Application developers are normally challenged in a wide spectrum. One of the challenges requires them to stay afloat and ahead of the competition without many funds to spend for the cause.
As of March 2022, there were around 4.8 million applications available for download on the Apple App Store, and there were almost 2.6 million applications on the Google Play Store at the beginning of 2022. This metric was showcased to demonstrate the serious competition between application developers, and the challenges they face are only increasing.
With such fierce competition, application developers and their publishers are in dire need of staying informed about the latest application monetization strategies, trends, and methods to envelop their skills and get the results for the effort they’re searching for.
What Is Application Monetization?
Mobile application monetizing refers to the process of gaining monetary benefits and generating revenue from a developed mobile application without the application of a download fee. With the inclining number of free-to-use applications across the digital world, users are more hesitant to pay for an application.
Besides, they might get the same service out of another free-to-use application rather than paying for this one, which is unlikely but true. This phenomenon is true worldwide and in almost all categories of applications, be it gaming, professional photo or video editing, or even news.
This is why application developers had to try a different and more versatile approach to get their application monetized, resulting in them looking at different application monetizing strategies. There are multiple methods and strategies with a better success rate. They include in-app advertising, in-app purchases, the freemium model, etc.
To approach app monetization, and then continue to scale it consistently, developers should always be investing in their acquisition. Gaining new users is always what every developer wants and needs for the application to grow. And it’s part of the process that further helps users to first survive, and then ultimately thrive in the current market.
Understanding which model to implement under which circumstance is the key here, and it’s not possible without understanding what each of these strategies includes and what concept they’re based upon.
Let’s first understand the importance of implementing these strategies and then rightly serve the main course.
Why Is Application Monetization Important?
The continuous rise in the number of free applications throughout the app stores available on the internet has made the importance of application monetization clear. App stores over the last 15 years now consider monetization to be a pertinent component of application development.
To quickly understand the point here, let’s look at some statistics. While 77% percent of applications in the iOS application store were paid apps in 2009, only 10% of the applications available today are paid applications, similar to Google Play Store. It has around 31% of mobile applications allowed for free use, whereas this number used to be much higher previously.
This gradual shift of the larger number toward free applications demonstrates that application developers and publishers had to make gradual changes to how they make money with their digital products.
To ensure that the revenue keeps going up while the application continues to grow as well, developers implemented such strategies. This is why, in the present times, application developers can implement and go with any one of the following strategies, depending on their app and their personal choice.
They can always choose to go with a hybrid approach and monetize their application accordingly. This denotes that the option of combining two or more strategies and elements is also there to be availed by anyone who considers this approach to be more beneficial for them.
That said, there is always the concept of implementing multiple monetization strategies to increase overall effectiveness. 1 in 4 developers have stated that hybrid monetization is the best way to maximize the Return-On-Investment ratio and get ahead of the market.
12 Best Mobile Application Monetization Strategies In 2023:
1. In-App Advertising:
During the period of growth of smartphone sales, digital advertising was already available and was considered a good approach for marketers of the time. This indicates that digital marketing was already established across the internet.
App developers and publishers, in hopes of successfully advertising their apps, quickly started to invest in application banner ads. This act led to several more modifications to ensure that the smaller screen users of the internet can also be targeted and view the advert on their mobile devices.
Banner ads have been in trend since that time onwards and have now evolved into having several other options integrated into them, including video ads, native ads, text ads, and interstitial ads as well.
This is why this application monetizing strategy falls into one of the best strategies to successfully monetize an app. In addition, it shows no sign of slowing down as well, so using it as your strategy to monetize apps will bring you what you’re looking for.
2. Using Interstitial Ads:
With analytics becoming increasingly sophisticated, application publishers and advertisers have deep knowledge about how their advertisement is performing. These insights are further utilized to obtain better results and improve the performance of the application. One of the most effective in-app advertisement alternatives to use is interstitial adverts.
Their features and perks are quite contrary to banner ads, which have size restrictions, are rather persistent, and are based on an intrusive experience-providing principle. Interstitial ads are intrusive and somewhat annoying even as they appear on the entire mobile screen rather than a corner or some space within the application.
When application monetization strategies are implement in a right way then it will be more effective. Like when these ads are in a gaming application. they should appear at the end of the gaming apps. Because when they appear during the gaming then it would most likely cause the user to uninstall the application rather than to convert or get engaged with the ads, it would become a bit too intrusive.
