Mobile apps are everywhere. The average user has 40 apps installed on their phone at any given point, and there are currently 1.96 million and 2.87 million apps available on the Apple store and Google Play store, respectively.
Developers, engineers, and brands are excitedly pushing to get their app on the market, excited about the profit they can make. If you want to make money with a mobile app, however, it’s essential to have clear and well-researched monetization strategies in place.
There are multiple routes to app monetization, giving brands and developers plenty of options when it comes to ways to make a profit.
In this post, we’re going to go over everything that you need to know about app monetization in 2021, including trends in the industry, monetization strategies and when to use them, and tools that can help.
App monetization is the process of putting systems in place that allow you to make a sustainable profit from your mobile app.
Some branded apps are designed to increase average order value or customer purchases.
Gaming apps might make money from a combination of in-app purchases that allow them to get extra tries, bonus features, or no wait times until the next round. They might also choose to have in-app banner ads or video ads that can net them profit if clicked or viewed.
App monetization is how all apps— including those that are free—are able to yield extreme profitability when executed correctly.
There are clear trends and patterns when it comes to app usage and monetization that it’s important to consider.
These include the following:
Though standard paid apps– which have an initial charge upfront– have been decreasing dramatically over the past decade, app profitability overall is still up substantially for both gaming and non-gaming apps. Monetization is largely thanks to this.
Before you start monetizing mobile apps, it’s important to make sure that your app is fully ready for monetization and that you have a great understanding of how the app works, what’s happening on the market, and user behavior.
Take a look at the four most important considerations to look at before monetization.
According to our own research, approximately half of all apps are removed due to a poor user experience or user interface. Even if the idea is great or the app is useful, if it’s too difficult to navigate, it won’t do well.
Make sure that your design is excellent, both easy to use on mobile with a single thumb and intuitive. Even if you’re designing it on a computer, it should be designed with a mobile device in mind. For best results, make sure that users who haven’t had a part in designing it test it out first.
If a user has just downloaded an app, how difficult is it for them to get started? This includes creating or setting up an account, but it also needs to take that initial interface into account.
What kind of learning curve is there, and does it outweigh the value of the app itself?
Remember that if the app is not intuitive to use, people will go looking for an alternative.
Make sure you’ve got simple, fast tutorials and engaging instructions that are useful without being overwhelming. For this reason, we strongly recommend not including advertising banners in the initial app walkthrough or training process.
Is your app working 100% correctly?
While minor bugs are almost inevitable, major issues can render your app unusable.
Imagine spending twenty minutes carefully planning out your meal within an app, only for it to crash and erase all that work, or to have an error that prevents you from leveling up to past round 10 on an addictive game. Either way, those users will be out and may never touch your app again.
Even loyal customers can be driven away by a buggy app, but new users who experience an issue may delete the app almost immediately.
Test your apps thoroughly before launch and again after every update (even if it’s minor). Product analytics tools can detect bugs so that you can resolve them quickly. MyTracker, for example, can help detect broken sessions caused by bugs and evaluate their impact on user activity.
If you’re the only app on the market that offers what you do, it’s much harder for users to leave.
The reality is that the market is flooded with apps, so it may be hard to stand out, but if you’re able to create a standout feature or two and really market that to your target audience, they’ll be a lot more likely to stick around.
Let’s go back to the meal planning app. Plenty of apps might offer meal suggestions based on your target diet with nutritional information. If you have a feature that lets users scan barcodes of products (like a specific yogurt cup or bag of chips) so that it can register exact calorie counts, you’d have something unique.
IKEA’s augmented reality app, for example, allows you to visualize what your new kitchen could look like with their products, and InkHunter allows you to see what a tattoo will look like on your arm.
Even features like offline mode, multitasking outside of the app, and chatbots can all help your app stand out.
Make sure you understand your USP and market that heavily during the acquisition and sign-up process.
Once you’re sure that your app is market- and monetization-ready, it’s time to start looking at different mobile app monetization strategies.
There are four core strategies to choose from. Let’s start with the most popular: In-app advertising.
As paid apps decrease, in-app advertising has taken up the mantle as the most effective method to monetize the vast majority of apps.
In-app advertising can work for a large number of different mobile apps. You can choose from different types of display ads from platforms like Admob, IronSource, and MoPub. After establishing yourself as a publisher, you can place content like banner ads or video ads onto your app, which fit seamlessly into the interface as if they were designed to be there.
Google, for example, will use their own optimization algorithms and the advertisers’ targeting information to show relevant ads to users who are viewing your app based on criteria like retargeting, demographic targeting, or interest targeting. If users take specific actions like viewing the video ad or clicking on a banner ad, you receive a payout.
For businesses using the “freemium” model, in-app advertising may be the only way to make money outside of selling consumable, physical products to customers.
There are a number of different ads to choose from for in-app advertising. These are some of the most effective:
Fortunately, if you want to monetize your app with ads, you’re in luck. It’s relatively easy to set up, and it can be one of the biggest drivers of app revenue, making it one of the best app monetization strategies.
