The mobile application market is speculated to grow at significantly higher rates attributing to the rise in the number of smartphone users all over the world due to reduced prices of mobile phones as well as data. Analysts forecast that global mobile apps market will grow at a CAGR of 15.14% during the period 2017–2021.
Such a vast market also presents opportunities for developers to tap into the stream and make a living out of it. In 2017, Sensor Tower calculated App Store revenue at $38.5 billion last year (34.7 percent growth over 2016), compared with an estimated $20.1 on Google Play (34.2 percent growth over 2016). The combined revenue of both the marketplaces comes out to be approximately $58.7 billion in 2017 up by 35% from 2016.
And in 2018 this number has risen to $92.1 billion, 76% of it coming from mobile games. By 2021, the total number of smartphone users worldwide will reach 3.8 billion, just under half of today’s worldwide population. This growth is being attributed to the recent surge in adoption of mobile devices in India and China.
So, how can a developer leverage this opportunity and make something for himself while continuing to develop awesome apps? This is what this post is all about.
What I have compiled below is an exhaustive list of all the ways you can monetize a Mobile app and make a sustainable income out of mobile app development. Let’s get started!
This is the most obvious of the lot. Marketers try every trick in their book to grab user’s attention and get them into their sales funnel. And marketers with a budget don’t shy away from spending money on paid ads. This leads to more competition for popular keywords thus resulting in higher bidding for that word.
What this means is that the ad shown on your app will have a higher CPC (cost per click)/CPM (cost per thousand impressions) for advertisers, which in turn will mean more income for you if the ad is clicked or even viewed.
Once you’ve integrated the ads, you can just focus on marketing your mobile application as much as possible and growing your user base.
**Note: Apart from user base/number of downloads, what also matters is your app’s Daily Active User. An app with 10,000 downloads and 4000 DAU is far more valuable than an app with 100,000 downloads and only 1000 DAU. So, your job as a developer is to develop features to keep your users engaged, while also focusing on gathering new users. ***
While choosing an ad platform, you should consider their advertiser base, i.e. how many advertisers are willing to spend money on that platform because eventually, it’s the advertisers who pay for the ad and from which you get your cut. Given below is an exhaustive list of ad networks that you can consider which have a large advertiser base and would allow you to make a sustainable income out of advertising.
Best Ad Networks
- Admob: Google’s AdMob is the most popular mobile ad network with cross-platform support. It offers high CPM and also you get an added advantage of being associated with 40 other third-party ad networks.
- Unity Ads: Unity ads are effective for mobile games. Remember that infinite surfer game where you could watch a video and you’d get a life key; head start boosts at the end? Most probably that’s powered by Unity Ads. Unity is the leading company in gaming and its Unity Engine is the most popular software to develop mobile games. It has more than 1B gamers on this platform, so the scale will never be an issue ;)
- Facebook Audience Network: Facebook ads have been a pioneer in digital marketing for a long time and have been regarded as the holy grail by digital marketing Gurus such as Neil Patel and Gary Vaynerchuk. Facebook has extended its network to mobile devices and now advertisers can extend their campaigns to mobile devices as well.
- InMobi: This ad network is really unique. Instead of targeting ads by demography, they use Appographic targeting. They study how the user interacts with your app and curates’ ads which the user can interact with, resulting in better offers and eventually better CPC. And talking about its scale, it is one of the largest mobile ad networks. It can target over 1.5 billion users and is still growing.
- Millennial Media: It is regarded popularly as the second largest ad network after Google’s Admob. It is less heard of but is really popular in the US with its varied range of advertising options.
Some other notable mentions are Leadbolt which deals with premium ads. Publishers connect to premium ad partners directly through DDM (Direct Deals Marketplace). AdColony is a mobile video advertising platform drawing high engagement with ads and thus high CPM, CPCV.
