2021 App Monetization Guide: The Tips & Strategies You Need to Test

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.

What Is App Monetization?

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.

What You Need to Know About App Monetization Trends

There are clear trends and patterns when it comes to app usage and monetization that it’s important to consider.

These include the following:

  • The majority of mobile apps cost less than $1, and most mobile apps on Google and Apple cost less than $5; this means that monetization is required for true profitability
  • There’s been an increase when it comes to in-app spending through 2017-2019
  • Gaming app revenue, in particular, has skyrocketed, starting at $16.7 billion in Q1 2018 and consistently increasing quarter-over-quarter before arriving at $31.9 billion in Q4 2020
  • Gaming app revenue far exceeds non-gaming apps, netting $31.9 billion in Q4 2020 while non-gaming apps reached $10.1 billion the same quarter
  • A 2019 PubMatic study found that 56% of media buyers believed in-app advertising yielded stronger audience targeting than other options; 54% said there was improved customer engagement
  • The percentage of paid apps (which charge a flat fee to download) in the market has been consistently shrinking, falling from 90% in 2011 to around 50% in 2017

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.

What You Need to Consider Before Monetizing

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.

how to prepare for app 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.

The Onboarding Process

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.

Bugs & Glitches

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.

broken sessions in myTracker
Sessions report in myTracker

How Unique Your App Is

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.

image source: InkHunter

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.

How to Monetize an App: 4 Different Strategies

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.

1. 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.

Different Types of Ads to Choose From

There are a number of different ads to choose from for in-app advertising. These are some of the most effective:

  • Banner ads. These ads are simple and static and are typically horizontal stripes across the top or bottom of the app. They’re inexpensive and easy to integrate into almost any app, and users can close them at any time. Our research has shown that they have little or no effect on user retention, but that they are a great guaranteed constant source of low income.
  • Rich Interstitial. These ads consist of full-screen images that typically can’t be closed right away. They consistently yield high CTR, largely thanks to the demand for a user’s attention. It’s best to place them between content and not right off the bat, so consider doing this between blog posts, videos, or levels of a game.
  • Video interstitial. This is another option for full-screen advertising, but this option uses video instead of an image. It won’t close for the first few seconds in most cases and is commonly placed between content like after every three or four levels of gameplay.
  • Rewarded video. Want users to watch videos? Offer them an incentive to do so. This method offers rewards in exchange for users watching advertising videos, like an extra life, a hint, 10% off, extra game currency, or an extra outfit for the character if relevant. These are often considered a positive and immersive experience by users, as opposed to an interruption to their app usage.
  • Offerwalls. Offerwalls allow users a list of tasks that they can complete in exchange for rewards. This includes viewing ads, taking surveys, playing mini-games, or signing up for free subscriptions. This can allow users to receive premium content for free, which means increased retention at no cost to you.
  • Playable ads. This is a newer more complex advertising model, but it’s a promising option that’s yielded positive results so far. It allows users to test-drive a mini version of the advertised product. If the advertiser has a game, for example, the user might be able to play level one. This is a powerful option, as users who are already invested in playing a game are likely to be high-value audience members for other games, too.

How to Get Started

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.

How myTracker Can Help

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.

ad monetization report in myTracker
Ad Monetization report in myTracker
Ad monetization in myTracker
Ad monetization in Report Builder

2. In-App Purchases

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.

How to Get Started

When it comes to in-app purchases, you’ll want to do the following:

  • Take a look at what competing apps are doing, including what they’re selling in-app and how much they’re charging. You may gain a ton of new insight into what users are willing to pay for.
  • Think about user behavior. What makes your app more valuable, addictive, or engaging? Coffee Meets Bagel allows users to spend “beans” in ways that can alleviate (while also increasing) the anxiety that comes with dating, like seeing whether or not a match has read their message. Users will enthusiastically spend money on this while also getting more sucked into usage as a result.
  • Test different price points. This is crucial because users may spend $5 once but then never again; if the same product is $1, they might spend up to $20 because it happens in smaller increments.

How myTracker Can Help

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:

  • Revenue earned
  • Average revenue per user
  • ROI
  • Number of transactions
  • Payment dynamics
  • First-time users who purchased
  • DPU
  • WPU
  • MPU
  • MPU
paying audience in myTracker
Paying Audience report in myTracker
Revenue in myTracker's Report Builder
Revenue in myTracker's Report Builder

3. Paid Subscriptions vs Freemium Models

You’ll notice a few different options when it comes to upfront, the immediate cost for apps:

  • You pay a small upfront fee for the app (typically $5 USD or less)
  • You pay a monthly subscription for app usage, and usage ends as soon as the subscription is canceled
  • You offer a free app, and then monetize through other means like in-app purchases

Subscription models work well for apps with non-consumable products including the following:

  • Apps that offer continued value, like budgeting tools or mile trackers for tax benefits, which users will pay for month-over-month. MileIQ is a great example, offering a paid subscription to track and categorize miles driven. It does have a free model, but you’re only getting the value to track all of your miles and with advanced automated features once you upgrade to the paid version.
  • Gaming companies that offer addictive elements that keep users wanting to play, or that can offer next-level features for subscribers. TempleRun is an addictive run-style game that allows users to purchase bonus features to enhance the game.

How to Get Started

If you’re opting for paid subscriptions as your primary monetization option, here’s how you’ll want to get started:

  • Keep in mind that this is a primary form of monetization. Users who upgrade to paid subscriptions may be frustrated to see ads, for example, or annoyed if they’re expected to make in-app purchases. This depends on the type of app, the cost of the purchases, and whether or not there is any incentive for them to watch campaigns. Tread lightly with other aggressive forms of monetization here.
  • Determine what types of subscriptions are worth paying for. Addictive apps that trigger impatience can offer low-cost subscriptions so users can skip ad videos altogether. In other cases, you need to offer more value, like additional features, game levels, or in-game products to keep users subscribing.
  • Test different subscription periods. Someone may not want to pay $5 a month but may be perfectly happy to pay $45 a year. Test out monthly vs annual plans and different price points to see what yields the most revenue and the longest customer lifecycles.

Read more on how to get the most out of your app subscriptions

How myTracker Can Help

Ready to implement a subscription monetization model for your mobile app? Here’s the data that myTracker can help you watch:

  • Trial and first-time subscriptions
  • Trials that convert into subscriptions
  • Subscription renewals
  • Different types of subscriptions
  • Total revenue
  • Breakdown by attribution, campaign, or subscription type over periods like one week or 30 days

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.

Subscriptions report in myTracker's Report Builder
Subscriptions report in myTracker's Report Builder
Subscription items in myTracker's Report Builder
Subscription items in myTracker's Report Builder

4. Hybrid App Monetization

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.

How myTracker Can Help

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.

Total revenue report in myTracker
Total revenue report in myTracker
Revenue Type report in myTracker
Revenue Type report in myTracker

How myTracker Can Help with Monetization

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.

myTracker: Mobile Attribution and Analytics Platform
myTracker: Mobile Attribution and Analytics Platform

You can track a wide range of metrics, including the following:

  • Metrics to assess in-app purchases, including revenue, average revenue per user, first-time users, payment dynamics, and more.
  • Subscription data including renewals, subscription types, conversions of trials into paid subscriptions, revenue, and more.
  • Ad revenue data from most popular platforms, along with engagement, impressions, and CPM cost.

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.

Final Thoughts

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.