There’s no feeling like launching your own mobile app; in fact, it's the day you have been waiting for weeks and months. Developing and designing a mobile app to successful completion is undoubtedly rewarding, but what’s more rewarding is when your app starts to generate revenue. To make that possible, choosing the right mobile app monetization strategy is more important than you even think of it. As in our previous blog, we discussed the different app monetization models and strategies; this write-up will be all about implementing them effectively. 

It is noteworthy that monetization is one of the most crucial considerations in every phase of mobile app development, be it planning, development, or marketing. You will be surprised to know the latest findings from the Statista report, which states that over 90% of app owners fail to sustain business from their mobile apps due to a lack of monetization strategy in place. And that’s just not a fact but a reality, no one can survive without money, be it a human or a business. 

That’s the reason why monetization needs early consideration in the mobile app development process. Remember, the mobile app monetization strategy you choose will directly impact your user’s experiences - get it right, and you will have happy users willing to pay, but if you get it wrong - be ready to face negative reviews and even immediate abandonment. 

So, to help you get the most out of your mobile app, here’s a detailed guide helping you understand the process of choosing the right mobile app monetization strategy, alongside a list of best practices and tools to implement it effectively. 

Mobile App Monetization Facts and Statistics to Know in 2024

• In 2022, global spending on mobile apps reached a staggering $167 billion, continuing its upward trend despite a minor setback in the previous year. (Source: Statista)
• In-app advertising has the biggest share in the mobile app market, raking in nearly $268 billion in 2022. In comparison, in-app purchases contributed approximately $205 billion to the total revenue. (Source: Statista)
• As of April 2024, 31% of app publishers opted for an in-app advertising model. In stark contrast, only a small fraction, about 5%, of app developers showed interest in in-app purchases. (Source: Statista)
• When it comes to consumer spending, the Apple App Store outperformed Google Play. In 2022, consumers spent $83 billion on the Apple App Store, more than double the $41 billion spent on Google Play. (Source: Statista)
• About 97% of apps on Google Play and 93% on the Apple App Store are free. Moreover, free apps are a major revenue source for Google Play, accounting for 98% of its total earnings. (Source: BusinessofApps)

Why is Having a Mobile App Monetization Strategy a Must?

The significance of mobile app monetization is on the rise, with these digital apps becoming the go-to platform for content consumption. It's hard to find an industry that doesn't have a significant presence of mobile apps. This trend is a reflection of the growing preference for mobile apps among smartphone users. For example, recent research indicated that 85% of consumers prefer shopping on e-commerce apps rather than mobile websites.

Furthermore, the number of app downloads from app stores has been increasing worldwide. Although the growth rate may vary, the upward trend is undeniable. And it's not just about e-commerce. 

These statistics all point to one conclusion: the future is in mobile apps and smartphones, and making money from them is the smartest decision. Therefore, having an app monetization strategy becomes crucial for several reasons:

• Not all apps can generate revenue by selling physical goods.
• Free apps tend to be more popular than paid ones, and monetizing them is crucial for generating revenue.
• The surge in content consumption via mobile platforms is attracting more advertisers to this medium.

Quick Comparison of Different App Monetization Strategies

There is no dearth of options for businesses when it comes to monetizing a mobile app. In our previous blog, we discussed all major mobile app monetization strategies in detail, along with their pros and cons. You can refer to it for more intense information on each monetization model and strategy. 

To recap, here’s a quick comparison of different app monetization strategies:

How to Choose the Best Mobile App Monetization Strategy?

As Erick Schmidt, the ex-CEO of Google, once said, “Revenue solves all problems.” His clear indication was toward businesses. And that’s even true; literally, every business needs revenue to keep going. In order to get these gains for your business app, you really need to do a lot of homework to choose the right mobile app monetization strategy that aligns perfectly with your app and its targeted users. +

Here’s how you can choose the best monetization strategy for your mobile app: 

#1. Understanding the Market Trends

Every app has a different niche and purpose, so not every monetization strategy will work for your app. Just because one strategy worked best with your competitor doesn’t mean it will work according to your app. To stay ahead, the best way to choose the right app monetization strategy is to research the market and understand the latest trends. 

#2. Protect your Intellectual Property

Before choosing the mobile app monetization strategy for their app, businesses must familiarize themselves with the various modes of Intellectual Property (IP) protection, such as copyrights, trademarks, and NDAs. This will help them avoid IP infringement. Understanding IP Protection will greatly help you choose an app monetization strategy. 

#3. Incorporate User Feedback in Product Development

Studies indicate that 52% of customers appreciate when businesses work on their feedback. It's crucial for businesses to have direct conversations with their users about their experiences with the app. This feedback can be instrumental in determining the most effective software monetization strategy.