That said, interstitial ads are growing massively in numbers, and the eCPM growth they’ve accumulated for their users. With a total of 34% increase between 2020 and 2021 on US devices alone.
Their level of view-ability is much more than banner ads; their format and design for being displayed is much more effective than that of banner ads and most other ads we’re going to discuss today. The reason behind this is that it’s too prominent to ignore; as it’s displayed on the entire screen, the viewer gets somewhat forced to read its elements, and if they like what they see, they will most likely convert.
A user cannot miss the contents displayed by interstitial adverts since they cover the entire screen. Therefore, the chances of the viewer skipping what the advert says and demonstrates on behalf of the advertiser are slim.
3. Use Native Ads:
Native adverts are being used increasingly, and their ad format within the application model fits most of their users. Native ads are designed in such a way that they don’t look like adverts when displayed; they look like any other content on the platform. Hence, they’re used on such a large scale and are preferred over many other ad formats by most experienced and unexperienced advertisers at large. They are mostly suited to news websites and social media, as social media users normally ignore any advert flying towards them; hence, native ads are a perfect strategic model to engage a person’s audience.
When implemented in the correct manner, these adverts are known to create an experience of engagement based on minimal disruption to the flow of users when scrolling or using your application. They have the highest engagement rates, as a study from 2018 demonstrates that these adverts get a higher click-through rate on native ads, 8.8 times more than that of average and regularly utilized display ads.
Driving better campaign performance is not a big deal for these ads as their ad format hugely supports securing this attribute for them. They also help brands build trusting relationships with the platform being utilized for displaying these ads, as they help the advertisers drive conversions and revenue.
4. Freemium Conversions:
This strategy falls into the same category as many other subscription-based applications. Freemium is a monetizing model with many different advantages to consider. After users download a free application, they are then offered further features that could make the process easier or even introduce some new features that give them exclusive access, which they will have to buy in order to receive.
Full access will allow them to utilize the full potential of your application, which the users only understood after they downloaded the application and realized the fact that there’s more to it than meets the eye.
Spotify is one of the best and most easily understandable examples of this type of strategy. Spotify offers many of its premium application features to its free users. However, it does so in exchange for a monthly subscription fee. Then, users can unlock premium features, including an advertisement-free version. This demonstrates a prime example of this model, so simply research what Spotify does to monetize its services, and you’ll understand completely.
5. Use Premium Subscriptions To Stabilize Revenue:
Premium mobile applications are based on a paid business model. However, it’s not that successful. They require users to sign up for a fixed fee that they could pay weekly, monthly, semi-yearly, or even yearly. This further means that revenue is directly tied to the number of downloads. Paid applications have been demonstrated, and they have higher user engagement and customer acquisition.
This type of strategy enables its users to develop a reliable and somewhat consistent income stream depending on the usability of their application. In addition, it increases further development opportunities as they can help fund the growth process and continue updates of the application.
Not only that, but this model also bases its principles on premium subscriptions that can help to ensure that the application remains accessible and useful for the highest possible number over time.
That said, it is less flexible than many other models discussed today, as the users may not be able to take advantage of special discounts or displayed offers. They are also quite expensive to use for beginners who don’t have enough funds to spend on expensive adverts.
Users of such applications can also get alienated as they struggle to identify their value in the application; this can then generate an unpleasant feeling. That said, some premium subscriptions can be difficult to cancel, which can lead to users feeling trapped or stuck in one way or another.
6. Using In-App Purchases:
In-app purchases are another successful monetization model that is being heavily recognized in a consistent manner, in the digital ecosystem, especially in the gaming atmosphere. Offering in-app purchases to get a better experience to your application’s users is a great choice for several reasons.
In-app purchases allow users to utilize real money to purchase some features or in-app items, even for gaming apps for several reasons. In-app purchases enable users to get ahead of the competition in some cases and even some cool skins in others. Depending on the type of game, users can get free lives, extra coins, or certain items that are essential for unlocking further levels in the game.
While the option of in-app purchases can be introduced at any point, the better and smarter way to go along with this strategy is to offer in-app purchases at points throughout the application. Make these points attractive and relevant to the story.
