This document discusses various monetization models for mobile apps, including paid apps, freemium, free-to-play with in-app purchases, advertising, and referral networks. It provides best practices and examples for each model. The key takeaway is that blended models are becoming more common, and developers should adapt strategies to each individual app rather than relying on one-size-fits-all approaches. Advertising is the most popular revenue model currently, while in-app purchases tend to be most profitable, especially on iOS.
4. Paid
You charge a pre-determined fee for downloading and using your app
When to use this:
● Offer superior content, tools or
experiences that users covet and are
willing to pay for
● Typically productivity tools, high
quality entertainment or experiences
powered by proprietary
content/tech/data
Examples: MS Office, Adobe Photoshop, Monument Valley, Minecraft, HBO Now
5. Paid
Best Practices:
● The key to finding success with this model is in your ability to showcase
the perceived value of your app with a killer app listing (which includes
screenshots, five star reviews, etc.) that differentiates it from similar free
apps.
● Pricing should be based on value to your customers and their willingness
to pay
● Determine One-time vs. Subscription model based on your product
consumption pattern and expected customer support
6. Subscriptions
This model is best suited for service focused apps and allows brands to earn
revenue on a recurring basis - eg. news, lifestyle, and entertainment apps since
they can limit content like articles read or videos watched.
Freemium Subscriptions (Paywalls) - business model is similar to the
freemium model except that it focuses on gating content, not features. Paywalls
allow an app user to view a predetermined amount of content for free and then
prompts them to sign up for a paid subscription to get more.
Example: Umano - allows users to listen to a limited number of stories until
they sign up for a premium subscription
7. Freemium
You provide a subset of your features or capabilities for free and charge for the
others
When to use this:
● You user needs and willingness to pay vary from feature to feature
● You expect your user needs to grow over time
● You can slice your product by feature bundles or levels of capability
Examples: Evernote, Parse, Slack, BitBucket
8. Freemium
Best Practices:
● Segment by capabilities instead of features to give users a taste of your
entire feature set
o Example: BitBucket offers all the features for free for a limited number
of users, vs. Evernote offers limited number of features in free tier
● Have no more than 3 tiers for simplicity
https://bitbucket.org/plans
https://evernote.com/pricing/
https://gamecommerce.slack.com/pricing
9. Free-2-Play with In-App Purchases
You offer your full-featured app for free for everyone to use.
When to use:
● Your app has broad appeal but
willingness to pay varies significantly
across your users
● You need network effect to drive
growth and retain your core audience
Examples: Most games - Clash of Clans,
Candy Crush
10. Free-2-Play with In-App Purchases
Best Practices:
● In-app purchasing should be optional and
not necessary to derive full benefit of the
app
● Typically 90%+ of the revenue is
generated by <5% of the users -
Understanding and balancing the needs
of these diverse segments is key
● Promote purchases that reinforce and
tighten emotional appeal of the app to
your core audience
Examples: Crossy Road characters
11. Advertising
Free, But With Ads (In-App Advertising) - You make money by selling data-
driven advertising space in your app. You can do this independently or work
with a mobile ad partner.
When to use:
● There are no organic opportunities for in-app purchases in your app
● You regularly collect preference data about users
● Ads won’t take away from your app UX
Examples: Most apps
12. Advertising Types (1 of 2)
● Search
o Keyword intent based
o CPC/RPM/CPI models
o Best in monetization
o Providers: Google, Bing, Yelp, etc.
● Display
o Brand-awareness primarily
o CPM/CPV/CPI models
o Quality & monetization varies widely
o Providers: Google, iAd, MoPub, etc.
13. PlayAds™ from GameCommerce
15 sec game-like ad experiences where
users interact with brands and products
★ Fun
★ Engaging
★ Rewarding
● 5-10x higher user engagement
● Platform to generate ad-creatives at
scale
● Available on iAd
www.gamecommerce.com
14. Advertising Types (2 of 2)
● Video
o Suited for long-form or MM content
o CPV (some CPI)
o Better monetization than display
o Providers: Google, AdColony, Vungle, etc.
● “Native”
o UI Native vs. Truly Native
o CPM/CPC/CPI
o Monetization still nascent
o Providers: Facebook, Outbrain, Twitter,
Amazon, Yahoo
15. Advertising
Best Practices:
● Relevance is the core of successful advertising. Better revelevance ->
Better conversion -> Higher Prices
● Quality > Quantity
● Localize your advertising to make it more relevant using technologies like
beacons, Wi-Fi, and GPS - allows real-time mobile ad targeting that
connects to real-world customer experiences.
● Clearly mark ads as such
● Don’t let advertising wreck your app - don’t use intrusive ad formats that
interrupt the core user experience
16. Referral network
Sponsorships (Incentivized Advertising)
You partner with advertisers, who provide your users with rewards for
completing certain in-app actions. In this model, brands and agencies pay to be
part of an incentive system. Your app earns money by taking a share of the
revenue from redeemed rewards. This way, you can incorporate advertising
into your app that actually enhances your app’s ability to engage users.
When to use:
● Potential advertisers would benefit from funding rewards for your users,
who earn these rewards by engaging more with your app.
Examples: RunKeeper uses incentivized advertising to motivate its users to track their running
activity with their app to unlock exclusive rewards and promotions.
17. Referral network
Pros
● Innovative app business model which can be adapted for many verticals
● This advertising strategy will likely be better received by app users because it is relevant and related to an app’s
purpose
● App developers and marketers earn revenue, advertisers get more ad space, and users benefit from free promos
● This form of advertising can be aligned with your app’s conversion funnels
Cons
● Mobile marketers need to be careful about what actions they incentivize within their app (Apple has been
cracking down on incentivizing downloads and social sharing)
● This app business model has not been as thoroughly tried and tested as the other ones (results and success
may vary)
18. Out-of-app
Advertising
The Lock Screen is the only screen
users see 35-100 times /day
How it works:
● Users opt-in from within the app
● Award virtual goods daily to
users who opt in
● Users can opt out at any time
● Publishers earn up to
$0.25/user/week
19. Lock Screen User Experience
New content every
time device is put to
sleep
Users swipe right to
unlock as usual
Or swipe left to
engage the content
and deep-link into
app
20. Statistics
● Apps Are Trending Towards
Blended Models
● Advertising is now the most
popular revenue model for
apps
● Subscriptions are the most
profitable
21. iOS vs Android
For Mobile Monetization, Choose Android for Ads and Apple For In-
App Purchases
● iOS users are 32% more likely to make a purchase, and spend
10% more than Android users.
● iOS users spending 45% more the Android users on in-app
purchases.
● Android typically generates more engagement per app - users
will start more app sessions per month (on average by 17%).
22. Summary
As the app landscape becomes more sophisticated, we should expect to see a
trend towards more blended models. For instance, you can start with a “free,
but with ads” model and then offer users a paid upgrade to an ad-free version,
which is a “freemium” approach.
The end lesson here is: don’t just do what others have done before, adapt and
iterate on each app monetization strategy to make it work for your app.
