users who don't want to spend real money on in-app purchases and subscriptions.
Key Features
- Virtual rewards in exchange for ad offers
- Partnerships with the world’s top brand and game advertisers
- High-impact, user-centric ad formats
- Comprehensive reporting and analytics
Pros
- Robust ad network management on one platform
- Pay-per-engagement model
- Extensive documentation and support for developers and marketers
Cons
- Revenue sharing model
Pricing
Undisclosed. Contact the ironSource sales team for pricing details.
App Monetization Best Practices
In a competitive digital landscape, effective mobile app motivation is crucial for long-term growth and success. These best practices can help developers maximize revenue:
1. Focus on UX
User experience directly impacts your app monetization success. These tips will help you maintain a positive UX while generating revenue:
- Use native or rewarded video ads that do not interrupt or negatively impact UX.
- Limit the number of ads displayed to users so they don't feel bombarded with ads.
- Place ads strategically so they don’t interfere with the app's functionality or distract users from the primary content.
- Display ads relevant to the user's interests and behavior.
- Provide users with value for their attention. Reward them for viewing or interacting with ads, such as virtual currency or premium content.
2. Attract New Users
To scale monetization, it’s essential to continually attract new users. Some effective ways to do this include:
- App Store Optimization (ASO): Optimize the app’s title and description with relevant keywords to make it more discoverable in searches.
- Social media marketing: Promote your app on social media platforms and encourage users to download it.
- Influencer marketing: Partner with influencers in your niche to increase the app’s visibility and reach broader audiences.
- Referral marketing: Offer rewards to users who invite their friends to join your app.
- Content marketing: Create high-quality and valuable content about your app’s purpose and benefits. Share it on your website and social media platforms.
3. Utilize Hybrid App Monetization
Using multiple app monetization methods, you can generate revenue from various sources. For example, you can combine in-app purchases, partnerships, and subscription models to maximize income opportunities.
Some users prefer to pay once to unlock premium features, while others use the app for free with ads or opt for a subscription model. Hybrid app monetization allows you to reach a broader audience and increase the chances of making money from different types of users.
4. Track Analytics
Measuring monetization efforts provides valuable insights into user behavior, engagement, and revenue generation. By tracking key performance indicators (KPIs) such as downloads, installs, active users, retention rates, and revenue per user, you can make data-driven decisions to optimize your monetization strategy.
Kelli Lucas, Chief Design Officer & Co-Founder of LunarLab, advises creating sample revenue models and understanding your expenses, including customer acquisition costs: “Set broad business goals and determine the revenue needed per customer to meet these goals. Consider your app's features and user demographics and needs to choose the right monetization approach—be it subscriptions, one-time pricing, freemium models, or pay-as-you-go. Initiate early user testing to validate your chosen model in the market. Continuously iterate, optimize, and evolve based on incoming data.”
5. Stay Updated
Policy changes on major app platforms can significantly impact your monetization strategies. So, staying informed and keeping up to date with these changes is crucial to maintaining and optimizing your revenue.
An excellent example is how many apps altered their monetization approach following the decision to reduce the commission fees on app subscriptions.
Mobile App Monetization Takeaways
Developing, testing, launching, and maintaining a mobile app requires a significant financial investment. The best way to get a return on this investment is to monetize your app. Combining various monetization strategies yields the best results, but the right methods and practices depend on a deep understanding of your app’s features, user base, and market dynamics.
Now that you know all the strategies, best practices, and advantages of mobile app monetization, you can make data-driven decisions for your own app. You can also partner with the top mobile app marketing agencies to get the most out of your monetization strategy.
Mobile App Monetization FAQs
1. How do I monetize my mobile apps?
You can monetize your mobile app using one of the above-described models:
- Paid apps
- In-app purchases
- In-app advertising
- Free trial periods
- Subscriptions
- Partnerships
- Affiliate marketing
- White labeling
- A comprehensive approach.
2. What are mobile app monetization models?
Mobile app monetization models refer to various methods through which app developers can generate revenue from their mobile applications. In simpler terms, mobile app monetization models are different ways the app can earn money and bring a return on investment.
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