3 Key Components of In-App Monetization Every Mobile Maven Should Know
The phrase ‘there’s an app for that’ has dominated the public vernacular for quite some time now. While apps are constantly being developed and introduced to the mobile market to the tune of a million plus, only the strong will survive if they reach a substantial ROI: as per Vision Mobile’s State of the Developer Nation in 2015’s Q3, a whopping 51% of developers earn less than $500 in revenue per month. While you may have an incredibly developed app with engaged users boasting an attractive UX and a number of other highly important and influential factors, your monetization model must be in healthy shape if you want your app to survive and succeed for the long haul.
Each method of app monetization comes with its own costs and benefits. Paid apps will enable cash flow from the fore, yet the lack of a free version may lead to decreased exposure for your brand; in-app purchases allow users to test out the product and advance accordingly by reaching levels in which they have the option to pay for greater access; and advertising — chosen by 31% of developers as per Statista — will grant you increased exposure, yet profits will be dependent on your CTR and conversions.
Since monetization is clearly fundamental to your app’s success, familiarize yourself with proven solutions that’ll bring home the bacon:
1) Entwine monetization strategies with your app content
The “freemium” in-app monetization strategy provides a solid middle ground, with the ability to allure a large pool of users with free downloads and an easy built-in path to encourage further engagement by making purchases as you go. Use the highly valuable collected data from your user base to make wise decisions that have positive bearings on your profit model. Check for trends in the popularity of certain in-app purchases, and reevaluate those that didn’t fare so well. With the knowledge under their belts, developers can focus on the money-making strengths and create new content in the same vein. Better content will lead to greater engagement, which will thus translate into more monetization scenarios that are likely to prove successful.
2) Encourage loyalty with in-app purchases
Loyalty programs can quickly become any business’s best friend. By encouraging users to stick to your brand and rewarding them with points, credit, etc. (i.e. incentives they want most) for doing so, it’s an easy win-win situation for all parties involved. If your app has yet to include loyalty incentives with in-app purchases, do so now and watch the funds come pouring in. As per Soomla’s Mobile Gaming Data Report from 2015’s Q4, 45% of users successfully convert into paying customers within the first hour of using an app/game with this strategy. Perhaps even more telling is their discovery that if a user doesn’t convert on the first day of use, they are unlikely to convert at all. Be sure to develop your app in such a way that it’s appealing, interactive, and a hard sell from the get-go. If you catch them from the beginning and persuade them to continue with incentives based on loyalty, you’re all the more likely to create a steady group of paying customers.
3) Create an ad-based app monetization strategy
As only 3% of users convert to paying customers, there’s a major gap in your audience that needs to hold money-making potential. When neither a paid app’s flat fee nor in-app purchases seem to pave the way for profit, advertising should be your go-to option to keep revenue afloat. Thankfully, 79% of users accept the trade-off for a free download in exchange for ad exposure. Ad-based monetization should be part and parcel of building your app experience, and shouldn’t be treated as an afterthought or an add-on. Every aspect of your app needs to be fluid and in congruence with one another, or the experience can go awry. When including ads, it’s paramount to keep them in close relation to your product. Furthermore, keep a delicate balance between optimal UX and ad density/relevance. Don’t overdo the ads, as you don’t want to deter potential buyers from exiting. (Three to four ads per session are a safe bet.) With this idea in mind, you also don’t want to underexpose the ads, especially if it’s a big source of your app’s revenue. One wise choice in this model is to explore the novel formats. The presentation of a rewarded video, for instance, is reported to increase respect for a given brand by 22%.
For better or for worse, there’s no foolproof way to guarantee your app’s financial success. However, by paying close attention to the collected data from your user base and fashioning your monetization model accordingly, you can generate great insight into your users’ behaviors and interests. A mixture of “freemium” apps with in-app purchasing capabilities — offered in tandem with a well researched advertising model — just might be your best bet in establishing your app’s profitability, longevity, and appeal.
This post first appeared on the Appnext blog
Appnext is a leading monetization and app distribution platform exclusively dedicated to building and growing great mobile businesses by promoting apps.