By John Rampton
Mobile apps are a great business model to make you and your company money and help your company continue to grow. 64% of adults in America have smartphones, and that doesn’t account for people under the age of 18. Out of that 64%, another 34% use their phone as their main way of going online and connecting on social media. Whether it is a new mobile game or a photo editing app, the mobile market is huge, having surpassed television in time viewed per day. People are spending, on average, three hours a day looking at their phones and tablets, and that number is expected to continue to rise as cellphone tech advances.
If you’re an entrepreneur and have an app idea, you’re already on the right path. Regardless of your amazing app idea, however, you need to have a revenue stream. The greatest app will eventually crumble if there is not a proper monetization model to back it up and support it. There are multiple ways you can go about monetizing your app. What the app business really comes down to is what type of app you have, and to whom and what demographic it is marketed to. Let’s take a look at some of the different ways entrepreneurs can make money from their mobile application.
1. Freemium: The most popular way to monetize an app in 2015 is to offer your app for free (everyone loves free), but some hide certain features behind a paywall that requires users to commit to a one time purchase in order to receive all of the benefits from the app. It is highly probable you encounter these types of ads on a daily basis. Everything from music applications like Spotify to antivirus programs like AVG use the freemium model. By offering the basics of the app for free, you give them a chance to find out if they like it. If they find themselves using it often, they are more likely to spend hard earned cash on the premium features of your app.
2. Freemium apps that allow multiple purchases: While similar to to the basic Freemium model, a freemium app that allows users to continue to pump money into it is also very popular. Most commonly seen in mobile games, this model allows users to continue to spend money on their free app by offering additional in-game items. Instead of a one time purchase, users can continue to pump real money into the game in order to advance their in-game ranks and items. This model can be mildly successful, just look at the numbers from Candy Crush to see how well it worked for them.
3. Advertising on freemium apps: A win-win for app publishers. Typically this model works by offering the app for free but shows banner ads while users are using the app. These types of apps will then offer to remove these ads (which are sometimes intrusive) by offering the ad-free “premium” version of the app for a small fee. This works in favor of the publisher because they can make money from both ends. This works well, but many developers will go overboard with their ads and drive users away.
4. Advertising: Using a mediation platform, publishers can make money through ad revenue on their app while still offering the entirety of your app for free. You can use a singular mobile ad network like MoPub or AdMob to accomplish this, or you can use something like AdtoApp, which partners with multiple ad networks under their umbrella. Platforms like AdtoApp can be beneficial because by using multiple networks, publishers can see higher return rates on click-throughs thanks to higher fill rates and better target advertising, regardless of country. (branding your app globally can return higher revenue), or target demographic. AdtoApp is able to provide the higher return rate by using a self-learning algorithm, that can adjust to accurately to over 280 countries and essentially any target demographic. With only four lines of code it can be easily implemented into any existing app without loading it down and slowing the app.
5. Partnering with a sponsor: While this is similar to number 4, there is one key difference. Unlike traditional advertising that will show a multitude of ads from different companies, partnering with a sponsor means that you show only ads from one company on your app, whether that sponsor is Amazon or Dunkin’ Donuts.
6. Video advertising: This method has been growing in popularity in recent years. Instead of just showing a basic banner ad on your app, some developers are partnering with ad networks to show video ads on their app. In some instances these types of ads can become overwhelming, but when properly implemented these short vid spots can engage users in a way traditional banner ads simply cannot do.
7. Promotional services: If your app isn’t being seen by anyone, then you aren’t going to make any money from it. It’s that simple. By using promotional services like Appshout, your app has the potential to be seen by many app reviewers and consumers. You’re basically hiring a marketing team that will push your app through press releases and newsletters to journalists and to the general public. Getting your app on websites and social media can help it grow moderately, or in more rare cases, help it go viral. The infamous Flappy Bird gained huge momentum thanks to social media.
8. Paid apps: The most basic app model, paid apps, requires an upfront purchase to use your app. While this method has been losing momentum, thanks mainly to freemium apps, it’s still a business model that has the potential to make money. In order for this method to work, however, you either need to have a recognized product or brand that already has a dedicated user group or use a promotional service to get your app seen by a large subset of interested parties. You can also become a sponsor of another popular app, meaning that their users will see your ad and app exclusively.
There is no right or wrong way to make money through your app. Every application works differently, and finding out what monetization model works best for you is key.