Although one of the simplest methods of monetizing an application is charging users for downloading it, you can’t forget about the competition in the form of freemium solutions. That’s why it’s usually recommended to choose a free download option and implement other monetization strategies in order to generate revenue.
Balance for 2022 according to Statista data: 96.8% of Android applications and 94% of iOS apps are free.
In-app monetization
In-app purchases (IAPs) offer a discreet monetization method that can even enhance the user experience.
What are the options?
Unique currencies for in-app purchases
Fee for additional points necessary to perform a certain activity or to unlock a feature
Purchase of additional information / unique tips
Fee for unlocking the next level / version
Purchase of the premium version of the application
Upgrade to an ad-free version
Best practices
Unique value
The most effective way to attract customers is to offer additional value which will enrich the current application. However, such a purchase must be safe and engaging enough to generate long-term revenue. Regardless of whether it is about using an application without ads or unblocking premium content, check what additional features your users are willing to pay for. Remember to optimize your prices depending on different geographic regions and user segments. Experiment with promotions and check the reactions of your recipients to draw accurate conclusions.
Predictive modeling
It will help you make quick decisions regarding the optimization of your campaigns. Machine learning algorithms are able to predict the outflow of users and prevent it effectively by identifying key patterns created by the most profitable users.
Monetization through subscription
The subscription model is based on free download of the application and charging a cyclical fee for its use. Such apps typically take a “freemium” approach that offers limited features for free and requires you to pay to unlock the rest of the functions.
Monthly subscriptions can help you generate predictable cash flow, especially with a good sense of churn and retention rates. Just like users who pay for apps in advance, subscribers actively use the solutions they pay for.
App Store lowers commission fees from 30% to 15% for subscriptions after one year. The Google Play Store only charges 15% for all subscriptions from day one.
Best practices
High-quality content
Provide fresh and original content regularly. Competition is fierce, so it’s important to create a unique experience that can’t be found elsewhere.
Discounts
Offer users an additional discount on 6- to 12-month subscriptions that are paid as a flat rate. This is a nod to the most loyal customers, plus an advance payment guarantee.
Free trial
A smoothly running free trial allows users to get to know the solution before making a purchase. Though you have no guarantee that a person will turn into a paying customer, even if conversion rates are low, you will collect data that will help you identify key opportunities to improve the app.
Monetization through advertising
The most common way of monetization is investing in in-apps ads. This method is a valuable source of revenue for applications that want to stay free in stores.
What ad formats should you consider?
Banner Ads: This relatively simple ad format allows advertisers to place static or animated banner ads in your app.
Full-screen ads: This format displays ads in an expandable, full-screen environment, so they have a better chance of avoiding “banner blindness” (users are so used to banner ads that sometimes they don’t even register them). However, as these kinds of ads can be distracting, they should be placed in natural breaks, e.g. between game levels.
Native Ads: paid ads designed to match the content displayed by a user of a mobile application.
Video ads: can be very engaging and have some of the highest CTRs of any format.
Rewarded video ads: you can make your video ads more engaging by rewarding users for completing a video.
Playable ads: This is a “try before you buy” method that exposes users to interactive gameplay. They then have limited visibility into the advertiser’s app before receiving a call to action, which effectively reduces the number of uninstalls.
Unity Ads, a monetization platform, found that 62% of mobile gamers regularly watch video ads with awards, and 71% consider this ad format better than others.
Best Practices
Testing
As with any other advertising method, you should test which formats and pricing models are most profitable for your app. Measure user behavior and don’t be afraid to use multiple ad platforms to determine which generates the highest CPM.
Checking visibility
Impressions for mobile display ads are only counted when at least 50% of the pixels are in the user’s field of view, and the impression lasts for one uninterrupted second after rendering. Test these requirements regularly to avoid errors and unnecessary costs.
High quality
Despite the heavy focus on data, creativity is still essential for marketing success. Investing in the best designers, measuring creative success and testing every component in many varieties is still crucial.
Fortune Business Insights estimates that the US mobile advertising market will reach $247.68 billion until 2026.
Summing up
Remember that the model of monetization should be chosen at the very beginning of the conceptual works. That’s why it’s great to have it all well diagnosed, researched and adjusted to a selected target audience.
Don’t have a clue how to do it right? That’s one of the reasons we’re here. Let us know what you need, and we’ll gladly adapt our services to your current situation.
