With mobile app monetization, your app can generate revenue, repay development and maintenance costs, and gain profit. This article explains everything you need to know about mobile app monetization, its benefits, and strategies for successful implementation.
Table of Contents
- What Is Mobile App Monetization?
- Seven Best App Monetization Strategies
- Best Platforms for App Monetization
- How to Monetize Your App: Best Practices to Follow
- Monetize Your App: Importance & Benefits
- Expert Insights on Mobile App Monetization Guide
- Mobile App Monetization Takeaway
- Mobile App Monetization FAQs
What Is Mobile App Monetization?
Mobile app monetization refers to the process of generating revenue from a mobile application. Simply put, it’s the way the app earns money. App monetization methods include in-app advertising, in-app purchases, subscriptions, sponsorships, freemium models, etc.
Seven Best App Monetization Strategies
Whether you want to monetize your app or optimize the mobile app ROI from an already successful app, this guide will discuss the best mobile app monetization models to help you accomplish your goals.
- Free Trial
- In-App Purchases
- In-App Advertising
- Subscription
- Paid App Model
- Partnership Model
- Affiliate Marketing
1. Free Trial
The free trial period involves offering the app for free but for a limited time. Users can enjoy all the features of the paid app during this period and decide whether they want to pay for the premium version.
Pros of free trial strategy:
- A free trial attracts many users to download and try the app.
- Users who enjoy the free trial may be 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 trial strategy:
- There is no guarantee that users who try the free trial version will upgrade to a paid version.
- A free trial version can 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 with its basic features is free, but users can purchase additional features within the app. These purchases can range from one-time upgrades to recurring subscriptions.
Pros of in-app purchase strategy:
- In-app purchases provide additional revenue besides initial app purchases or downloads.
- They offer users flexibility. They 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 purchase strategy:
- Some users may not be willing to pay for additional features.
- Users may become frustrated if they feel that the in-app purchases are necessary to enjoy the app fully or are constantly pressured to make additional purchases.
- Implementing in-app purchases can require additional development costs.
- In-app purchases can complicate the app's design and user interface, damaging the UX.
3. In-App Advertising
In-app advertising involves displaying ads within the app to generate revenue. These can be banner ads, interstitial ads, rewarded video ads, or other formats. The app owner generates revenue every time users click or see the ad. Users often voluntarily click ads for reward: for example, more energy to complete the game level.
Pros of in-app advertising strategy:
- Users don’t have to pay for additional features, positively affecting their retention and engagement.
- In-app advertising can scale with the app's 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 strategy:
- In-app advertising can negatively impact the UX if the ads are intrusive or disrupt the app's functionality.
- Some users may use ad blockers to avoid in-app advertising.
- In-app advertising typically generates less revenue than in-app purchases or paid apps.
4. Subscription
The app is free to download and use with a subscription monetization strategy, but users must pay to subscribe to enjoy premium features. The best example of a subscription-based app is Spotify. Users can enjoy music for free, but if they want an ad-free version, unlimited skips, or to listen offline, they must subscribe.
Pros of subscription strategy:
- The subscription strategy often generates 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 subscription strategy:
- Some users will always use the free app version and won’t pay to subscribe for premium features.
- Subscription is unsuitable for all apps. The app must offer lasting value or content that justifies the recurring cost.
- Users can 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 from the app store. 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 app strategy:
- 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, providing 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 (UX) without overwhelming or irritating users.
Cons of paid app strategy:
- Users may be less likely to download and try an app if they have to pay first. This can be especially challenging if there are similar apps available for free.
- Users who pay for the app expect high quality and service in return, which can pressure the app developer to 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 quite popular in a specific niche market, app developers can partner with suitable companies and promote their brands within the app. The app can be monetized through acquisition, partnership, and brand sponsorship if the user base is considerably large.
Although similar, partnership strategy shouldn’t be mixed with in-app advertising. Developers don't need to use an ad network to show ads. The ads are usually static and customized to match the sponsor's brand. For example, the partner's logo can be displayed on the loading screen.
Pros of partnership strategy:
- 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.
