The Best App Monetization Strategies of 2017

It is no surprise that if you are developing consumer software, sooner or later you will come to creating a mobile application. If you are aimed at individual users, you cannot do without a mobile app. And once you have developed a mobile app, you have to make it bring profit.

The most obvious way is to sell an application upfront charging per download. True, this is the most obvious way but it is also the one almost inevitably leading to disaster. According to the statistics, today about 90% of mobile applications are free. And there is another side to the same coin – most users will not even browse paid options when there are free ones. Imagine the tough competition among free apps, and you will see that your chances of jumping into the market with a paid one are slim to almost none. Of course, there may be really unique solutions to which the regular market laws can be hardly applied, but in most cases, you will have to look for other ways to monetize your apps.

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OK, we have admitted that in most cases paid applications compare poorly to those which can be downloaded free of charge, but there certainly should be the ways to earn money with mobile apps; otherwise, there would not be so many free ones around. So, let's look at the best app monetization strategies and models to see how we can make our apps earn money.

Advertising

The easiest way to make money with your app is through advertising. The basic principle is that you display third-party ads within your application and get your revenue from clicks, views or actual conversions. Depending on the type of your application and on the agreement with your partners, you can choose one of the following ad formats:

  • Banners. This is the most frequently used ad type, and you must have seen them hundreds of times – rectangular ads at the top or bottom of the screen. Despite being very popular and seemingly easy, banners demand extremely precise and focused design, as they rely mostly on brand recognition. Another concern is that, in most cases, users tend to be irritated with banner ads, as they distract them from the main experience and sometimes overlap the app content. When including banner ads, you must be very careful not to cross the thin line between making enough money from partners and losing customers due to excessive advertising.
  • Interstitial ads. This type of advertising fills up the whole application window hiding its content. Interstitial ads attract more user attention than banners due to their size, so their effect is more pronounced. Users can either skip the ad to return to the application or click it to navigate to the partner content. For example, the interstitial (pop-up) game ad below contains the “play” and “download” options as well as the “x” icon to close the advertisement window and continue with your application content.

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[Image source: Chartboost]

The best practice here is, on one hand, not to use interstitial ads too frequently and, on the other hand, to place them in logical places within your application – between game levels, for example, or while the core content is loaded. The ad must never interrupt your consumers’ flow or prevent them from performing certain actions – in this case, users are very likely to uninstall the application altogether.

  • Capture forms. These forms are used to collect user data in any way – by making them subscribe to newsletters or by filling-in a "Get Quote" form. The information, usually consisting of the user's email address and, optionally, the phone number and postal address can then be used for further marketing campaigns. Capture forms are especially effective in social network applications where they gather the data directly from the user's profile. Facebook is definitely the leader here with its Lead Ads (pun intended) and businesses love using it as their advertising platform.
  • Native advertising. This is the most elegant format of ads within the mobile software, as native ads do not look like ads at all. Instead, they seem to be a part of the application content, they look like they belong there. They may sound like another article on a news website or a mention of the partner’s brand subtly woven into the application context or even an entire page provided by the third party. In many cases, native advertising is marked with “Sponsored by”, “Featured”, “Recommended for you” or other similar annotations showing that this particular piece of content is, in fact, an advertisement. One of the beautiful examples of native advertising is the Thump Channel invitation to explore the South London club life. The unobtrusive “co-created with Airbnb” line points at this online rental marketplace as the best platform where travelers who do decide to visit South London can find proper accommodation.

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[Image source: Thump]

Freemium Model

The so-called “freemium” is another way of monetization of mobile apps. The word itself which is a combination of “free” and “premium” means that the offer always includes two versions of the same application – free supporting the basic functionality and premium including additional features and options not available in the free version. The idea behind this model is that users downloading the free version enjoy it so much that they become willing to pay for the upgrade to premium to get access to the enhanced functionality.

Runkeeper, a GPS-enabled application for tracking walking, jogging or cycling activities, offers quite a sufficient range of features in its free version – you can create a profile, track your runs, set goals and use a set of basic training plans. However, with the premium version, Runkeeper Go, you will get the customized training plans tailor-made for you, receive the analytics of your fitness progress and enjoy a number of other features not available for users of the free version.

