App monetization allows businesses to generate ad revenue through new or existing mobile apps, creating a brand new revenue stream out of resources that were just waiting to be tapped into. Although it may feel intimidating, getting started with app monetization is easier than you may think—and this guide can help!

Business owners can begin mobile app monetization by creating strong code, offering email lists for their marketing campaign, showcasing in-app advertising, offering in-app purchases, and utilizing SMS marketing. App monetization allows publishers the ability to make money through an app without the consumer paying for it. By offering a free app on the app store, companies can increase the probability of downloads. Further, publishers can decide whether they want to use advertising, in-app purchases, or data monetization for their mobile app. 

We’ll go over all of this in more detail soon. Once you understand how to get started, the slight obstacles you may face, and the price of monetizing mobile apps, the overarching perks of app monetization become increasingly clear.

What is App Monetization?

App monetization is any method of earning revenues from a mobile app that you own. There are a few different ways in which a publisher or company might decide to monetize an app, however some of the most popular options include charging a fee to download the app, utilizing in-app advertising, and offering in-app purchases. 

Whichever monetization strategy is chosen, app monetization allows companies to create consistent, low-effort, recurring revenue.

Why Is App Monetization Important?

The benefits of app monetization for app developers include passive income streams increasing, which can lead to growth in user acquisition, and prompt further development. As a startup or enterprise company, the additional money can be key to making expansion to existing projects as well as starting new ones to capitalize on past success.

The demand for in-app purchases has risen among free app users that have more time for digital channels than ever before. More and more potential users have entered a virtual space that might never have interfaced with your applications otherwise—now is a perfect time to add the right app content to appeal to these new end consumers.

In some cases where a strong developer-to-user relationship exists, app monetization can confer benefits to both parties. Certain monetization strategies allow users to optimize the experience they have with an application, most often occurring in gaming apps. The choice to freely use an app for the price of watching advertisements versus paying a one-time cost for complete access lets different kinds of users tailor their usage more effectively.

The funding given by continuous app monetization strategies allows many developers to add desired content to live service games, cutting-edge tools, and other applications that make use of varied sources of engagement. This allows app monetization to help creators and their users, although developers will always retain the most benefits.

Why Reliance on Apps is Changing the Way Developers Operate

As the world changes, everyone is becoming more and more dependent on their smartphones. Apple’s App Store is consistently growing, increasing by more than 1,000 apps per day, and with that growth comes opportunity for higher revenues. In 2021 consumer mobile app spending increased to $170 billion, up $27 billion from the previous year. 

In order to get in on the action, developers are focusing on creating high-speed and useful apps that benefit consumers. They’re remaining competitive with burgeoning projects from other creators, watching what apps and functionalities are growing in popularity, and mimicking or implementing similar features into their own apps. Once the app is published, it’s all up to brand recognition, awareness, and advertising to get users to download your application.

The Most Popular App Monetization Strategies

Curious as to which monetization method is best for your app? Deciding on the most popular and effective way to start monetizing is crucial. 

One of your first steps might simply involve boosting your app marketing efforts. The success of mobile ad campaigns that target lead generation has changed the landscape for many newer applications.

More advanced strategies, like subscriptions models, freemium plans, and the various ads involved with both have all found success for different apps.

Paid App Downloads 

One of the first ways that came about to monetize your app was to charge the user a fee in order to download (i.e., purchase) the app. Instead of listing your app for free, you can charge a domain fee, such as $0.99 or $1 for the download, and then include in-app purchases to increase the likelihood of increasing your revenue and building a sustainable profit over time.

Although paid apps have become more successful in recent years, free apps remain superior. When given the choice, individuals will most often opt for a free app over a paid one that provides a similar service. Since users want to pay less money upfront, offering a competitive app that’s properly designed for mobile devices is essential to increasing app downloads. 

Despite the move from paid apps to free apps, publishers may still find it worthwhile to charge a small fee for their apps. The most successful apps typically provide a highly valuable service or serve a very specific niche, which users find worth paying for.

Typical benefits of paid apps include:

• No ads – You do not get interrupted with ads during your experience, increasing user satisfaction and user retention rates. 
• Increased features – Paid apps often include additional features that free apps do not have.
• Regular updates – Consistent updates and periodic changes make paid apps more stable, increase features, and boost functionality. 
• Reduced data consumption – Lowering the data consumption means users are more likely to continue using this app over others. 
• Less distraction – Users will continue using apps for longer than free apps because their experience and interaction will be more consistent and rewarding than those constantly interrupted by advertisements and notifications. 

In-app Advertising

Another way to monetize your app is through in-app advertising. This popular method incorporates a variety of ad formats to adjust to application UI and find their effective target audience faster.

