How to monetize a mobile app? Each app developer gets concerned with this question sooner or later. For better or worse, there is no silver bullet. The ever-growing mobile market continuously brings new app monetization strategies to the table. The task is to pick the one that suits your needs best, depending on your goals and KPIs.
If you want to get your app monetized and seek advice, look no further. Here is a handy app monetization guide covering the most popular monetization schemes available today. Let’s take a closer look at each of them.
Top Mobile Monetization Strategies for Your App
- In-app advertising
- Paidmium (Paymium)
- In-app purchases
- Strategic partnerships
- Referral programs
- A powerful content marketing strategy
- SMS marketing
- E-mail marketing
- A strong user engagement strategy
- Multiple payment methods
- “White-labeling” your code
1. In-app advertising
Without exaggeration, this is one of the most popular ways to monetize a mobile app. It allows to keep an app free of charge for users and still generate cash for the developer. In-app advertising comes in various formats – video, interstitial, native, app wall, banner – and is especially popular for messengers and gaming apps. It is crucial to consider the types of ads you place. Carry out A/B testing to understand which one works best. Make sure that the ads you run are not annoying or disturbing. Otherwise, current users might abandon your app.
Image source: Sweet Pricing
The idea behind this model is to allow users to use the basic functions of an app for free. It gives an overall picture of what the app is all about but confines its full potential. “Freemium” apps usually include in-app purchases that bring revenue to app developers. The customers who want to receive a set of additional features have to pay for it. As a result, they can enjoy a better user experience and improved functionality. If you are monetizing your app with the freemium model in mind, you should note that it has both strengths and weaknesses. On one hand, each user has a choice whether to purchase the premium upgrade or not. On the other hand, a high percentage of users ends up using an app with limited functions.
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A premium model, or paid app, means that users purchase an app from an app store for a fee. The only payment is for the download, it covers all of the content and further use. This is a classic example of direct sales. Yet it evokes a question: if there is an abundance of free apps in the marketplace, why buy something? Lots of users feel reluctant to pay for apps they don’t have a chance to test. If you would like to utilize the premium strategy, keep in mind that your product must be truly remarkable or innovative to get users interested enough to pay for it. As of today, the popularity of this monetization model is decreasing.
Image source: Incipia
4. Paidmium (Paymium)
As the name suggests, this is a blended model of freemium and paid strategies. Though it is still in its infancy, it has a lot of potential. It already works well for social media, navigation, and music apps. In this model, users have to pay for the app and can purchase additional features for an extra fee. To generate revenue reliably, app owners should think creatively and engage users on an ongoing basis through captivating content, feature updates and enticing reward programs. One of the drawbacks here is that some users may get discouraged by the idea of multiple payments and churn.
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5. In-app purchases
This go-to-market strategy can bring good results if done right. Most gaming apps are based on this model. A lot of them cost nothing to download, yet app developers still can make money by offering users an option to buy items directly from their apps. It could be anything that improves user experience like extra content, additional features, camera filters and other items relevant the app’s purpose. Teens spend huge money trying to upgrade their characters or unlock new features. In a continuous battle with this issue, a lot of parents use control software to monitor the online activity of their kids.
Image source: Sweet Pricing
6. Strategic partnerships
A problem shared is a problem halved. Team up with a company that has a similar target audience, share your customer base and integrate their features into your app. This is an effective way to create an integrated experience each of the parties could benefit from. It’s obvious that choosing the right partner is not easy but it can help you open up new monetization streams and generate more revenue. You can also share your expertise and team up on a new product. There are some pitfalls, though. It could take a lot of time to agree on all the details of cooperation, align priorities and expectations. Still, co-partnership is a great way to get more recommendations and positive feedback, as well as significantly speed up the monetization process.
Image source: Movie Pilot
7. Referral programs
Word of mouth goes a long way in marketing. Сustomers, by nature, tend to share their experience after making a purchase. They take someone’s positive recommendation as a reason to believe that a specific product or a service must be of good quality. And that is both good and bad. Let’s say you managed to build a remarkable app that wows users. With the avalanche of positive feedback, chances are – your app will skyrocket in ratings. But the truth is – negative word of mouth is going viral faster than positive rumors. As one study says, an average unhappy customer will tell 11 other people about their poor experience with a brand. That said, you need to set up a solid referral campaign if you want to grow your app.