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[Image source: Runkeeper]

If aiming at making money with your mobile app using the freemium model, make sure your premium version is really worth it. To make it work, you need to carefully plan both the free package which should be attractive enough for your customers not only to keep using it but also to want to upgrade and the paid one which should convince your consumers that their money is well-spent.

If you are using advertising within your application, the good practice will be to run ads only in the free version. This will give you the value proposition in promoting the paid version – upgrade and you will no longer see the advertising.

In-App Purchases

If you decide to keep your application free for download but still look for strategies of earning money with it, try implementing in-app purchases. They are a popular method of monetizing mobile apps, both for iOS and Android. This model is built on the principle of the application being generally free but offering additional features for purchase. In-app purchases are very widely used within mobile games where you can pay real money for additional lives or rare artifacts. For example, in the insanely popular Candy Crush Saga, a casual “match three” game, each time you have used your last life, you are offered to buy more or wait for up to 30 minutes for new lives to restore.

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In other games, you may be requested to pay for unlocking new levels or for special items which cannot be obtained in a free version. In regards to both free and premium versions, you can offer to hide advertising in case of in-app purchases, either forever or for a certain limited period of time.

Subscriptions

If your application does a certain regular service to your customers, you can monetize by offering a subscription to your loyal customers. The subscription model is especially effective for apps focused on delivering content – news feeds, newspaper or magazine applications. With subscriptions, the application as such is provided for free, however, to continue receiving the content users need to pay the subscription fee – just like with oldy-moldy newspapers which used to be delivered to our porches before.

Forbes, the global business magazine, followed this path to monetize its mobile applications. You can download the Forbes app for free either from Google Play or from iTunes, but then you need to decide on the subscription plan – a single issue, one month or one year. Of course, the longer period you choose, the less you will have to pay per issue.

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[Image source: Forbes Magazine]

White Labeling

In the business context, a “white label product” is something produced by one company but then sold under the brand of the other company. To the end user, the product appears to be made by the company whose brand it bears.

In custom application development, the while labeling strategy can also bring certain profit – if you have written a truly good application with a very positive user experience, supported by top-notch code, you can try your hand in reselling it to other brands. If your application has already been on the market and received positive user feedback, users will be happy to find the familiar functionality under yet another brand.

Otherwise, you can resell your application code as a framework on the basis of which other companies can develop their own applications. This monetization model can be beneficial in situations which seem to be on two opposite ends of the application lifecycle – either when you have just created it, but have difficulties selling it under your brand, or when you have already exhausted it and would like to move on to a different project. Or you can even make it your specialty and develop applications to be used under other brands. In all cases, you must ensure truly strong development power to deliver consistently performing products.

Many brands prefer getting ready-to-use application solutions and marketing them under their names. This way, the company does not have to invest in creating the product from scratch, thus saving the development costs. An additional advantage is that usually, the developing company bears the responsibility for the application performance. In such model, both sides can focus on areas which they are the most competent in – the developing partner delivers the actual product, while the marketing partner takes care of promotion, distribution, and advertising. Due to the steady demand, there are already whole platforms dedicated to developing white label products – for example, Gamezboost producing game software for other brands.

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[Image source: GameZBoost]

Paid-Only Applications

As we’ve already mentioned, if you offer a mobile application only as a paid version, you are walking on thin ice, as your product must be truly unique and exceptionally usable to compete with hundreds of free competitors. Sometimes a paid application is offered for a limited free-trial period after which user has to pay the fee to continue using it.

Needless to say that paid applications produced by well-known software companies stand a better chance of winning the market. And there is one more curious trend which all mobile app developers should keep in mind – iOS users are more likely to make purchases within mobile applications than Android users. However, the fact that there are paid applications for Android means that there is a sufficient demand for them. Check, for example, Solid Explorer File Manager – a multi-functional file manager for Android devices with rich functionality including drag-and-drop, two separate panels, cloud storage management support and much more.

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[Image source: Solid Explorer File Manager]

If we browse iTunes, we will also find lots of paid applications, such as, for example, Scanner Pro – an application for scanning paper documents to store their digital versions.

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[Image source: Readdle]

As you see, paid mobile applications are more on the “serious” side – you will find solutions for anti-virus protection, password management, photo editing, remote control, and so on. This should not discourage you from venturing into this sector of application development – the demand for quality software is enormous, and a perfectly designed, user-friendly, robust and secure application solving a vital problem stands a good chance of bringing its developers a good return on their investment.

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