As per the Statista report, there are 2.87 million apps available in the Google Play Store, and you will find 1.96 million apps for iOS. In the same report, the app publishers are expected to earn $808.7 billion in 2022.
How to monetize your app? Many of you might be having this question – if people are downloading most apps from the app stores free of cost, how app owners make money out of Mobile App.
This insightful article will help entrepreneurs who wish to start their journey by building mobile apps and make money through them in the app stores. For this, the list of leading mobile app development companies will be of great help to select an ideal development partner.
- App Monetization Strategies
- How much money do free Apps make?
App Monetization Strategies
Around 90% of applications available on the app stores are free. Still, the app owners generate $1.73 billion in revenue with the free apps. In 2015, the global app revenues reached $70 billion whereas, by 2023, it is expected to reach $935 billion.
As per Statista, video ads have proven to be one of the most effective mobile app monetization methods during recent times. This has opened the door of opportunity for both the app owners and customers, as, after the completion of advertisement, users receive points and app bonuses.
Well, this is the data that you should look upon to gain interest in developing mobile apps. Now, let us know the strategies that might help you make money via Free Application.
1) In-App Advertising
Advertising is the first revenue model that might come to your mind when you think about the question, how to monetize your app?
Good revenue can be generated by placing ads in your app because, nowadays, most games make their money through advertising. When users are hooked onto your app for a long period of time, then these ads might help you boost your revenue. Users generally watch the ads if it’s helpful or valuable to them.
However, if it’s a free app, you must be careful not to put too many ads as this may annoy them, as some video and full-screen ads may be very disturbing, and thus Ads should be placed sparingly.
So, let’s have a look at different types of in-app advertisements;
a) Banner Ads
The banner ads are displayed at the top or bottom of an app. It’s an effective way to display your ad as it covers the screen and blocks your screen activity for the moment. However, it covers a very small amount of your display so the users can freely interact with the top and stay on the existing apps.
Apart from that, as per the user’s demographics and past behaviour, experienced app developers can target them to display the ads. Still, they have a very low engagement rate which is 0.1% CTR (Click-through Rate) only. By far, the Flappy Bird app got success by utilizing this tactic and generated $50K in revenue per day.
b) Video Ads
Recently, video ads have emerged as one of the most effective tactics that help app owners monetize mobile apps. This allows users to run or play a video within the application when there are natural pauses. It provides a direct link to customers to follow and download the app. It lasts for 10 to 30 seconds.
Video Ads help to increase Average Revenue Per Daily Active Users (ARPDAU). By watching the video ads, the customer gets a reward once he/she watches the video until the end. An average CPM rate for mobile video ads ranges from $0.05 to $5.00.
For Example, the user can get extra game currency or life after watching the full video.
c) Native Ads
The Native ads are seamlessly integrated into the application. The added elements can be sponsored content or video that is aimed to promote a particular brand or product.
This covers the same part of the mobile screen, which looks like another post in the timeline. This is the reason why the users find this ad more interesting and less annoying.
Hence, Native ads have become more popular among users and have proven to be an effective way to monetize mobile apps.
For Example, With the New York Times’s T Brand Studio association, Airbnb had created a campaign for Ellis Island.
d) Interstitial Ads
Interstitial ads are displayed on the full-screen of mobile devices. This is a pop-ad and displayed within an app for a specific time. This ad is in the form of a display or video and asks users to watch the ad for some time. After some time, they can skip the ad and resume to the existing app. During this time, users can get two options – either close the ad or check out the promoted content.
For Example, Interstitial Ads were utilized by Emirate Airlines, and after that, they got over 5000 clicks to the website and 170,000 video views. This ad was promoted on the Emirate website as they launched a new flying destination place, New York – Dubai. This full-screen ad was shown to travellers in the New York airport once they got connected to WiFi. Interstitial ads have emerged as a novel way to monetize mobile apps.
e) Reward Ads
Reward ads are widely popular in Mobile Game apps. The users are offered a reward to engage with the content. Many of the users will surely watch your video and get the benefits if you implement this tactic. This can increase app loyalty and generate revenue.
For Example, if you watch a 30-second advert, you may get a reward of extra life in the mobile game.
f) Playable ads
Playable ads are one of the new ways to monetize your mobile app. Playable ads, or playables in short, are a form of advertising that provides the customers with a try before you buy experience. The app owners let the users interact with its major features before installing the app.
Normally used in Mobile games, advertisers are exploring the idea of using playables in other arenas as well. A playable ad starts with a tutorial or a lead-in video that explains to the user how to interact with the playable.
Then the ad leads the user to a mini-game or other interactive experience that grabs the users attention.
Once the interactive experience finishes, a CTA(Call-to-Action) card is displayed asking the user to take action like downloading the app, make a purchase, or sign up for an email list.
2) Subscription
Subscription is another popular mobile app monetization model. In the subscription model, the paywall and freemium models are frequently used by businesses to lure subscribers towards them. Subscription often emerges as one of the best ways to monetize an app, as it ensures repeat business.