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8. A powerful content marketing strategy
Do you want to know how to convert new installs into lifelong users? There is no magic formula. Just be ready to update the content within your app on a regular basis and get users hooked with every iteration. Even if there are occasional users who have never bought anything from you yet, there is still a chance to turn them into loyal customers. Produce content worth paying for. At first, let users enjoy some limited content or features without charging them. Then offer them some additional value, granting them full access to all features – for a certain price. It will give you a clue which direction you should take and what features you need to roll out in the first place.
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9. SMS marketing
SMS marketing is aimed to build a contact list of subscribers and win their loyalty by sending them permission-based texts. This is a good channel to use if you want to strengthen your brand voice and open a dialogue with your audience. Follow up your customers with the latest promotions, giveaways, contests, exclusive deals and new feature announcements. Provide better customer service by sending reminders to your clients and asking for their feedback. Short text messages have a high open rate. James Citron, CEO of text messaging service Mogreet, said in his interview with Forbes that “95 out of 100 of your customers who have opted into your text messaging program OPEN and READ your mobile messages within 3 minutes.” Over the past few years, mobile messengers like Viber, WhatsApp and Telegram are actively stepping on the heels of SMS marketing. Marketers commonly use them to create interactive and entertaining promo campaigns for users.
Image source: Giftedsms
10. E-mail marketing
The first thing most people do in the morning is check their emails. Having an email subscriber list is a good way to connect with your users on a personal level. There is one pitfall here – you need to know as precisely as possible what your users want. Spamming them with unsolicited content will inevitably result in unsubscription. You don’t have to necessarily be an influencer to reach users, but you need to be a good marketer. Make a simple yet powerful introduction of your offering. Be ready to send reports, statistics, webinars for free to make them interested in premium content. Don’t try to sell. Try to show value preemptively. Add native banner ads to your newsletter that seamlessly blend with the surrounding content. It’s a win-win strategy both you and advertisers.
Image source: eMarketer
11. A strong user engagement strategy
A lot of aspiring marketers make the same mistake. They blindly focus on user acquisition. It’s sad but true that high install rates mean nothing. A good deal of users churns after using an app once, so there is still a long way to go to make them your customers. To win this battle, you need to re-engage your user base on an ongoing basis. Improve retention rate by incentivizing users with coupons, discounts, and enticing deals. Enhance your mobile app UX by launching new features, perfecting its functionality and personalizing for each user. Keep the audience interested with engaging and regularly updated content. Track their behavior to have a better understanding what you should improve in the first place.
Image source: eMarketer
12. Multiple payment methods
You can build a remarkable product but still fail in sales. Why? One of the reasons is lacking a payment method your customers prefer. More and more people shop online over the last decade. A lot of them already have their favourite payment options they regularly use. If they don’t see a familiar payment solution, they will immediately cancel their order. The best thing you can do is to offer a set of separate payment solutions for different subscriptions you provide. Give customers the freedom to choose. It will add some extra points to your customer service and help you win over clients.
Image source: Statista
13. “White-labeling” your code
An app developer can easily turn their code into cash. Let’s say you built a strong code from the ground up, which sells perfectly well. Other companies that don’t want to reinvent the wheel can simply offer you to reskin your app. They will use the existing framework of your app to create their product, and you will receive a paycheck in return. This is an enticing opportunity as it takes no additional marketing efforts from your side. Code sharing is a monetization strategy that’s quickly picking up steam.
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It is a non-traditional method of monetization, but an effective one nonetheless. If you have a limited budget, posting your app on a crowdfunding platform (Kickstarter, Indiegogo, CrowdFunder, AppsFunder, etc.) would be a good option. Unfortunately, getting funding is not easy but there is one secret out there. It is the right pitch. You need to clearly explain the idea of your app and tell visitors what is special about it. Prepare a captivating video or presentation, create some enticing perks to motivate people to back your app. It is vital for running a successful crowdfunding campaign.
Image source: Crowd 101
It is a bankable monetization strategy in case self-funding is not an option for you at the moment. If you are curious about applying this model, you can team up with the advertiser and work together on your the promotion of your app. They can help you incentivize your users with bonuses, rewards or coupons. Then you will share the revenue obtained. This model is based on the rewards-driven monetization plan and works literally for any business vertical.
Image source: MonetizePros
When it comes to app monetization, there is no one-size-fits-all solution. Each app is different. You have to choose a strategy that fits your app best and aligns with your business goals. A wrong monetization method can make or break your business. Be thoughtful and make the right choice to drive the most revenue from your app.