Best practices and mobile app revenue and monetization tips in this informative ebook. Find out how to earn more money from your app.

1. Strategies for
MOBILE APP MONETIZATION

2. 2 Strategies for
Mobile App Monetization
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Introduction
There are a number of factors that should be
considered when determining which monetization
strategies are the right fit for your app. Review
your competitors and gauge what is working (or
isn’t) for them. Is your app meeting a demand that
hasn’t been solved yet, and your users may be
willing to pay up front for your unique solution? A
thorough review of successful competitors in your
space will also help you understand what they have
already tested, so it may make sense to follow suit
with their revenue strategies. Finally, make sure you
know the costs that are incurred in running your
app, and which monetization models will meet
your app’s financial needs and hopefully return
revenue at scale.
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The following monetization
models will be discussed:
In-App Advertising
Freemium
In-App Purchases
Sponsorships
Paid Apps
Subscriptions
Commissions

3. 3 Strategies for
Mobile App Monetization
clevertap.com
Mobile ads are an effective revenue strategy if you
are looking to drive downloads, and if there is no
natural opportunity for in-app purchases within
your app. In removing the barrier to pay up front,
the goal is to attract a large enough user base to
incentivize brands and app publishers to place
ads within your app. The user experience here is
critical, and when the ads are targeted and curated
with offers that fit the right users, this can add value
to the user and not distract from the experience
they’re expecting.
As the mobile ad network space has matured, there
are many ad networks to choose from. Look for
an ad network that is brand-safe, offers predictive
mobile ad targeting, and account management for
support. After selecting the appropriate network,
download the SDK, select the ad set, and begin to
earn revenue from the traffic associated with that
ad.
There are many ad formats, and it is important
to have knowledge before you move forward in
choosing which types are best for your app. The
most commonly known are banner ads, which
can appear spammy but are fast to integrate.
They are often the lowest revenue-generating ad
format, though. Interstitials take up the entire app
screen at optimal times in the user experience,
such as when you’re leaving the app or at the end
of a game experience. They generally have high
impression rates and can be very profitable. Rich
media ads with music, video and in-ad games can
increase revenue as well as provide valuable user
data. Native ads are the newest ad formats that
developers are exploring, which can be customized
to the look and feel of the app’s native content.
In-App Advertising

4. 4 Strategies for
Mobile App Monetization
clevertap.com
Freemium
Freemium mobile apps are free to download,
with the expectation that to access the premium
features, the user will need to pay. This model is
effective in growing large user bases, if the users
are able to gain enough value in the free version.
After having a positive experience (typically shown
in long session lengths and high engagement)
with the free version of the app, some users will
want to unlock extra features and functionality
such as additional game levels in Angry Birds, or
the ability to “swipe” in different cities with Tinder.
It is important that your users understand from
the description of your app in the App Store that
the free version doesn’t provide the full suite
of features, so that they are not surprised post-
download.

5. 5 Strategies for
Mobile App Monetization
clevertap.com
In-App Purchases
In-app purchases can be physical or virtual goods,
often associated with m-commerce and gaming.
Purchasing of services is also considered an in-
app purchase, which is becoming more common
as the on-demand service (Uber, ClassPass, etc)
category continues to grow. In gaming apps,
in-app currency purchases can be converted to
extended playing time and in-app upgrades can
unlock additional levels. In-app consumables are
common in productivity apps, such as paying for
additional sleep monitoring features.
If you are exploring integrating in-app purchases,
it should feel organic to the users experience,
and add value. When a user has purchased
value-adding features such as additional photo
filters, they will return to use the app more often
to repeatedly receive the benefits of their paid
purchase. When you are marketing your app, be
transparent and make sure the user understands
up front that your app is offering in-app purchases.
Profit margins can be high as there is lower
overhead than selling in a physical store, but
remember that App stores take a cut for virtual
good purchases (but not for physical goods or
services).

6. 6 Strategies for
Mobile App Monetization
clevertap.com
Sponsorships
There are a number of app-sponsorship models
that can work well with relatively low risk to the
app creator. One avenue for sponsorship is to
partner with a brand advertiser, who can offer
your user rewards if they have completed certain
actions in your app, such as finishing a survey.
After the user has fulfilled the number of points
required to achieve the reward, the brand gives a
% of that reward price back to the app. Sponsored
content is another option, where brands can
sponsor limited in-app purchases, or co-brand
skins or games within your app. These types of
sponsorship models will become more viable as
you develop a large, highly engaged user base.
Ideally, these sponsorships should add value to
your user’s experience, and incentivize them to
continue engaging with the app.

7. 7 Strategies for
Mobile App Monetization
clevertap.com
Paid Apps
Apps can charge to download their app starting
at $0.99. The most important factor in achieving
success with this model is to establish the value
of your app right away with five start ratings,
a strong description, rich designs, and standout
differentiating features from your competitors.
After you have shown the potential user that your
app is worth a premium, think about pricing your
app higher than your competitors to associate an
increased level of perceived value. A higher price
point, coupled with a high quality listing in the app
store, can place your app above your competition
in your user’s mind.
The benefits to offering a paid app is obviously
the upfront revenue earned with every download.
Also, as the user has paid for the app, they are
more likely to use the app on a regular basis to
maximize the value they expected to receive when
they purchased the app. In addition, most paid
apps do not include advertising to maintain the
quality user experience. These qualities are great
for increasing user engagement and retention. The
drawbacks to offering a paid app are that the Apple
store takes roughly 30% of the revenue earned
from downloads, and it can be a barrier to potential
users in the crowded marketplace of many (often
free) apps.

8. 8 Strategies for
Mobile App Monetization
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Subscriptions
Subscription-based apps charge a subscription
(typically monthly or yearly), and are generally
the best fit for service-based apps. An example
of a company that uses this model successfully
is Ancestry.com, which offers two different tier
levels for subscription, providing their potential
subscribers a choice. Other apps allow users for
limited access to content – gated content – but
with the premium subscription pricing the user has
access to the full level of content. This is a great
way to offer users a taste of your services, and
encourage them to pay (on a recurring basis) to
access the full suite.
SUBSCRIBE

9. 9 Strategies for
Mobile App Monetization
clevertap.com
Commissions
Some apps charge a commission for the
transaction that happened via their app. Digit is
a new app that utilizes this model. On a regular
basis, it deducts anywhere from $5-$50 from it’s
users’ checking accounts and places them in a
savings account. Instead of this savings earning
interest, Digit takes this interest amount as their
commission fee. The company is motivated to
want to not deduct too much from the users
account so that they won’t pull that money out of
the Digit savings, but they also want make sure the
Digit savings balance grows so they can continue
to earn their commission fees. Another example
is Airbnb, which charges a 3% host service fee as
well as a guest service fee every time a booking is
made via their site or app. These relatively nominal
fees encourage repeat customer purchases for a
service that could not be transacted as efficiently
without the use of these companies.

10. 10 Strategies for
Mobile App Monetization
clevertap.com
Author - Kara Dake
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