The process of setting up payment transaction systems for in-app purchases, with app stores utilizing and taking a commission from. These purchases are not one size that fits all the spaces. There are four main categories of in-app purchases available to app developers. It is important for application publishers looking to use this monetization strategy to understand the different types of in-app purchases they can implement further to generate revenue and monetize their applications.
Implementing this strategy can allow you to take advantage of its flexibility. They allow developers to offer a variety of content and features for the users to buy to utilize them and better their overall experience. In-app purchases have become one of the many popular revenue-generating factors that help developers of applications monetize their digital products. The convenience for users comes as a perk of utilizing this strategy.
These in-application purchases create the the great sense of convenience for users as they don’t need to leave the apps. they do not need to open another one to make app-related transactions. In return, users also purchase the wide variety products and services and the process of buying them doesn’t remain a hurdle anymore.
Types Of In-App Purchases:
The most utilized type of in-app purchases in mobile apps such as games and other service-providing applications. Consumables refer to items like in-game currency, bonus health, or features of such kind. As the name suggests, purchases of such kind can be made again at any given point in time.
While most games offer a specified amount in such purchases, these purchases are made so the users can reach a certain level, skip some levels, boost their character’s stats, or even successfully complete a level they were previously unable to. The people who buy such consumables are happy to spend their money and get ahead in the game by gaining the items they paid for. They are saving significant time and effort by doing so.
This concept opposes the concept of the previous type, consumables. When consumers purchase non-consumable in-app purchases, they have permanent access to them, meaning they can use them it any point in time without having to avail them in any other method ever again. Some good examples of this type are unlocking hidden levels, bonus characters, or even some customizing items in a game app.
c. Auto-Renewing Subscription:
In-app subscriptions that unlock certain features, enhancing the overall user experience or extending the application’s usability period, serve as a method to manage payments and establish a consistent revenue stream in exchange for granting users access to premium content within the application. This strategy involves automatically renewing the user’s subscription once its allotted time period expires.
In mobile gaming-based applications, developers can adjust subscriptions to vary in duration and the extent to which they unlock features or content, ranging from the lower-priced model to the highest-priced model, providing users the opportunity to access all available premium content within the application.
d. Non-Renewing Subscriptions:
Non-renewing subscriptions are known to work on the exact same principles as auto-renewing subscriptions, except for the “automatically renewing” part, as mobile users must manually renew their subscriptions each time it comes to an end.
7. Affiliate Marketing Offers:
Many majorly recognized technological companies, including Google, Apple, and even Microsoft, are known to serve as Affiliate platforms for people who know how to generate traffic and drive sales towards a specified product or niche of products. These platforms provide this opportunity to the public and refrain from providing their platform to a specific set of people or groups, to be exact.
These affiliate programs offer their mobile application, allowing users to promote other applications within their own application. While the commission-based income regarding this type of promotion is not high, app developers often use this opportunity to make some extra income. Some use this opportunity for reasons other than the formation of an extra income stream, such as wanting to associate their application with brands that offer similar services or that are relevant to the niche, category or services that your application offered.
There are many perks that come with implementing this strategy to monetize your app. For starters, this strategy is not based on any expenditure made by the user or the consumer of your application. It can be completely free for your users and can still help you generate a separate income stream for yourself. However, it will not benefit you with high revenue.
In addition to that, implementing this strategy can help relevant brands recognize your efforts. Affiliate marketing can be further used to promote their products or services based on what the brand is about and what your application is capable of.
8. SMS Marketing:
While SMS marketing is considered a washed-up and old method of marketing, it’s much more effective than you would think. When written with the right words and with style and smarts, it’s a great tool to have when it comes to reaching the right audience. You can use the SMS to keep your audience engaged with your application after you introduce them to it. You can also use this strategy to motivate them towards buying your app’s premium subscription and what benefits it would give them or what features they can potentially unlock for themselves if they buy that premium subscription.
It is imperative to understand that the consent of the parties you’ll be sending SMS to is not a matter to ignore. Their consent to the implementation of this strategy matters most. In addition, thinking about the core value of your message is an important thought to consider when typing in these messages to market your application; make the message engaging and concise, as no one wants to read an article in an SMS format unless they’re expecting to receive it.
Implementing this strategy is rather easy in comparison to many other successful strategies with the same criteria. The data can be accumulated through in-app prompts and pop-ups or offering some sort of reward for giving you their email or SIM number, etc. The more people convert with the prompts, the better, as you get to target a wider range of people. Marketing your app via automation is always an option to consider.