Paid and Free Version
Paid apps are a great way to earn on the playstore. The revenue from ads is fluctuating and is decided by how many advertisers are willing to advertise on your app. But creating a paid app is awesome. You decide what you want to charge for your app and the user has to pay the entire amount if he wants to download it.
But no one wants to pay for an unknown commodity. It is very hard to make people part with there money, let alone to pay for an unknown app. So how to go about it?
Checkout PowerAmp on the playstore.It offers a trial version of the app on the playstore for 15 days, after which if the user wishes to continue using the app, he/she has to buy the full version on the playstore.
This way, the user has a taste of what the app would feel like and whether it serves the user’s purpose or not. Finally, if he finds it useful, he can continue using the app after purchasing the full version on the playstore.
In-app Purchases / Freemium
Although creating trial and paid versions of the app is a great way to sell your app, it can lead to decreased user retention. A user may choose to uninstall the app after the trial period is over as it is no longer usable. But this way you lose out on all the advertising revenue!!
In order to prevent this, google has come out with a much more elegant solution i.e. in-app purchase. In-app purchase allows the user to pay for an extended feature in the app while continuing to use the base version.
For example, an in-app purchase could allow the user to remove all the advertisements from the app, thus leading to a better app experience overall.
This model has many upsides. If the user does not want to pay for the feature, you can still conceal the feature from the user while letting him use the base version. This way you’ll increase your DAUs and also have ads revenue simultaneously. This is better than the user uninstalling the app, and also the option of paying is always open just in case the user changes his/her mind ;)
DAU is an important metric when you pitch your app to an investor (if you plan to do so eventually) and it’s better to not mess it up. So the freemium model is excellent to keep your users engaged while hoping that they pay for the extended feature.
This one works best for mobile games. This model was particularly made popular by Unity where the user has to watch a 30 second ad in order to unlock something special, like doubling his coins/points, providing extended health, or any other exciting feature.
This is a win-win situation for all the parties. The advertisers get their value for money. The user has to sit through the entire ad in order to get the benefit. Hence the advertiser’s message gets along better.
The user gets some advantage like extra points, health or whatever by just sitting through 30 seconds which otherwise he would have to pay for, or just make do without the benefit. In a world where everyone loves freebies, this is a great strategy.
The developer eventually wins!! Due to high engagement rates with the ads, the ads are costly which leads to increased earnings for the developer. Apart from that, the user receives free stuff which keeps him engaged in the app making the app addictive thus increasing the average time spent on the app and DAUs as well.
If you can find out a way to integrate this model within your app, it can pay off really well.
This is a bit unconventional and something I think has really good potential and will have huge payoffs if done right.
We very well know how sponsorships work in youtube videos where a popular YouTube channel receives a certain amount or some goods for free from the company which wants its products to be reviewed on the channel, thus driving people’s attention to their product and eventually leading to increased sales.
This is technically known as “Influencer Marketing”. But this works only if you have a large user base or if your app is specifically targeted. For example, a fitness app could receive sponsorship from fitness bands manufacturer to promote their bands. Even though this app might not have a large user base, but each and every user will be the target user for that company and that’s what matters.
This category includes everything ranging from Crowdfunding donations to paypal donations. Let’s be honest, advertisements are not a great User Experience and actually lead to frustrated users uninstalling apps, if overdone.
So, if you don’t want to integrate ads, you can try one of the other options mentioned above or add an option to make a donation via PayPal.
All you have to do is set up a PayPal account and create a paypal.me link. Then you add a screen where you ask the users to donate if they liked the app and when they click the donate button, open that link (PayPal.me/XYZ) in the web browser. The user can choose to donate any amount they like.
Personally, I always try and pay for the app if it serves my purpose as I know it means a lot to the developer. If not, I try to donate via that paypal link. So, you can do the same.
And btw here is my PayPal link: https://www.paypal.me/ayusch
Go ahead and buy me a beer! 😉
Given above is an exhaustive list of feasible methods that developers can use to monetize their app. Let me know if I’ve missed out on any point and I’d be happy to review it.
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