In the freemium subscription model, the app owners allow the users to use limited features first and ask the users to buy a premium version of the app if they want additional features.
The paywall model is similar to the freemium model, but instead of features, the paywall model focuses on content. A newspaper like the wall street journal can allow the subscribers to view 5 articles every month for free and then ask for a monthly subscription fee if they want to view more articles.
3) Data monetization
Monetizing the user data is another attractive app monetization model that has gained prominence in recent times. With data monetization, the app owners need to take extra care not to entrench user privacy. Asking for consent to share anonymous non-personalized data upfront is a practice that most reputed apps that use the data monetization model use.
Companies like Twitter, LinkedIn, and YouTube use data monetization extensively. These platforms have data related to millions of users, and they can control whom to share this data with. Data monetization is big business for these companies as in 2020 alone, Linkedin raked in $3 billion in revenue as Linkedin provided data access of its 700 million users to the advertisers. YouTube hit $6.9 billion in the same period.
The data monetization model is one of the best ways to monetize an app when you have a large user base and want to avoid any user experience interruptions. Data monetization works with all users and all types of applications, but you need to ensure that you take the consent of the users first.
4) Transactional apps
Charging a small transaction fee every time a user uses the app is another highly effective app monetization strategy. The transaction fees strategy works well in finance, investment and ecommerce apps.
Ecommerce apps like Amazon charge a small transaction fee to the sellers whenever a purchase is made through their platform. Another example of an app using the transactional strategy would be mobile wallet apps like PayPal. Apps like PayPal charge a small transaction fee to the users whenever the users complete a transaction using PayPal.
The transactional mobile app monetization strategy is one of those app monetization strategies that provides scalability to the application. You can choose to use the transactional app monetization strategy to monetize mobile apps only when there are a lot of users.
The strategy gives application owners the ability to accurately predict revenues based on the number of users using the app actively.
5) In-App Purchases
As per Forbes, In-app purchases have generated the highest revenue within the app industry. In fact, to be precise, 47% of the total revenue is generated from in-app purchases. So, including the in-app marketplace is one of the best ways to answer the question of how to monetize your app.
This is completely managed by the app store, and app owners get a commission from every trade. For Example, The Clash of Clans game earned $1m per day on purchase and Pokemon Go users bought in-app purchases for $1.5m daily.
6) Affiliate Programs
Google, Microsoft, and Apple are providing affiliate programs to app developers.
With affiliate programs, you will be able to choose promotions from a wide range of apps. Find the latest or hottest apps from the app store and promote them in your app to earn easy commissions. You can also check for other businesses that have affiliate programs.
You can earn more commissions from the businesses that offer paid memberships. Thus, affiliate programs can be a potent way to monetize your mobile app.
7) Sponsorships
You can choose sponsorships to monetize your mobile app. Many app owners are looking for investors to build their app and turn it into a successful business. As an app owner, you can offer them free marketing within your product. It’s a profitable model that helps to make money from a free app.
Integrating this sponsorship model with a huge user base, you can gain many benefits with a specific market niche. Hence, you have to get in touch with those persons who belong to the same industry.
You can put their sponsorship ads with your brand and information in the app.
It consists of two ways:
- Share the equal profit that is generated from the app.
- Make a payment for a monthly sponsorship fee.
The Weather Channel app uses the sponsorship app monetization method frequently.
8) Crowdfunding
This is an interesting way to monetize apps for free. With this crowdfunding model, startups and large companies raise funds for development and marketing needs by exchanging and sharing their ideas.
Platforms such as Kickstart, IndieGogo, GoFoundMe, Patreon, Fundable, and AppsFunder can help you with app monetization for this model.
How much money do free Apps make?
A report suggests that over $5000 per month revenue is generated from the top 16% of Android developers and 25% of iOS developers with their free apps. This can set a benchmark in the industry. So we can believe that around 20% of applications from the app stores bring great profit.
So, if you have a good idea and have a good app development company to support you, then there are high chances to become rich. If you want your application to be listed on the top list of an app store, then you should know what types of strategies should be implemented to monetize from your app.
The top Digital Marketing Agencies can help you to better market your mobile apps more appropriately in addition to strategizing for App Store Optimization and helping to monetize your application to get high ROI.
It is important that you have a clear understanding of which of these mobile application monetization techniques is the best for your app. It is better to discuss this with any app developers and digital marketing service providers you hire, as they will have to work in sync to convert it to a successful approach and bring the most ROI.
Wrap up!
We have covered a few major mobile app monetization options that you can think of applying to your business model. Since every coin has two sides, there are peaks and drawbacks too for every strategy you implement. So, as you can see, there are a lot of major factors behind gaining a profit with a free app.
Just because it’s free, that doesn’t mean you cannot have a profit margin. In fact, offering a free app might help you to earn money and increase your ROI than offering it for a solid price.
So, remember, if you want to hit the marketplace with the right income, a powerful marketing campaign is required. Without one, the app will not reach the users, nor will it generate profit for you.