The main benefits of using in-app advertising compared to other types of ads include the following:

• Versatility – In-app advertising is versatile and functional. Since developers can choose their desired ad formats, users can choose a way to incorporate the add-in to the user experience without dissuading users from using the app in the first place. 
• Free – The in-app advertising on free apps makes it easier to scale the audience due to the free price.
• Targeting – In-app advertising lets developers focus on the user base that will benefit the audience and the developer.  
• Control – Developers can avoid certain advertisers popping up on their user’s screen, setting a price of the advertisements, and other customizations.

Understanding the perks of in-app advertising can influence developers and businesses of all sizes to take advantage of services like Newor Media, made for optimizing cost per action (CPA), pay-per-click, and other metrics like cost per mille (CPM). No matter the advertising strategy, reaching a user base could always benefit from the services of a professional ad management company.

Banner Ads 

Banner ads, also known as display ads, are small combinations of images and text that can technically appear anywhere in an app. They often occupy the space at the very top, bottom, or edges of a user interface.

An ad-free version of your application should take into account the change in space that removing these ads necessitates. The design of any application with advertising options needs to consider what happens if they can be removed.

Banner ads are easy to configure, and can functionally add simple monetization to any screen of an app experience. They are great options for quickly advertising to target demographics that won’t be willing to sit or read through interstitial ads or longer descriptions.

Be careful using banner ads by making them work with your user interface designs. Always consider their location relative to crucial buttons. Make sure only one banner ad is showing up on a single page at a time.

Interstitial Ads

Interstitial ads are powerful options in advertising that create full-screen engagements for a user. If delivered at the proper time, they allow developers to learn an immense amount about their users. However, the disruption of a user’s experience can completely remove their enthusiasm for a product if it significantly disrupts functionality.

A popular interstitial ad variety is a video ad that plays between uses of any service or game. Engaging with a quick video can introduce users to new sponsored products, and effectively increase your monetization opportunities.

Some apps have optimal times to serve interstitial ads, like many mobile games and services that have clear demarcations in their content. Optimizing interstitial ads means precisely showing them to users during existing mental breaks in their engagement with your services.

Potential issues with integrating interstitial ads include:

• Disruptions caused to the app content, especially if the interstitial ads are particularly unrelated to the core experience
• They are hard to click out of
• Many are timed and need more vetting before proper integration
• If poorly optimized, interactive and video ads can buffer and lag

Native Ads

Native ads are advertisements conducive to the feel and the usage of the app. In many cases, the overall app experience is not interrupted by seeing a native ad. There is a delicate balance between what is considered part of the app experience and where the native app starts.

The use of native ads, in addition to the previous advertisement examples, can be more effective when coupled with the expertise of a programmatic ad management company. Plenty of options exist in this cutting-edge field, but companies with Google Ad Manager authorization and a lengthy contact list could be perfect for your project.

Developers who want to use native ads should make the ad feel cohesive while not being misleading. The key to this balance on powerhouse applications like Twitter and Facebook is in slipping the “sponsored” title into the content naturally.

The unobtrusive design of native ads should flow with the rest of your app’s experience. Optimal placement per page is more subject to individual experiences, but making sure they show up infrequently enough to look natural is a crucial factor in effectively designing native ads placement.

The benefits of native ads include the following:

• Increased engagement – Customers may not trust businesses that force ads upon their target market. However, native ads integrate seamlessly into the app, providing users with a continuous, high user experience without pushing advertisements. 
• Higher CTR – Native ads have a much higher clickthrough rate when compared to banner ads, increasing user engagement.

Video Ads

In-app video advertising is one of the most powerful methods of driving user engagement and increasing click-through rates. Video ads provide users with an interactive way to engage with the advertisement while simultaneously maintaining a beneficial user experience.

Click-through rates for video ads were 2x greater than typical CTR and 10x greater than CTR for banner ads and interstitial ads. While they are impressive tools for engaging some users, they also present challenges for many demographics.

A poorly placed interstitial video ad can make users want to leave instead of waiting for one to end, especially if it is unskippable or doesn’t display the remaining time. This format can also be delivered along with a minor reward or incentive to watch. This technique is especially popular with mobile games, as it increases retention even after the ad is over.

Another option of implementing video ads includes native implementation. If these videos play automatically, it can also be upsetting to users. A fair warning when opening up an app or beginning certain video streams on mute can help users stay engaged while also serving most of the advertising experience.

In-app Purchases

In-app purchases allow users to interact with their service more directly, buying upgrades, features, or enhancements to the experience. After purchasing an app or getting a free version, users can then decide if they want to purchase extra content or subscriptions within the app. Not only does this increase the functionality and experience for the users, but it boosts the revenue for developers.