You can sign up to become an advertiser on AdMob here, and on IronSource here.
You’ll see that you have different options for the types of ads you’re willing to run. You can enable all of them, or choose to be picky.
It’s best to limit the number of ads that users will see in a single sitting, or they may grow frustrated, but including different types of ads into your app usage can work well. Test them out to see which platforms (Google Admob monetization vs. Facebook’s monetization options, for example) and what ad formats work best for you.
If you want to understand how in-app advertising is bringing in revenue, it’s best to go outside of the advertisers’ native tools to dig in deeper.
MyTracker offers in-depth analytics to help you understand how your app is netting ad revenue across multiple ad platforms. You can track how users are engaging with the apps, how many impressions the ads are receiving, and the average CPM cost that you’re getting paid.
This information can help you assess profit, driven from different types of ad platforms and formats so you can optimize for higher revenue in the future.
In-app purchases earn profit by allowing users to make purchases within the app.
There are two different types of purchases to consider for gaming-styled apps:
Consumable products. They’re used one time and are then deleted. They need to be purchased again. Games that offer hints, extra lives, or rushed access to another level are examples of apps that can make a substantial profit on consumable products. Candy Crush is an excellent example of this, allowing customers to buy items that can help them reach the next level or to purchase extra lives.
Another example is the dating app Coffee Meets Bagel, which allows users to make in-app purchases for their “beans” currency, which can be used to access activity reports or additional matches.
Non-consumable products. These are products that do not expire after purchasing, like an outfit for a character or an exclusive feature. A fashion app, for example, might require you to purchase access to their “ideas gallery” once, but then you have access permanently.
Both types of products can successfully lead to in-app purchases and app monetization, but it’s important to consider which will work best for your audience.
When it comes to in-app purchases, you’ll want to do the following:
When it comes to tracking in-app purchases, MyTracker has all the data that you could ever need. We can offer insight into the following metrics:
You’ll notice a few different options when it comes to upfront, the immediate cost for apps:
Subscription models work well for apps with non-consumable products including the following:
If you’re opting for paid subscriptions as your primary monetization option, here’s how you’ll want to get started:
Read more on how to get the most out of your app subscriptions.
Ready to implement a subscription monetization model for your mobile app? Here’s the data that MyTracker can help you watch:
Subscriptions can be particularly tricky because you need to find that crucial balance between the right price point for the highest possible revenue per user without driving too much of your userbase away due to a high cost. MyTracker can help you test and balance all the different contributing factors to find that perfect balance.
If several or all of the monetization strategies we’ve discussed so far seems like a good fit for driving revenue from your mobile app, a hybrid monetization approach may be best for you.
This allows you to combine different monetization strategies. You can use in-app purchases to drive up significant revenue while also running in-app advertising to still profit off of non-purchasing users.
There’s also the option to use in-app advertising or purchases for your “freemium” model while offering subscriptions to skip the ad and maybe gain a few extra features.
It’s typically not advisable to use all monetization strategies in a single app, but instead decide on the most effective ways to consistently bring in revenue. And if you’re using your app exclusively to drive sales through your eCommerce site like ModCloth does, it’s best to keep it completely free otherwise.
When you’re using multiple monetization strategies, it’s essential to understand exactly which are working and what each is bringing to the table.
Instead of just seeing a lump sum of revenue once per month, MyTracker will break down detailed metrics for each monetization strategy you’re implementing, showing you what’s working, why, and what can be changed.
This can help you invest more into successful monetization strategies, test pricing, or optimize your app for more revenue moving forward.
As you can tell from the post so far, MyTracker is a valuable tool for app monetization. No matter which monetization strategy (or strategies!) you use, we can help you take your revenue to the next level.
MyTracker is an advanced analytics tool that will help you track revenue from every monetization method discussed here, even if you’re using several different strategies at once.
You can track a wide range of metrics, including the following:
MyTracker can help you create customized reports to keep up with all the essential data relating to your monetization strategy, and can offer automated revenue forecasts based on LTV to help you predict revenue and make calculated decisions moving forward.
Finally, as a fail-safe measure, MyTracker has built-in fraud detection features, flagging suspicious sources that could mean fraud, protecting your income and budget.
There’s an enormous amount of money in the mobile app industry right now. Even though gaming apps are leading the charge, there’s plenty of room for apps that can help you organize your closet, remember what’s in your fridge, track your workout routine, and remind you to take your pet for their annual checkup.
There’s so much room for innovation, but it’s crucial to find ways to monetize that innovation, too. Consider the different app monetization strategies discussed in this post, and think about what would be most effective for you. You can always test different strategies and move forward from there, even if your app is completely free (except for ads!) at first until it collects reviews and gains some momentum.
Ready to monetize your app and optimize it for increased revenue? Register for free with MyTracker today or request a personal demo.