In January 2024, nearly two million apps are available for download on the Apple Store. Nearly 2.5 million apps are available on the Google Play Store. However, the average income a popular or average app generates is nearly 1.8 USD in revenue. Competition is fierce in today’s world and companies must stay informed on the latest app monetization methods to ensure they remain afloat.
This article covers exactly that. We’re going to look at the best app monetization strategies in 2024. That way, you can get the most out of your apps.
A quick summary of mobile app monetization
Mobile app monetization is the process of earning or generating revenue from a mobile app.
Numerous methods leverage a user base to generate revenue. Some of the most famous methods include in-app ads, in-app purchasing, the subscription model, and the freemium model.
The importance of app monetization in 2024
In 2009, nearly 80% of the apps on the Apple Store were paid apps. However, only ten percent of these apps had users pay to download. On the other side, paid apps on Google Play Store account for a little over three percent of mobile applications.
The notable shift from paid to free apps means developers have to rethink the way they generate app revenue. The typically successful practices before are not that successful now.
Developers must strike a balance between functional and revenue generation. That balance ensures the app earns money while cultivating the user base. There are many app monetization models developers and companies can follow. Additionally, they can always implement a hybrid app monetization approach. This method combines two or more approaches to generate revenue.
Top mobile app monetization models of 2024
In-app advertising
In-app ads as the name says are when users see ads while they use an app. These ads include video ads, native ads, banner ads, text ads, and interstitial ads. The popularity for this revenue model grows every day as more companies and developers use it. Predictions showing ad revenue obtained from in-app ads could reach 226 billion USD by 2025.
Benefits
In-app ads have a proven track record of performing ten times better than banner ads on mobile websites. Also, in-app ads help you advertise relevant apps with a specific target audience. This approach increases the marketing effectiveness.
Drawbacks
There’s always a chance your competition can appear in the ads. These ads could lead to the user downloading the other app meaning you lose revenue.
Using Interstitial Ads to Grow eCPM
There are many analytical tools available today. These tools helps developers or app publishers can critical understanding of their audience and their behavior. Such insight helps these developers pivot away from the standard app monetization methods. One reason why to do this is to combat banner blindness and reduce user disinterest.
One of the best alternatives to in-app ads is interstitial ads. Banner ads come with size restrictions and are often intrusive. Conversely, interstitial ads cover the mobile screen and blend in at transition points within the user flow.
This app monetization strategy succeeds when added at the end of a flow. Imagine a reading app or news app. Here, the ads appear when the user reaches the end of the article or scrolls to the bottom.
Benefits
Interstitial ads have greater viewability the regular banner ads. A full-screen ad is very effective as it is impossible to ignore. These ads also boast higher engagement rates and better CTR, meaning advertisers are ready to pay more CPM for interstitial ads.
Drawbacks
Publishers using these ads must abide by Google’s strict guidelines and recommendations. Failure to adhere to these rules results in penalties. Another problem facing interstitial ads is the potential to cause slower load times. This drawback could impact the user experience and may turn some users away.
Improving CTR through native ads
Native ads exist to integrate into the host app. They seamlessly merge with the app that most users see them as another post in their feed. Proper implementation of these ads results in minimal disruption to the user experience.
Also, these ads are shown to have the highest engagement rates over others. According to a study done by eMarketer in 2018, data suggests the click-through rate on native ads is nearly nine times higher than regular ads. In 2022, ZipDo highlights how the CTR from native advertising was double that of regular banner ads.
Benefits
Native ads are non-intrusive and non-disruptive by their nature. Hence, these ads result in a better app browsing experience for the user.
Drawbacks
Hyper-focused campaigns require advertisers to gather more customer data, build unique audience segments, and ensure their content is personal based on interests and behaviors. Native ads may not work here as users could pass by them without a second glance.
Drive conversions through freemium subscriptions
A freemium app is a monetization model with numerous advantages. These apps are always free and come with in-app purchases. Users who make these purchases get exclusive access to digital goods, exclusive content, and more.
Perhaps the best example of this model is Spotify. The app was developed in 2006 and began life as an alternative to the pay-per-song model that iTunes ran on. It was also preferable to pirating songs which was very prevalent at the time. The platform had many features available behind a premium subscription.
There’s no denying that Spotify is among the best in the freemium app model concerning conversion. Typically, freemium apps have a conversion rate of 2-5%. However, Spotify converts nearly a quarter of its users who start with the free version.
