APP MONETIZATION MODELS AND HOW TO MONETIZE APPS

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APP MONETIZATION MODELS AND HOW TO MONETIZE APPS

Introduction

Mobile apps plays an important role in every smartphones out there. Each one of us has a list of some favorite apps which we like to open again and again. Every app is designed either for the purpose of information, entertainment or to solve the problems faced by users. This being said, 90% of the mobile user’s total time on the phone is being spent on using mobile apps according to leading company flurry analytics.

Monetizing the app is the major step toward earning money as an app developer. Earning money is vital for a developer to make a living as well as keep making new apps and update an existing one in the coming future. Even before thinking about monetization, we can think of distributing an app either as for free or as a paid version. A paid version is undoubtedly the easiest and straightforward way to monetize your app but is it the best choice? Are there any other options to monetize which is better than paid monetization? Obviously, there are and we are going to explore it in our current article.

Nowadays monetizing your app is really easy because of the availability of tons of services like AdMob and start-app. With few lines of code, your app could be monetized and it could possibly earn money but choosing the correct way of monetizing is vital of earning long term sustainable income not affecting the usability to the users. Whenever you are making a decision on monetizing your app you always have to think about the app users and their usability besides your profit because that is the thing count for a long time. We have seen lots of developers flooding their apps with ads and other offers in such a distracting manner that users are forced to uninstall that app. In this ever competitive market of apps, it is not so harder to find another app with fewer ads and similar features. Hence thinking about the user experience is the first step toward choosing the monetization model.

Here we will discuss different monetization strategies and the pros and cons of each of them.

  1. In-App Advertisement

From the reports of app stores and different developers its clear that free apps are earning more than that of paid apps. Who would buy an app if there’s another alternative providing all features for free?
It’s exactly the same mindset that has made in-app advertisement the most profitable monetization strategy. Giving your app for free and monetizing it with ads later is a great way to have a good number of installs as well as a good source of income for developers. Although the income won’t be as straightforward as that of paid apps it would have more potential to earn money because of the possibility to reach more users base.
It is actually the easiest way to earn money because of the availability of dozens of ad service providers and its global reach. Paid app monetization is not available in all the countries out there but the in-app advertisement is available in almost any countries even in Nepal. The basic principle of in-app advertisement is that you display the ads of different ad providers in your app and get the revenue off of it from views, clicks, and engagement. Different networks are providing different kinds of ad formats based on your need and type of app.
Pros :
– Easy to implement
– Free to download for users, making the chance of getting good popularity
– Many networks available
– Worldwide support

Cons:
– Low payment rate
– Distracting for users

Some Networks:Admob,Media.Net,Startapp,InMobi,Flurry,leadbolt,Vungle

a. Banner Ads
One of the most commonly used ad type for the app is banner ads. These are the rectangular ads on the top/bottom of the apps which keeps showing until user usages the application. As banner ads are typically made for brand promotion it must be placed wisely and appropriately to get the most value from it. It is the simplest ad format to integrate but requires a dedicated space in your app screen. There would be a huge chance that the users would be distracted from your app because of ads and might reduce the overall rating of your app. Overlapping ads with your content makes your app ineligible to monetize with some networks like Adsense and you must be clear on the allocation for space for ads on your mobile apps.

b. Interstitial Ads
Another most used ad format is interstitial ads which are the full-screen ads hiding the main app’s content and must be closed manually by users. As they cover the whole app screen it’s usually more attractive and might increase user engagement but is heavily distracting while using an app. It should be placed at the pause points of an app such as moving between different screens /game levels and while pausing the game. A user must click cross sign in corner of ads to close it and it unlocks the app screen. Interstitial ads are very popular in games and apps with multiple screens. This kind of ads must be placed wisely by not distracting the user experience in a significant way.

c. Rewarded Video Ads

Rewarded video ads are the hot new trend in app monetization. These are the full-screen video ads showcasing different third-party products or apps which must be viewed for a certain period of time and in return it gives users the reward of some kind, making a win-win situation for both developers and users. Its the best video format out there but requires significant network bandwidth and consumes space in users device. It could also make your app less responsive and in case of slow networks, it will degrade the app experience. Rewarded video ads are especially useful in gaming apps and other apps which are using the subscription-based model. Whenever the viewers close the video without watching them completely they lose the reward forcing users to view the ads anyway increasing the profit for developers

d. Native advertisement

This is the form of in-app advertisement where you place the ads inside the actual content of your app mixing it with other valuable contents You can think this like a newspaper ads where actual contents and ads appear in the same page and users must have to watch the ad for reading the contents. This kind of advertisement model is especially useful for content centrist apps such as news and blogs. The major advantage of native ads is that you don’t need to allocate the whole space for an ad and also the users don’t need to get distracted by the obtrusive ads while using an app as its seamlessly integrated into the content.

