3 Effective Mobile App Monetization Strategies
How do app developers and advertisers generate revenue?
With the explosion of mobile app usage in recent years, monetizing apps have become an increasingly important topic for app developers and business owners.
Let’s explore the various ways in which mobile apps can be monetized, including in-app purchases, subscriptions, and ads.
What is mobile app monetization?
Mobile app monetization is the process of generating revenue from mobile applications.
It comprises multiple strategies, such as in-app purchases, ads, and subscriptions.
With an effective monetization strategy, mobile apps can be a good way to generate income for developers or businesses who have invested in creating them.
Most popular app monetization strategies
1) In-app monetization
In-app monetization can be achieved by charging for additional app features, physical goods, or digital content.
Some of the most popular in-app monetization models include:
In-app purchases: This is one of the most popular forms of monetization. With in-app purchases, users can purchase items within the app to unlock new features or gain access to exclusive content.
Consumables: This monetization strategy involves the sale of items such as coins or virtual goods that can be used within the app.
Non-consumables: This monetization model involves the sale of items that are permanent and can be used multiple times. For example, users could purchase a toolkit or a set of cosmetic items that can be used multiple times.
Pros of in-app monetization include:
- Direct revenue: In-app purchases generate direct revenue, which is a more stable and predictable source of income than other monetization methods, such as advertising.
- Flexibility: In-app purchases can be used to monetize a wide range of apps and services, including games, productivity apps, and more.
- Can increase user engagement: In-app purchases can create a sense of investment for the user, which can increase their engagement and retention with the app.
Cons of in-app monetization include:
- Limited audience: In-app purchases are most effective when the app has a significant user base, which can be difficult to acquire for new or niche apps.
- Fraud: In-app purchases can be vulnerable to fraud, such as unauthorized purchases or hacking.
- Risk of alienation: Some users may feel alienated by the requirement to pay for additional features or content.
2) Subscription monetization
Subscription monetization involves charging users a recurring fee in exchange for access to new content or exclusive features.
Pros of subscription monetization include:
- Recurring revenue: Subscription-based monetization provides a steady and predictable revenue stream.
- Increased user engagement: Users that pay for a subscription often have a stronger sense of commitment to the app and are more likely to engage with it regularly.
- Upsell opportunities: Subscription-based apps often offer the opportunity to upsell additional services or features to users, which can provide additional revenue.
Cons of subscription monetization include:
- Limited user base: Subscription-based monetization can be challenging for apps that have a limited target audience or user base.
- Higher churn rate: If a user cancels their subscription, the business loses that recurring revenue, which can lead to a higher churn rate.
- Subscription fatigue: The sheer number of subscription services people can subscribe to can make them reluctant to sign up for more.
3) Advertising monetization
In-app advertising is one of the most popular forms of monetization because it requires minimal effort on the part of the developer or publisher.
This allows app developers and publishers to keep their content free for users while still earning revenue through ad placements.
Ad demand sources, who fill inventory in exchange for a share of the revenue, often work with app publishers to facilitate this process.
This monetization strategy can lead to an increase in app downloads and provide a scalable source of revenue for publishers.
The most popular forms include:
- Banner ads
- Interstitial ads
- Native ads
- Video ads
- Rewarded video ads
- Playable ads
Pros of in-app advertising include:
- Easy to implement: In-app advertising is easy to implement and can be done through a variety of ad networks and platforms.
- Higher reach: Users do not need to make a financial commitment to access the app or its features, making it easier to reach a larger audience.
- Flexibility: In-app advertising provides flexibility in terms of ad formats, making them blend easily with the app’s design and layout.
Cons of in-app advertising include:
- User experience: In-app advertising can negatively impact the user experience if best practices are not followed.
- Limited control over revenue: The revenue generated from in-app advertising is dependent on various factors such as traffic geolocation, ad network fees, and user engagement.
- Vulnerable to ad blockers: with the increasing use of ad blockers, the revenue generated from in-app advertising can significantly decrease.
Author: Alise Zaiceva
Alise Zaiceva is a content marketing manager at a website monetization platform Setupad. She’s passionate about content and helping publishers scale their businesses through powerful digital marketing strategies. In her free time, she enjoys doing yoga, listening to techno, and expanding her knowledge of tech.
