What is mobile app monetization?
Mobile app monetization is a means by which app developers generate revenue. There are various forms of app monetization, including in-app ads, in-app purchases, one-time payments, and subscriptions, which are listed more in-depth below.
Over the last several years, most mobile apps have embraced a free-to-play – or freemium – model, so that today there are significantly fewer apps requiring users to pay before they download. As a result, free-to-play apps must find other ways to generate revenue and make money from their apps.
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What Are the Best Strategies for Monetizing Your App?
- For many developers today, a popular strategy for driving app revenues is ads. Developers are paid each time their users interact with ads in their app. The ads are normally integrated directly into the app experience and, in the case of rewarded ads, complement the in-app economy to ensure a non-disruptive user experience and increased engagement. In fact, good in-app ad implementation can increase the number of users who make in-app purchases as well as improve retention, getting them to spend more time inside your app.
- In-app purchases are premium items or features that normally form the bulk of the in-app economy. When integrated well, they are typically an integral part of game or app design, with prompts to purchase in-app items or services displayed at times users are likely to convert. While only about 2% of users convert to paying users, the revenue coming from in-app purchases can be significant.
- For apps that host continuously updating content and different features, offering a subscription can provide a reliable revenue channel. Subscriptions allow members to access premium content and features while building a loyal following. Apps can also provide different subscription tiers, giving users greater flexibility and capturing a broader range of potential paying users.
Paid apps (or one-time payments):
- Some apps may opt to offer access to the entire experience for a one-time payment at the start. As opposed to in-app purchases or subscriptions, one-time payments are ideal for apps whose content is not refreshed as frequently or who provide a very specific or high-quality service which users would be willing to pay for.
How Do You Measure the Success of Your App Monetization Strategy?
There are several ways to track the success of an app’s monetization strategy, and the most complete picture involves measuring a variety of factors, from value or revenue for every user, to retention, engagement, and length of session.
Tracking Revenue over time:
- Using lifetime (LT)—how long users are on an app before they stop using it—and lifetime value (LTV)—how much each user is worth over their lifetime—is a valuable place to start. These metrics show you how your monetization strategies work per user for their entire life cycle. More importantly, for app developers running user acquisition campaigns, these metrics can be compared to the effective cost per install (or eCPI) and can help determine whether an app is making money or losing it.
- Using lifetime (LT)—how long users are on an app before they stop using it—and On a more specific level, tracking retention can show the impact a monetization strategy has on how many users continue using an app regularly. Of course, monetization is only one element which impacts to retention, but depending on your choices and implementation, it can have a significant impact – either negatively or positively.
- To determine how effective a monetization strategy is on a more granular level, tracking the average revenue per user is crucial. An even more specific measurement is ARPDAU – average revenue per daily active user. By measuring the average revenue per user, it is easier to determine the success of a specific strategy, ad implementation, or of the strength of an in-app economy.
Mobile app monetization examples: How top developers are monetizing with ironSource
“Users were very happy with the rewarded videos from ironSource. We did a test where we took them out, but actually got a lot of negative reviews.”
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VP of Marketing and Revenue,
“After implementing rewarded video with ironSource, we saw no interruption in user experience and a double digit increase in revenue.”
Senior Director of Product Management,
Big Fish Games
“As Shooty Skies’ monetization loop depends heavily on rewarded videos, we couldn’t be happier with ironSource as a monetization partner.”