Mobile applications are a huge business. This business is innovative and global, but its ultimate goal, as well as in any other case, is earning money. Learn what types of monetization of applications it is possible to use and what their top differences are from our article.
How is it possible to monetize mobile applications?
Nowadays, it is possible to allocate the following main ways of monetization of applications:
- In-app advertising.
- Monetization through the built-in purchases.
- Sale of subscriptions.
- Premium apps – download fees.
Let’s have a more detailed look at them.
In-app advertising
More and more developers utilize advertising as the main way for app monetization. Paid apps and games are difficult to sell, and within apps 2-4% of users make purchases, so advertising remains one of the best (if not the only) methods.
The main types of advertising are the following:
- Banner.
- Native.
- Interstitial.
- Video (including rewards).
- Interactive and gaming ads.
Pros:
- It is easier to attract users with a free application, which means you can monetize it from the very beginning.
- A variety of ad formats can sometimes even improve user experience.
- Compared to the rest options, this method is the easiest one.
Cons:
- It is not suitable for niche applications that solve the immediate need of the user (taxi ordering).
- Low revenue from one user – you need a very large audience to start earning good money.
- Banner blindness and user fatigue from advertising.
Monetization through built-in purchases
Another popular way to monetize applications is through built-in purchases. As a rule, users buy virtual currency for real money and then spend it on any items in the application or game. Typically, built-in purchases are used in games only.
Pros:
- Low risk.
- Familiar to users.
Cons:
It is difficult to integrate this method so as not to harm the gameplay or basic functionality, without giving the buyer any advantages and forcing him to make purchases constantly.
A very small percentage of users make purchases.
Subscription
This is the most “fashionable” way of monetization, now actively promoted by Apple and Google. Money from users is taken on a regular basis – there is some free part or content in the application, and an additional one is available only for subscription fees.
An example of an application with such a monetization model: an application with series that allows you to view for a monthly payment.
Pros:
- Recurring payments.
- Increased LTV and user loyalty.
- Platform owners in every possible way encourage the use of an appropriate subscription (for example, Apple for the second year takes not the standard 30% from the subscription price, but only 15%).
Cons:
- Loyal paying audiences are very difficult to assemble.
- You need premium content for which people would be eager to pay: and not simply pay, but do it regularly;
- Comparative complexity of technical implementation and tracking of subscription activity.
- It is not suitable for most content applications that do not have a regular update.
Premium apps – download fees
This is gradually dying, but still a fairly popular way to monetize apps and games. From the very beginning, you can sell applications or a game to a user – just ask for money for downloading from the very beginning to sell your product. Such a model works both in the App Store and in Google Play and it is especially convenient that stores themselves will adjust the price to the user’s currency.
Mistakes in monetization
Making an app that makes money is incredibly difficult. And in matters of monetization, it is easy to make mistakes.
Here is a shortlist of what you may face:
- Choosing the wrong strategy. Each type of application has its own type of income and what works for Netflix is unlikely to work with Candy Crush Saga.
- Unscaled model. How and when will users spend money on your game or app? How will their payments be repeated and why would they want to pay again? All this must be answered even before the product is created, and all the answers received must be put into the main mechanics and functions.
- Lack of analytics. Which ad space is making you the most money? Why do users pay for that feature and do not pay for another one? Who do you show ads to and who do you sell in-app purchases to? This is just a small part of the questions to which you will need to find answers. Analytics in monetization and search for answers play one of the main roles.
- Choosing the wrong ad network. Every region and every country has different sets of effective ad networks. What works in the United States does not work in India, and Chinese ad networks have nothing to do with Korean or Japanese at all.