Benefits
The biggest benefit of the freemium model is the ability to scale up as the app’s user base grows. That way, companies don’t worry about costly overheads. Here, users can try the app a little before they commit to paying for it.
Drawbacks
There’s always the chance users don’t upgrade to the premium subscription and that leads to lost revenue. Some freemium apps have confusing or convoluted UIs. This problem often ends with users deleting the app altogether.
Affiliate marketing offers
Many tech companies like Apple, Microsoft, and Google have affiliate programs open to app developers. These programs revolve around promoting other mobile apps within yours. Developers earn a commission for hosting other apps. It is an excellent way to encourage users to try apps similar to the one they’re using.
Benefits
Affiliate marketing is a great way to generate revenue without having to charge for downloads or in-app purchases. It also helps sell products and services within an app.
Drawbacks
The downside here is affiliate marketing is highly competitive as everyone wants to promote their app. Also, this method makes it possible to promote the app in a way that does not reflect the final product.
Create repeat customers through in-app purchases
One monetization system steadily gaining traction over the years is in-app purchases. Evidence for this growth is especially noticeable in the mobile gaming area. This monetization model enables users to use real money to unlock additional features when they play a game.
These extra features vary on the game type.
There is a smart way to monetize the app so that you don’t come off as greedy. The best way to do this is by analyzing user behavior and strategically providing in-app purchases at points where the user needs help.
Benefits
In-app purchases provide a great way for users to make purchases without ever leaving the app. A smart developer can provide a wide range of features to purchase to convince the user. This approach helps developers create a flexible monetization strategy that adapts to each new game they make.
Drawbacks
The biggest drawback here is creating the feeling of being nickel and dimed. In-app purchases that constantly pester the user to make a purchase often turn users away from the app. Worse still, some games get labelled as a pay-to-win game which rapidly drives users away. Also, users who make in-app purchases could be disappointed by the product and leave a negative result. That negativity reduces the brand image and may prevent other users from making similar purchases.
Sponsorship ads
Sponsorship arrangement is an old but successful app monetization model. Any app with high engagement and a large user base can adopt this monetization model. The model revolves around finding a single company to sponsor or invest in the app. The company gets exclusive access to selling ads to your user base.
Before getting into sponsorship, always consider the user base and the products and services that appeal to them. That way, you advertise something with a greater chance of succeeding at launch.
Benefits
You can use these ads to target a specific audience and that leads to higher conversion rates. Also, sponsorship ads are useful for cross-promoting other products and services. This greater reach often results in higher user acquisition and revenue generation.
Drawbacks
The biggest downside is finding a sponsor willing to get in on this strategy. Further, the sponsor or brand must have a similar or parallel user base. If not, the whole strategy falls apart.
The best practices for mobile app monetization
One reason why many company’s app monetization strategies fail is a poor implementation of the model. They often make ads as annoying as possible and that leads to users leaving or uninstalling the app. Before picking an app monetization strategy, ensure the user experience is protected. A strategy that overrides the user experience is guaranteed to fail.
For example, in-app ads must be added in a way to ensures minimal disruption to the app’s user experience. Be it video or interstitial ads, they cannot disrupt the user flow, or else the plan fails. Ad revenue is important but not at the cost of losing a user.
Additionally, developers should look into the following when they want to build revenue for their apps.
Invest in user acquisition
Developers must always look to invest in user acquisition. New users are a necessary part of an app’s ability to survive. It also helps the app thrive in the market.
Hybrid monetization
Instead of sticking to one app monetization model, companies or developers can opt for hybrid models. These models combine the best parts of two or more monetization strategies. That way, developers increase the effectiveness of their
Analytics and data
Perhaps one of the best ways to optimize an app’s revenue generation is through analytics. A company can partner with an app monetization platform and reap the rewards. These rewards include valuable information like revenue, geography, and user behavior. Companies can use this data to plan what they do next or sell it to marketers for an ongoing income stream.
What is the best app monetization strategy for your app?
There is always a list of things to consider when deciding which app monetization strategies work best for the app. Typically app developers opt for multiple app monetization approaches and earn revenue.
When looking to adopt an app monetization method, the best approach is to consider the following
- What does the app do?
- Who is the competition in the market?
- Who is your target audience?
Closing thoughts
The strategies listed above are the most successful app monetization strategies in the industry. Ultimately, choosing the best strategy depends on various factors. Keep those ideas in mind when choosing a strategy to increase your chances of success.
Remember, app monetization is complex. Anyone new to this world benefits immensely by partnering with industry experts. Our company for example helps