#4. Monitor Revenue Performance

You can identify the most profitable app monetization strategy by scrutinizing and enhancing sales and marketing initiatives based on revenue. Revenue Performance Management (RPM) can be a valuable tool in realizing return on investment and boosting overall revenue growth.

#5. Regularly Update and Discuss Your Pricing Strategy

App pricing, often an underestimated aspect of business, plays a pivotal role in customer acquisition and retention, making it a key factor in monetization. Changes in pricing can have a ripple effect on all facets of your business. Hence, whenever you modify the pricing of your app, it's crucial to keep both your existing and prospective customers in the loop.

#6. Iterate and Improve

Don't be disheartened if your app fails on the first attempt. You might have to go through several iterations like MVP1, MVP2, and so on. If a particular app monetization strategy fails, don't hesitate to go back to the drawing board. Keep experimenting until you find the strategy that yields the results you're aiming for.

Best Practices for Monetizing an App with the Right Strategy

Formulating a strategy for app monetization is merely the beginning; the ultimate aim should be to implement it to maximize profits. This can be achieved by being aware of the possibilities and adhering to the best practices of monetization.

Each mobile app monetization model comes with its own set of benefits and challenges. However, there are some universal ways to boost app revenue that are effective across all models. So, let’s understand how:

1). Use Multiple Monetization Strategies

A common pitfall for many app owners is relying solely on a single monetization model for their app's revenue. This is particularly common among app businesses that have found success with a specific model.

Businesses often become complacent when they discover a monetization strategy that yields results. This is where the issue lies: depending solely on one monetization model is risky.

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For instance, suppose you use in-app ads in your app. Your revenue depends on users clicking on these ads. But what happens if the quality of ads from your publisher deteriorates?

Moreover, how do you respond when users begin to tire of the ads in your app? Having an alternative monetization strategy lessens your reliance on a single method. In other words, your app won't go under if one strategy fails.

2). Choose Multiple Monetization Models

Do you know what drives the success of multi-billion dollar apps like Amazon? They don't rely solely on one monetization model. They use a combination of in-app purchases and subscriptions to enhance their earnings. It's crucial for any enterprise to diversify and establish multiple income sources.

This principle applies to mobile apps as well. For instance, an ecommerce app isn't prohibited from incorporating in-app advertisements. However, the challenge is to maintain equilibrium. If a paid app begins to display in-app ads, it may deter users who have already paid a premium for the app's use. The same holds true for apps that operate on a subscription basis.

When apps already charge a fee for download, introducing in-app ads can upset and alienate existing users. Businesses must understand which monetization models complement each other.

For example, in-app purchases and subscriptions can be effectively combined. However, ads, being a more direct monetization method, should be used judiciously. 

3). Optimize User Retention

When users keep coming back to your app, it increases your chances of earning through mobile apps.  This involves enhancing the user retention rate, encouraging users to interact with the app, and enticing them to return frequently.

Businesses must employ various strategies to ensure a consistent user retention rate. Elements like app functionality, user experience, ease of navigation, user engagement, and app speed are vital in boosting user retention.

The more users revisit an app, the more opportunities for monetization arise. Whether the app provides in-app purchases or displays in-app advertisements, a larger user base always guarantees increased revenue.

Moreover, an app with high user retention gains more visibility across all relevant app stores. Consequently, paid apps and apps with subscription models can also boost their downloads with an optimal user retention rate.

4). Focus on Mobile App Analytics

Paying attention to mobile app analytics is crucial to succeed in this competitive environment. The market is highly competitive, and apps that don't utilize data effectively are unlikely to thrive.

But how can businesses, especially those without the means to employ a skilled data analyst, focus on app analytics? The solution is to leverage top-tier mobile app analytics tools. 

With the right tools, even those new to data analytics can perform necessary tasks. Given the wide range of both free and paid app analytics tools currently available, businesses have no reason not to use analytics to maximize their profits.

There are numerous tools designed to help businesses boost their revenue potential. The secret is to select the right tool that will unlock monetization possibilities. Additionally, businesses can explore ethical data monetization strategies, which have been trending for some time now.

5). Take App Marketing Beyond Just Downloads

The role of mobile app marketing is pivotal in generating revenue from an app. Whether it is about in-app purchases, subscriptions, or paid apps, marketing remains the base of these monetization models. It's crucial because it brings the audience closer to the point of the transaction.

The importance of app marketing in achieving this goal is clear. At present, most businesses rely on marketing to boost downloads. However, the ultimate objective of promotion should also be to generate direct income.

