Do you have a great idea for an app? Of course, you do, so do a hoard of other people. But the question here is, how do you get past the others to build the next hi-tech fortune? Here’s a tip—learn ways to monetize mobile apps.
As Paul Kafasis, CEO of Rogue Amoeba, aptly puts it, “The App Store is very much like the lottery, and very few companies are topping the charts. It’s a hit-based business. Much like music or book sales, there are a few huge winners, a bigger handful of minor successes, and a whole lot of failures.”
But hey, there’s not too much to worry if you go the right way about it. Here’s what you need to do: build a free app for a start. It may sound counterintuitive, but free apps trump paid ones any day.
1Weather, Evernote, and Groupon are just some of the many top grossing free Android apps available on the Google Play Store according to Android Authority. But what keeps them up and thriving?
Read through this blog post to find out how–in a market where a majority of users expect their apps to be free (believe it or not, 90% of apps are available for free)–app creators recoup their expenses, monetize mobile apps, and manage to strike gold.
Developers are increasingly turning their focus on targeting enterprises, even more than targeting consumers, and have been using third part tools for greater financial gains (read monetize mobile apps) that often results in sophisticated business development.
From porting apps to various platforms to providing killer sales pitches for garnering sponsorships, app developers are giving it their all.
7 Ways to Monetize Mobile Apps
In-App Purchases (IAPs)
It is generally observed that pricing an app low does not earn as much as it would if it was offered for free and then later charged for in-app purchases.
In-app purchases allow users to unlock features or purchase more of something, maybe coins in a game or stickers in an instant messaging app. While building an app, you can decide whether you want the IAPs to be a one-time event (where users unlock additional features), or an ongoing process (where users purchase goodies or coins, as within a game). This form of the revenue system is fairly rewarding, but you need to have a spectacular app to justify those purchases to your users.
A strategy of “freemium upsell” is gradually gaining popularity, that will help you monetize mobile apps better. The apps are free to download but come with limited functionality, which means, a user needs to perform IAPs to experience an app to its fullest.
We are talking about a love–hate relationship with ads here; a gold standard to monetize mobile apps.
The simplest way to “monetize” a free app is to include some advertising that mostly involves promoting other games or apps available on the app stores. It is also an accepted norm to offer a free ‘lite’ version of your app along with its upgraded HD version, sans the ads.
Mobile ad networks, such as AdMob or even Google’s own ad-serving service, offer easy integration with apps: just install the ad network framework, and let it rip. The good news is, mobile advertising is predicted to grow to $17 billion by 2018. So, jump into the game today!
Though, advertising pays differently for Cost-Per-Click (CPC) and Cost-Per-Thousand Impressions (CPM). They also depend on users’ countries of origin (even time of access to some extent) and the format used in the ads (videos fare better than static ads).
Some common ad format types:
- Interstitial ads: Full-screen pop-ups
- Banner ads: Sits either at the top or bottom of the screen inside an app
- Video ads: Automatically played or on-demand
- Native ads: Merge seamlessly into apps
Typically, a developer stands to gain US $10 to $100 for 1,000 views. Let’s break down the math for you.
Ads are usually rotated every 30 seconds on the app, which means if a user spends 10 minutes on your app with ads in it, you stand to earn something between US $0.01 to $0.10, which translates into US $100 per 1,000 downloads.
There are some downsides to monetize mobile apps this way.
Returns follow traditional advertisement principles, it all depends on the ads you get served and the number of people that click on them. Besides, ads can also look terribly ugly and may take up a lot of screen space; remember, app users are increasingly looking for sophistication, so it is safe to remain subtle and actionable with your marketing. Make an effort to weave-in ads into the fabric of your app in a way that it feels like a natural part of it.
As a matter of fact, even you may not like to get interrupted by a highly obstructing whole-page interstitial while shopping online grocery.
Take some cues from the study done to monetize mobile apps based on the screen pixels taken up by advertisements.
CPI Affiliate Income Networks (Cost Per Install)
“Pop-ups,” usually found within games prompting us to buy other games, are a pretty regular feature that dynamically shows up based on the type of apps we usually download.
Cost Per Install is what makes it all happen.
You basically pay a fixed amount to the publisher of your app for every install that you get. These publishers place digital ads of your app across a range of platforms in an effort to boost installation rates. The charges that you need to pay to a publisher (or a CPI company) typically range from US $0.80 to $3.00 per install. For instance, you may need to pay US $3 for every install made and get paid US $1 for making that install happen.
These numbers don’t look all that bad too, at least you are guaranteed a constant trickle of revenue.
Take CPI as a way to increase your user base; It definitely works better as compared to other advertising tricks in this respect. Once you have sufficient downloads, you can monetize mobile apps further by introducing IAPs, subscriptions, etc. Besides, CPI also works as a good gauge of the monetization potential of your application.
This model is mostly adopted by newspaper and magazine apps and is a great way to monetize mobile apps. They are initially free to download but involve subscriptions once you finish reading your weekly quota of articles. The users are prompted to pay a monthly subscription to unlock rest of the contents.
Other apps come with a subscription fee at the beginning itself but involve a kicker: free subscription for the first few weeks. This will at least guarantee your app the required downloads.
Landing a great a deal with sponsors is a great way to monetize mobile apps, besides, it helps add great branding value to your project.
Look for a company that is forward thinking, go up to them and say, “Hey, how would you like to see your name on this app that we’ll promote for you; can I help you with it?” And if they agree, then viola! You may have just struck gold.
Generally, sponsors will be more than happy to promote your app on their websites (which already gets huge traffic), e-mail newsletters, social media, etc. This will help your app achieve the much-needed visibility it needs.
And if nothing works, there’s always a mini pot of cash handy: your friends and family.
This bit’s really important: you need to find out very quickly about your app market and users. Find out if your idea already exists.
Generally speaking, apps tick for two reasons: either they are a ton of fun, or they help solve a problem. If your idea fits neither of the two, then it’s best to reconsider.
Spend time doing some serious digging. Go through your competitors’ apps, and pick up a thing or two about advertising and monetizing successfully. You have to understand what will attract your users the most. Let’s face it, only a fraction of your entire user base will ever click on an add or opt for in-app purchases; over-promoting may even spell death for your app.
You need the perfect coding skills to live up to your audience’s expectations, which can be safely assumed, was not taught that well to you in your schools.
Developers cannot monetize apps if they offer shoddy products to their audiences.
The alternative, an increasingly popular route, is to learn them outside. A growing range of online and real-world code academies can teach you what it takes to build a great app.
A lethal combination of some dazzling ideas for apps and enviable coding skills will make you unstoppable in a world increasingly looking at a “mobile-first future.” Besides, upskilling won’t harm either: if you fail with this idea, you will have your coding skills to fall back on to try out a new one!
There are many ways of generating revenue through apps that have been tried an umpteen number of times already. The important question is, which among them suits your business goals the best?
If your ultimate goal is to promote an already existing business or brand, offering in-app purchasing or advertising may not be the best idea. Since you will already enough capital and a tremendous marketing horsepower; the best thing to do will be to focus on making your app popular among your target customers.
And if your app is a stand-alone product, then it is best to try and iterate all weapons that you may have in your marketing arsenal to promote your business to potential users and businesses.
So get the right skills and capitalize on your ideas fast. After all, smart developers make their own luck!
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