When you install an app on your phone, do you ever wonder how much money it generates?
There must be something to it. There wouldn’t be so many people making apps if there wasn’t the potential for massive profits.
Just looking at mobile games, the Apple App Store currently has more than 250,000 to download. When you include all types of apps, the entire store contains almost 2 million to choose from. Google’s platform holds even more, with close to 3 million.
The numbers look even more amazing when you see what Apple and Google pay to app developers. For example, the Apple App Store has only been around for 12 years, but it has paid developers more than $150 billion in that time. Google reports it has paid out more than $80 billion (even though Android is much more prevalent around the world—we’ll come back to this later).
Clearly, a mobile app can be a lucrative source of income for a developer. But you may be wondering, what exactly does it take to make the money start flowing?
There are a lot of ways you can monetize an app, but how you do it depends on your audience and the user experience you want to create. After all, you don’t want to run users away with constant interruptions. Knowing how to strike the right balance will keep everyone coming back for more while your app generates a sizable income. Keep reading to learn your options for how to make that happen.
What Are The Best Ways To Monetize An App?
When you monetize an app, you create a way for it to generate an income for you. The simplest way to do this is by making users buy it, but that may not be the best strategy for the audience you’re targeting. Some of the most common ways an app can be monetized are listed below.
Pay-to-download:
When users pay a fee to download an app, they typically expect not to pay for anything else. It’s often viewed as a one-time purchase, so in most instances, you shouldn’t include other types of monetization within the app if you select this strategy. It also works best for apps that can’t be easily copied by competitors.
Free:
Apple and Google report that more than 90% of the apps in their stores are free, but that doesn’t mean they don’t generate an income. Most use a combination of the options listed below to convince users to open their wallets.
In-app purchases:
Many free apps use this strategy to allow users to buy extras that make an app more enjoyable or unlock additional features. Most users expect to see an option for in-app purchases within free apps.
Subscriptions:
If you want a predictable, recurring revenue stream from your users, subscriptions are the best strategy to use. This format works best for apps where new content is added regularly, like music and video-streaming services.
Sponsorships:
This doesn’t get as much attention as the other options on this list, but it’s a great way to generate revenue from an audience you may not want to monetize in other ways. Sponsorships usually require at least the sponsor’s logo to appear when your app opens, but there may also be opportunities to include sponsored messages within the app’s content.
Ads:
Advertisements can be added inside an app using a variety of techniques. Common formats include full-screen interstitial ads, playable game ads and banner ads. The options for how your ads generate revenue are also important to know. More details are included in the next section.
App Advertising Metrics You Need To Know
Advertising within apps allows for more sophistication than just counting how many people are exposed to them. This list explains the different ways metrics affect your advertising income.
CPM:
“Cost per mille” charges advertisers a flat rate for every 1000 views of an ad. This is often used for branding and awareness campaigns. It doesn’t matter if your users take any action related to the ads; you get paid as long as the ads are served.
CPC:
In ”Cost-per-click” advertising agreements you only get paid when a user clicks or taps on an ad. Since this requires more work from users, app developers have the potential to earn more income than with CPM campaigns.
CPA:
“Cost-per-action” takes CPC a step further and only provides developers a payment if users take a specific action, such as making a purchase. There is a possibility for this to be more profitable than CPC and CPM arrangements. However, the biggest drawback is that developers don’t earn any money when an ad is shown to thousands of users.
CPI:
“Cost-per-install” provides a payment to you each time a user installs an app.
CPV:
“Cost-per-view” is related to video ads. Most of these agreements stipulate that users watch most, if not all, of a video before a developer is eligible for payment.
The Tools Of App Monetization
Once you know how app monetization works, you need to get connected to advertisers. One option is to sell all of your ad placements yourself, but it’s a time-consuming process finding clients and making contracts. That’s why the most popular solution is to use an ad network. Two of the most popular services are explained below.
Google AdMob
Admob is an ad network and a way to manage all the ads in your app. One of the most useful services it provides is called ad mediation. It allows you to connect multiple ad networks to one account and automatically show the most profitable ads to your users. It also provides comprehensive analytics so you can see how your ads and other monetization strategies are performing.
AdColony
One of the largest ad networks and monetization platforms in the world, AdColony offers a full suite of tools to help developers place ads in their apps and monitor their performance. It specifically excels at seamlessly incorporating video ads into apps.
How To Get Started With App Monetization
The best way to make money with an app is to build one your users love so much they want to share it with everyone they know. The more positive attention your app gets from the audience you’re targeting, the easier it will be to draw advertisers to it.
You should also be mindful about the drawbacks of too much monetization. While it can be tempting to have lots of in-app purchases and include every type of ad, be sure to consider the user experience. Lots of ads can make an app a pain to use, which will result in people abandoning it. You need to find the right balance to keep users and your advertisers happy.
At the start of this article a major difference was noted when comparing the income generated from the Apple App Store versus the Google Play Store. Apple customers outspend Google customers by a considerable margin. This doesn’t mean you should avoid making apps for Android (they can be profitable, too), but if you have a limited budget, you should devote more of it to Apple development.
App Monetization Starts With Blue Whale Apps
Blue Whale Apps is a full-service development firm that helps organizations add machine learning, IoT integrations, augmented reality and other custom solutions to their offerings.
Our team can handle all parts of the development process, from reviewing where you are now, to making and implementing a plan for where you want to go. We specialize in end-to-end development for Fortune 1000 businesses and government agencies, including consulting, branding, UX design and hand-crafted code.
Contact Blue Whale Apps today to discuss how you can maximize the income your app generates.
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