- A partnership strategy can attract new users through cross-promotion or other forms of collaboration with partner companies.
Cons of partnership strategy:
- It can be time-consuming; the app owner must identify and negotiate partnerships with other companies or organizations.
- Implementing the partner’s visuals to the app requires additional development efforts and might change the 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. You earn a commission for each installation or conversion that results from the referral. Although commissions are not high, you can choose which apps to promote, which can help your brand image and user engagement.
Pros of affiliate marketing strategy:
- 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 strategy builds relationships with relevant brands.
Cons of affiliate marketing strategy:
- Many companies compete to find effective affiliates, which can create high competition.
- Affiliate marketing can harm brand reputation if affiliates promote the app incorrectly.
- Managing and recruiting affiliates can be a time-consuming task.
Best Platforms for App Monetization
The best app monetization platforms available on the market are:
1. Google AdMob
Google AdMob allows developers to monetize mobile apps by displaying in-app ads in various formats, including banner, interstitial, native, and rewarded ads. Developers can target ads audience based on user demographics, location, and behavior, to increase ad relevance and user engagement.
The platform is beginner-friendly, intuitive and simple, with numerous automation tools that do your hard work. AdMob provides real-time analytics and reporting, allowing developers to track ad performance and optimize their advertising strategy for maximum revenue.
AdMob can be integrated into Android and iOS apps, and it supports multiple payment options, including wire transfer, PayPal, and check.
2. AppLovin
AppLovin offers developers a variety of ad formats and targeting options to help them monetize their apps. It provides advanced targeting options, ensuring your ads will be personalized to your target audience. Supported ad formats are banner ads, interstitial ads, instream video ads, rewarded video ads, rewarded interstitial ads, lock-screen ads, and native ads.
AppLovin is beginner-friendly and easy to use, even for developers who don't have experience with ad operations. Additionally, it offers access to programmatic ad exchange and hybrid monetization, making it an excellent choice for both new and experienced publishers.
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.
Regardless of your monetization strategy, Unity Ads provides the tools and analytics to support your goals and reach your target audience. One of the biggest advantages of Unity Ads is its excellent integration support for gaming apps built on the Unity platform and engine. This monetization tool is ideal if you're a developer working with this platform.
4. InMobi
InMobi is an excellent 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.
One of its key features is advanced audience filtering, which allows targeting specific audiences based on factors like OS, device, GEO, and channel. InMobi also offers ad preloading support, ensuring ads load quickly and seamlessly. Developers can easily integrate InMobi's platform with their apps using the regularly updated SDK and have access to real-time ad analytics to monitor their ad performance.
5. Tapjoy
Tapjoy is a mobile advertising and app monetization platform focusing on rewarded advertising. It enables app publishers to offer users virtual rewards in exchange for watching ad offers while also allowing advertisers to show you those ads. Once users complete an ad offering, Tapjoy receives a notification from the advertiser and rewards them for their time and attention. With Tapjoy, users earn rewards, publishers money, and advertisers potential clients.
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. Additionally, its pay-per-engagement model provides a more dependable return on investment (ROI) than standard cost-per-click or cost-per-impression networks.
How to Monetize Your App: Best Practices to Follow
Apart from the strategies, there are a few best practices that businesses need to focus on while monetizing their mobile app. These are:
- Focus on the UX
- Attract New Users
- Utilize Hybrid App Monetization
- Track Analytics and Measurement
- Stay Updated
Focus on the UX
UX is closely related to your app monetization success; therefore, you must prioritize it. Here are some tips to help you maintain a great UX while still generating revenue:
- Use native or rewarded video ads that do not interrupt or negatively impact the UX.
- Limit the number of ads displayed to the user, so they don't feel bombarded with ads and can enjoy your app.
- Place ads strategically to not 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.
Attract New Users
To scale monetization, you have to keep new users coming. Several ways to do so are:
- 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 more 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.
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 so users can choose the one that suits them the most.
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.
Track Analytics and Measurement
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.
