• App Monetization
  • MOBILE

Your Ultimate Guide to Mobile App Monetization 2020

Eugene Dorfman
7 Apr 2020
19 Min Read

Every app owner knows the struggle of coming up with a killer mobile app monetization strategy. A good monetization model should keep your product afloat, generate more loyal users, and communicate your brand. But how do you choose a business model that will be right for your product? Keep reading to learn about the most popular monetization strategies and tips on how to make the best out of them in your case or book a call with us to discuss your app development prospects.

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Before you choose a monetization strategy

To build a stable and effective monetization strategy, you need to build a foundation for it. Before examining the best ways to monetize an app, let’s look at the things you have to do first.

Study your audience

First and foremost, know your audience. Know them like the back of your hand! Divide your users into segments and define what value your product brings to each segment. This will help you come up with a monetization model that serves all your users.

Think about monetizing ASAP

One of the biggest mistakes business owners can make is developing the product first and leaving the monetization strategy for later. This is not a good idea. You need to think about how you’re going to make money from your app as soon as possible and develop a product strategy with this in mind. 

Start growing your user base 

To make a monetization strategy work for you, you need a large user base. This is the time to pay tribute to Andrew Chen’s example of ad-based monetization. If your burn is approximately $40K per month and you monetize at $0.25 CPM, then you need 160M ad impressions per month to break even. Sounds scary, right? That’s why it’s crucial to have a go-to customer acquisition strategy and continuously test different marketing channels. 

Analyze your competitors

Do your research and analyze the monetization strategy of your direct and indirect competitors. That’s how you’ll discover what works in your industry and what your target audience is ready to pay for.

Best mobile app monetization strategies

Once you’ve ensured that your business has laid the groundwork for monetization, it’s time to choose a strategy. Here are the major monetizing models mobile apps use.

Pay to download

The concept of paid ads is straightforward: users download your app and pay a one-time fee to unlock all of its features. But you should know that the tendency for paid apps has significantly declined. Just look at the distribution of free and paid apps in AppStore and Google Play.

90% of apps can be downloaded for free image

As you can see, more than 90% of apps can be downloaded for free. So if you want to make a profit from paid apps, you need to roll up your sleeves and prepare for hard work. Here are the pros and cons of this monetization strategy for your app.

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Pay-to-download monetization tips

  • Make sure that you fill a gap in the industry

Users will pay upfront, but only for really innovative products that solve their problems; like the Facetune paid app. This selfie photo editor does miracles with your appearance: reshapes your face, erases your flaws, and provides a bunch of cool effects. It revolutionized the image processing technology and became Apple’s most popular app in 2017. This is an excellent example of how innovative products can disrupt the market.

  • Communicate the value of your product

Start building relationships with your audience early on and prove the value of your product. Create a self-explanatory landing page that clearly describes all the features and benefits of your product and evokes trust. Launch a marketing campaign as soon as possible and make your brand visible.

  • Set an attractive price

Look at the prices of the paid apps in your category and build your pricing strategy from there. For example, the average price for Google Play apps in March 2020 is $1-2.

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Ensure that your app will fit market expectations at a reasonable price.

In-app advertising

Mobile advertising monetization is all about generating revenue by displaying ads. On the one hand, this monetization model gives your users a chance to access more features for free and explore your product. On the other hand, most people dislike ads, especially if they’re annoying. So be careful if you want to monetize your app with ads and ensure that these ads are relevant.

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In-app advertising tips

1. Choose the right ad network

An ad network is a platform that connects publishers with advertisers. Choose a reliable ad network to provide your users with relevant, high-quality ads. We have prepared the list of advertising networks that are worth trying.