9. Use E-mail Marketing:
While many people would argue regarding the credibility of email marketing for a mobile application, email marketing can be an effective way to keep your app’s consumers engaged and further convert them into paid users.
Social media channels normally consist of over 75% of millennial who use email to market or even communicate with their respective businesses. You can use this number to your advantage by marketing your application to this generation as your target while using Emails as the medium.
That said, it is pertinent to understand that it’s essential for your email holders to have consent for you to market your application to them. The app developers should strategize accordingly when implementing this monetization plan for their applications.
In addition, emails are known to motivate the decision-making of your potential customers, and this ultimately speeds up the buying process. Many studies also show that email marketing is known to be 40 times more effective than utilizing social media platforms for this purpose. Moreover, email marketing is easily implemented and is cheap to opt for. A simple in-app subscription provides you with access to your users’ emails, which you can use to further market your application and keep your target audience engaged.
10. Leveraging Sponsorship ads:
Another highly beneficial application monetizing strategy is to utilize the power of sponsorship arrangements. If your application has a large enough user base, you can use that to your advantage. Moreover, if your mobile application does have a large user base on which you can rely to generate conversions, then this model may be the ideal one for you.
Essentially, the implementation of this model depends on the factor of searching for a single company to become your app’s sponsor and will support your app in return for its own marketing and support, and you will then give them exclusive access to your user base.
You can complete this in different ways. However, one way to do this is by covering a more significant portion of your application’s interface with its logo. Use a splash screen and you can achieve this, and that is visible to your app users or via push notifications as well.
When opting to implement this strategy to monetize an application, the developmental authority should always consider the type of audience they’ve accumulated for the application so far. Then, further strategize while keeping their likes and dislikes in check and what would best fit for their brand to grow.
Sponsorship adverts are known to help the host brand with audience targeting since they can benefit from being targeted towards a suitable audience that is more likely to convert.
11. Use Licensing:
If your app, by its nature collects and accumulates user data, and it falls into a category that requires this to operate, then you might want to license your collection of data to further monetize your application. It is significantly important to understand that the data you will collect, or you have already collected, is subject to the user’s consent.
Moreover, licensing can be a great method of monetizing applications. It enables the users to further access the application without having to pay a single dime, while the app is paid for by the licensing. Implementing this strategic monetizing model enables the developer to maintain the app and form a consistent income stream. It will further establish a sense of control over the data and will ensure that the data is used in a consistent manner, along with the company’s brand considerations and values.
In the early and developmental stages of free application development, crowdfunding is an exceptional strategy to monetize and generate revenue while utilizing the services showcased and provided by your application. It can effectively integrate the idea of funding into your users’ minds. There are many crowd-funding platforms that enable users to utilize the power of funding to monetize their skills and services. These platforms are normally for the audience of a specific person, company, or business to show their appreciation through monetary appreciation gifts.
There have been countless successful applications in the past that started this way. Not only that but there are also many advantages to using this monetization strategy. Foremost, it provides developers a way to tap into a base of users and audiences that they might not be able to reach on their own. In addition, it can provide a quick way to develop an income stream, and it can help you get your app development project off the ground. It can also help users build a community that supports them and can provide valuable feedback and further promote the developer’s application.
There are many app monetizing strategies you can implement. However, it all depends on how well you know your audience and you recognize the potential of your application. Moreover, how much you recognize its limits as its developer. The app monetizing applications used to be a lot easier as all you needed to do was to make the application and then sell it for a set amount.
However, things have gradually changed, and the system is now hungry for strategizing. You must strategize accurately if you want to monetize your application today. That said, there are many monetizing strategies you can implement, and they’ve all been stated above. You can benefit from the given strategies by simply implementing how they’re explained.
Alternatively, you can implement a hybrid strategy, which is born when two strategies are joined together to increase the overall effectiveness.
Frequently Asked Questions (FAQs):
1. What Is The Easiest And Most Common Way Of Monetizing An Application?
In-app monetization (IAA) is, comparatively, the most common and easiest way of monetizing applications.
2. How Do Free Apps Monetize?
Showcasing Ads is the most common way to monetize your free app.
3. Are App Ads Profitable?
Ads are a great way for an app developer to earn money, as they are not one of the many paid forms of monetizing your app.