App marketers need to adapt and excel in maximizing app revenue. They need to shift their sole focus from boosting downloads to tackling more complex objectives like app revenue. An effective marketing team can significantly influence income. 

Top 3 Tools to Monetize a Mobile App Effectively

With the rise of cloud technology and digital tools, earning money from your app has become easier than ever. Many of these platforms primarily offer advertising services for apps, while others provide additional monetization strategies. Here are some top-notch tools that can help you generate income from your app:

Google AdMob: This is a mobile app advertising platform owned by Google and used by countless developers across the globe. It offers a variety of formats to choose from and allows you to leverage Google's comprehensive and interconnected ecosystem to monetize your app and increase your earnings.

Meta Audience Network: Previously known as Facebook, Meta has developed its own ad platform that's gaining traction among app developers. It operates on an auction-based system, allowing users to display ads in a variety of formats, such as reward-based videos, native ads, and banner ads.

InMobi: Recognized as one of the largest standalone ad networks for mobile applications, InMobi boasts a wide array of advertisers and delivers top-notch ads in all formats. It provides smart audience division and targeting based on a range of factors.

How to Measure the Efficiency of Your Mobile App Monetization Strategy?

Creating a successful mobile app monetization strategy is just the beginning. It's equally important to consistently monitor and enhance performance by keeping an eye on crucial metrics. 

Here are some key performance indicators (KPIs) for monetization that you should be tracking:

• ARPDAU (Average Revenue Per Daily Active User): This helps you understand the revenue trend per user.
• Conversion Rate: This is the percentage of users who switch from free to paid versions. The target can vary between 2-20% depending on your strategy.
• Lifetime Value (LTV): This represents the total revenue generated by a user over their lifetime. Look for trends among different cohorts.
• Churn Rate: This is the percentage of paid users who cancel their subscriptions each month. Ideally, this should be kept below 5%.
• Ads RPM (Revenue Per 1000 Impressions): This varies by niche, but generally, the higher, the better.
• Monthly Recurring Revenue: This is the total revenue from subscriptions. The goal is to increase this over time.

To maximize revenue, consider the following optimization strategies:

• Enhance the conversion rate by strategically positioning upgrades or offering incentives.
• Lower the churn rate by adding more value to paid tiers and introducing loyalty programs.
• Boost ARPDAU by adjusting pricing and bundling subscriptions.
• Increase Ads RPM by optimizing ad placement and formats.

You can use tools like Google Analytics for Firebase, Facebook Analytics, Adjust, App Annie, and UXCam to measure the success of your monetization strategy. 

Remember, continuous measurement and testing are key to refining your monetization performance over time. The data will help you understand what works best for your users.

Top 5 Latest Trends in App Monetization to Consider in 2024

The landscape of app monetization is ever-evolving, with new technologies making it into the space every day. Here are a couple of emerging trends that are currently influencing the industry:

Native Advertising Gains Traction

Native advertisements emerge as the best way for advertisers to integrate their ads seamlessly into an app's interface, ensuring the user's experience remains uninterrupted. 

This innovative approach to advertising is gaining popularity as it allows advertisers to present their products or services within the ad content itself, bypassing users' common tendency to ignore traditional ads.

Premium Ad-Free Versions

A growing number of apps are adopting a dual approach to monetization. They display ads to generate revenue but also offer an ad-free premium version for a subscription fee. 

This model, known as the freemium model, is becoming a popular choice among app developers looking to diversify their revenue streams.

AR/VR and Advertising

Imagine playing a virtual reality game and coming across native ads within the game. That's the potential of AR and VR technologies. They offer limitless opportunities for advertisers to engage with their audience in a seamless way while they're using an app.

Data Monetization on the Decline

As app store policies and cyber laws become more strict about user privacy, collecting data is more complex than it once was. This could lead to a significant decrease in data monetization, pushing brands to seek other ways to leverage their consumer and user data.

The Rise of Hybrid Monetization Models

As mentioned earlier, mobile app monetization trends are shifting towards using multiple models, techniques, and channels. App developers are looking to diversify their revenue streams while simultaneously providing value to their users.

Conclusion

In this comprehensive guide, we have explored everything about mobile app monetization strategies. Our focus has been on the significance of selecting the right mobile app monetization strategy that aligns with your app's functionality and its user base. We have made an effort to equip you with essential metrics to track the success of your chosen strategy and explain its importance.

However, if you still have any queries or want a more in-depth understanding of monetization models, don't hesitate to reach out to Mtoag Technologies. We would be delighted to help you out with your mobile app development, deployment, marketing, and monetization needs.