  • Google’s Ad Mob – most popular monetization platform that works with millions of advertisers and helps you manage different types of ads in one place. 
  • OpenX – an advanced ad marketplace that provides publishers and app developers with cutting edge solutions for advertising, analysis, monetization, and header bidding.
  • IQzone  – provides single SDK customized for the requirements of the publishers and supports all major ad types on Android and iOS
  • RhythmOne  – a global leader in multiscreen advertising that gives both advertisers and publishers an access to multiscreen supply and advanced monetization offerings
  • Sonobi – advertising technology developer that provides a reliable marketplace which connects advertisers with individuals
  • Chartboost  – in-app monetization and programmatic advertising platform that delivers high ad revenue to mobile app developers.
  • Rubicon   – advertising company that automates buying and selling for the online advertising industry.
  • Tapjoy – mobile advertising platform that connects advertisers with tailored audiences in popular mobile games and apps
2. Decide on the pricing model

The pricing model can make or break your profit from ads. Here are the most common pricing models to choose from:

  • CPM  (Cost Per Mile).

Networks pay publishers when an ad gets 1000 views.

  • CPC  (Cost Per Click).

Advertisers pay publishers only when people click/tap on ads. 

  • CPA  (cost per action).

Publishers gain profit when people click/tap on the ad and perform certain actions (fill out a contact form or download the app).

3. Choose the ad type
  • Banner ads

The most popular type of ads are banners that are located at the top or bottom of the app. They are usually animated, and that’s why they often distract users.

  • Interstitial ads

Full-screen apps that appear during a transition (when you load a page, wait for a new level in a game, or between stories on Instagram). This type of app is the most intrusive, however, it catches attention and has the highest CTR. 

  • Video ads

Promotional videos are a type of interstitial ads. If you have a gaming app, consider rewarded videos. Users receive an award by watching a video, and you get revenue from the ad. Everyone’s happy and satisfied.

  • Native ads

Native ads are the least annoying type of ad as they perfectly fit into the content of your app, look organic, and don’t distract users. Moreover, native in-stream ads will drive 63.2% of all mobile display advertising by 2020

  • Offer wall ads

A page in an application that suggests a number of incentives and offers. These ads usually have a high CTR as users can choose to engage with the offers they like.

  • Combine in-app ads with other monetization models

For best results don’t rely on just in-app advertising. Combine it with other strategies, like freemium, to get the best results.

  • Don’t interrupt the user experience

Crossy Road game generated over $3M of revenue via the game’s video ad placements. Here is their key to success. The game featured  in-app currency that players used to buy new characters or power. Players could buy this currency by watching video ads that appeared  randomly. It’s was, and continues to be, an excellent way to motivate users to watch ads while not interrupting their gaming experience.

Freemium (in-app purchases and in-app subscriptions)

Freemium is a combination of two words: free and premium. The freemium model implies downloading an app for free with some basic features but with an ability to unlock more advanced paid features. There are two types of freemium monetization models vendors can use:

  • In-app purchases.

When the basic functionality is free, but users pay to buy additional virtual goods or features.

  • In-app subscriptions.

Users pay an annual or monthly fee to unlock the premium version of the app. 

In-app purchases and subscriptions are also often combined with an ad monetization strategy giving a user a paid option to get rid of ads via in-app purchase (lifetime) or a subscription (monthly / yearly).

Freemium monetization image

Freemium monetization model tips

  • Create personalized campaigns for different user segments

Don’t try to sell everything to everyone. Offer relevant upgrade features to your users, depending on their needs and goals.

  • Reach a balance between free and upgraded plans

Don’t offer too much in your free plan as your users will have no reason to upgrade. At the same time, you need to provide enough value in the free version so that users are motivated to pay for more. This is a real art, and you have to understand how your users move from free sign up to the paid version and what motivates them to do so.

  • Run campaigns right in your app 

Make hay while the sun shines. Inform users about the opportunity to upgrade while they’re using your app rather than by email or phone. It will make your message more relevant and timely.

Wrapping up

Sorry to burst your bubble, but there is no one-size-fits-all approach when it comes to a monetization strategy for apps. During our experience, we have developed a number of monetization SDKs, mobile apps, and created successful monetization models for different products and industries. The best advice we can give is to always analyze your niche, study your customers, and focus on your product benefits. This way, your users will be happy to pay for all the goodies you offer.

Book a strategy session

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