There are also other kinds of ads such as text ads, app closing ads and notification ads but these are not so popular as compared to above 4.

2.In-App Purchase

It is the monetization strategy utilized by most of the highest earning apps out there. If you want to give your app for free but want some money for other extended features this method would be the best for you. It is the model where users can download and use an app with basic features for free but must need to buy some extra package from within the app to unlock more features or get some rewards.
It is one of the widely used strategies in most of the mobile games where you can play the game for free but need to purchase some package for artifacts/coin or another extra weapon.In Games such as candy crush or temple run, you can buy more lives with some small purchase or wait for some particular time to continue on. This model helps to offer ad-free app but with a strong source of earning revenue from within the app. It helps to choose the good payment gateway to fit the needs of developers making it easier to manage and get the payment. As users can choose to buy the package on their own it is not so distracting for them enhancing user experience. If you are making a gaming app or some kind of education one you could use this strategy to monetize your apps.

Pros:
– No distraction to the user
– Good income potential
– Free to choose the payment gateway
Cons:
– Not suitable for all app types
– Difficult for worldwide reach

Some Networks: Google play billing library

3. Freemium Model

Freemium is also another popular way of monetizing mobile apps. It’s especially popular in utility apps where users can get a basic version of an app for free and must purchase a paid version for extended features. As the name suggests its the combination of free and premium model, having both free as well as a paid version of the same app running separately. If the users liked the free version they could easily purchase the extended version with some fee. Some apps also include a free version with ads and offer a paid version with ad-free experience. Having both versions makes it easier to market your app as well as brand name and paid version helps to get paid for the effort made in the development phase. if the app is popular and liked by users freemium model must make you successful in app stores.

Pros:
– Quick, Easy and stable income
– Multiple income Source

Cons:
– Selling app is not globally supported

4.Paid Only Model

If your product is exceptionally unique and has awesome features which users are ready to pay for it could use this model for your next app. There is some kind of apps which requires a tremendous amount of time and effort to make it and these are the most suitable apps for the paid only mode.
Although there could be the apps providing similar features like your app with lesser cost or for free of charge, you must always be ready to make your app competitive and polished with frequent updates and more features. This model is more popular in iOS as more users habit of buying things there as compared to that in the android. Before using this model you must be sure on its market demand and it is also better to offer a trial version before they could actually buy making it easier to build trust with you. App store has tons of paid only apps as compared to android. If your core platform is ios you could surely give this model a try.

5. Subscription-based Model

If you are making a service based apps such as content delivery, video streaming, television, radio, music, books, and podcasts you can surely use this model providing different kind of subscription packages for your genuine users. With this model, users could access the contents for a limited period of time or they could access the limited contents for free but must upgrade to other subscription for accessing more contents. Many newspaper and multimedia services are using this model in their app. Apps such as Forbes and Netflix etc are following this model is a very successful way. You can create different packages for subscription based on time or content. Time-based subscription needs to be renewed on some fixed interval to continue accessing the service while content-based subscription allows access to all premium content after paying some predefined fee.

Pros:
– Quick and stable income

Cons:
– Hard to get downloads
– Competitive
– Requires app with great features
– Not worldwide support
– Need to fill various tax-related details before getting paid

6.Sponsorships

If your app has a huge number of users you can approach different partners for sponsorship to your app in return for their brand endorsement. You can even relabel your app with their brand name. Sponsorship could be temporary either for some short period of time such as in case of sports or other events or for a long time. If your app has a good follower base its surely the win-win situation for both brands as well as you. Although the revenue you could generate with this method would be you need to have good soft skills as well as other resources such as /push notification service, good consumer reach.
Pros:
– Quick and good income
– Back support for further growth

Cons:
– Only for already established apps
– Harder to get sponsorship for indie developers

These are the common ways to monetize your app. If your app is of gaming category you can use rewarded video ads and for apps, with another category, you can try different techniques which work best for you.U ser experience is the major thing you should keep in mind before monetizing it. Which monetization would you like to use for the next app? Please let us know in the comment section below. Thanks for reading this article.

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