Mobile game developers can include purchasable extra lives, gate characters behind paywalls, or limit the number of plays a user has per day unless they buy more.

For free apps on the Google Play Store and Apple App Store, in-app purchases come in all shapes and sizes but can be more incorporated into the user’s experience with an app than many ad varieties. The inclusion of virtual goods and other boosts to performance in a game is a growing topic for professional developers in the mobile market.

Global app revenues from purchases rose by over 23% in the first half of 2020, with $50.1 billion generated by in-app purchases and $36.6 billion from intra-game purchases. Although the in-app purchase volume from individual users is low, the presence of high-spending users allows many mobile games to flourish.

Sponsorships and Advertising

Sponsoring mobile apps provides numerous benefits like a more seamless and integrated experience than in-app advertisements. Sponsorship networking can lead to long-lasting relationships between companies, especially when some are just starting.

A smaller brand might need the exposure of a larger company to boost itself into new markets. Without a platform, apps can’t be expected to succeed anywhere as easily.

The kind of high-profile sponsorships between creators on large platforms like Instagram and YouTube can be absurdly lucrative. These partnerships create a strong sense of familiarity between content developers and the brands they are associated with.

The brands that sponsor a mobile app can increase the number of active users by creating positive consumer experiences. Using this mobile marketing tactic helps boost brand awareness, increase visibility, and analyze consumer purchase intent. 

Sponsors must have an established audience, target a strong niche, and popularity in their industry to secure relationships of this caliber. A large number of active users or higher engagement numbers goes a long way in achieving good partnerships.

Freemium Subscriptions 

The freemium subscription business model offers the basic version of a product to create a foundation that will pave the way toward future costs and fees. Turning down a quality service that is also free is hard for many users.

Larger-than-life companies often offer services under this model, like Google’s search engine and suite applications. You can still pay for increased storage space and other benefits, but the core service is free. Users need to give information rather than money to gain access.

The Freemium model does not include an upfront fee but includes the ability to buy premium features in the future. Subscription models or other in-app purchases become possible to further optimize a user’s experience after they can get introduced to the service or game. The inclusions of a game currency or improved version to an app’s core service are good examples of monetizing freemium subscriptions.

Offering a premium version encourages users to sign-up without paying a fee while still providing the chance for increased functionality in the future. For example, some apps give you money for playing games, such as Swagbucks and Mistplay, which provide you with game currency.

Mobile app subscriptions generated the most money through leading mobile app monetization strategies, showing how subscription models are essential to generating consistent revenue. 

Best Mobile Ad Networks

A mobile ad network is a platform that connects app advertisers to publishers by delegating ad space and matching the supply with the demand. Networks prioritize revenue strategies that target different metrics of measuring advertising success. 

• The CPM or Cost Per Mille model shows the cost for 1,000 impressions of a certain ad. The advertising rate of this calculation strategy takes into account the number of times your ad is displayed.
• The CPC or cost-per-click model only charges the advertiser when a user clicks on the ad. This metric generates tons of revenue for advertisements that are reaching peak engagement numbers and can represent a risk for middle-success areas.
• The CPA or cost per action model allows mobile networks to promote different kinds of apps to analyze user experience, purchases, and sales. Advertisers in this model are only charged based on a specific user action being performed.

If a user downloads an app on their iOS phone or Android, the mobile ad software development kit (SDK) helps the developers monetize their apps. Working with a quality mobile ad network that works with your app’s advertising for the biggest payout is a crucial aspect of engaging with any platform.

Admob

Google Admob is a mobile ad network service that operates on a global scale. Its automated tools and supported device reach represent a significant improvement in CPM rates over many smaller networks.

Working with Google advertisers, you can take advantage of more than 200 worldwide markets and reach app users of all kinds.

Google Ad Exchange

Google Ad Exchange is a marketplace that provides users with the ability to buy and sell advertising space. Thousands of businesses benefit from the DoubleClick Ad Exchange to optimize their outreach across networks using certified spaces.

Facebook Audience Network 

The newly-branded Meta Audience Network provides businesses with the ability to monetize their apps by showing targeted ads that work with active niche users. Since developers can choose the types of ad they want to show, such as video ads, they can easily extend their scale and ad network. Furthermore, Facebook Audience Network includes various social media sites and mobile app developers, such as TikTok and Tinder. 

Google Ad Manager

Google Ad Manager is an ad platform that provides control, support, and personalization for various ad formats. By using optimization tactics to streamline mobile apps, connect with ad exchanges, and communicate with other networks, Google Ad Manager is a good solution for large-scale advertisers.

The Bottom Line

There is a growing need for mobile apps in every industry sector. With the advent of advanced experiential technology like VR and AR, the synergistic experience of monetized ads and the rest of an app’s content is vital to developers.