Stay Updated
The changes in the policy of the major app platforms can change your strategy overnight. So, keeping up to date with such changes is an indispensable practice. An excellent example of this is how many apps altered their approach to monetization with the decision to reduce the commission on app subscriptions.
Monetize Your App: Importance & Benefits
Developing, testing, launching, and maintaining a mobile app requires significant financial investment. To gain a ROI, you must monetize it.
Here are some of the most important app monetization benefits:
- Generating revenue. With various monetization strategies available, you can choose the best option that suits your app and target audience and boost your ROI.
- Improving your app. Monetizing an app gives you the resources to invest in improving your app's features and functionality. Your app can become more creative and innovative and attract more users (aka generate more revenue).
- Enables you to offer a free app. With app monetization, you can offer your app for free, providing users with a cost-free way to try out your app. This can attract more users, increasing your app's popularity and success.
- Facilitates user acquisition. Monetizing your app can also help you acquire new users by providing an attractive app that is both functional and profitable. This can lead to more downloads and higher user engagement, improving your app's ranking and visibility in app stores.
Expert Insights on Mobile App Monetization Guide
We asked agency experts: "What is your main advice to clients when it comes to monetizing apps?"
Daniyal Vadsaria, Chief Marketing Officer at Codment:
"Do have a freemium model in the app that allows users to experience the app, get hooked, and then have to pay for full access or continued use.
· Leverage in-app advertisement in the free version of the app to make money even when you are not charging users.
· Opt for a subscription model instead of a one-time purchase model.
· Create a referral program incentivizing existing users to refer the app to new customers and get a reward.
· Start an affiliate program and get a sales team without having one. Affiliates can be users and non-users promoting your app, as they get a commission on every successful app subscription/purchase.
· Make the right use of the app’s data with data monetization. Collect and sell anonymized user data to relevant parties (advertisers, marketers, etc.)"
Karan Rawal, Brand Partnerships Coordinator, Ace Infoway:
"In today's app monetization landscape, my primary advice is to focus on building a large user base before implementing revenue-generation strategies. Once you have a substantial audience, consider the freemium model, which includes in-app purchases and limited ads to enhance user experience. This way, even free users can contribute to revenue and be encouraged to upgrade to a premium experience. A subscription-based paid version is also an option for users who want full access to advanced features.
In addition to freemium, 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 of this success is Pokémon Go, which generated over $2 billion in the first two years through in-app purchases."
Kelli Lucas, Chief Design Officer & Co-Founder, LunarLab:
"Before choosing a monetization strategy, start by building some sample revenue models for your organization. Understand what your expenses are and determine how much you need to make in order to keep the business running - don't forget to include a rough idea of your customer acquisition costs. Set some high level goals for what you'd like to achieve. Next, determine how much you will need to make from each customer in order to meet your business goals. Now, think about your feature set, who your users are, and what they want to achieve. This collection of data will help you to determine which direction you should go for monetization, and how to price it: subscriptions, one-time pricing, freemium models, pay-as-you-go, etc. Once you have an idea of the direction, start with some early stage user testing to validate whether this model will work in your actual market. Iterate, optimize, and evolve as you collect more data."
Anastasiia Savytska, Business Development Manager at Lionwood.Software:
"The main advice to clients seeking to monetize apps is to prioritize user experience and value.
Focus on creating a product that genuinely meets users' needs and delivers a seamless experience. Implement a freemium model, offering basic features for free while providing premium, value-added features through a paid subscription.
Additionally, consider in-app advertisements and strategic partnerships for revenue diversification.
Regularly analyze user feedback and app analytics to refine and enhance the app continually.
Lastly, 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."
Mobile App Monetization Takeaway
Now that you know all the strategies, best practices, and advantages of mobile app monetization, you can make data-driven decisions about whether to charge for your app or keep it free. Regardless of the mobile app marketing strategy you opt for, you can attract users to your app and generate revenue.
Mobile App Monetization FAQs
1. How do I monetize my mobile apps?
You can monetize your mobile apps using one of the above-described models: paid apps, in-app purchases, in-app advertising, offering free trial periods, subscriptions, partnerships, or affiliate marketing.
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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