Mobile Monetization Models – Making Money out of apps

Mobile monetization is a problem that usually bothers every mobile developer out there. Creating a cool app is only the first step in the roadmap of creating a successful application that can be monetized. Choosing the appropriate monetization model for an app is usually one of the most difficult decisions to be made. Mobile developers are looking for more revenue without compromising the user experience and the quality of their app.

We will highlight the most important mobile monetization models that exist out there, focusing mainly on mobile advertising models, which seem to be quite popular among mobile developers nowadays.

Mobile Advertising

One of the most widely used monetization models is mobile ads. There is a big debate going on regarding ad methods & tactics, compromising user experience level, revenue effectiveness, intrusiveness and users drop-off among different mobile ad platforms. Developers are usually overflowed with terms such as eCPMs, fill rates, CPI, CPA, CTR and others. But what are developers actually looking for? Can a current mobile ad platform bring sufficient enough revenue to a developer? Many developers usually try different mobile ad platforms or even a combination of them to find which ones monetize better their apps.

What a developer is actually looking for is:

1) High and efficient revenue

2) Not compromising app’s user experience

3) Easiness of SDK integration

4) Reduce app’s users drop-off

Mobile ad platforms are using a variety of methods and techniques to deliver ads to the users. We will list some of the most important of them here:

·       Banner Ads

Banner Ads are one of the most widely used mobile advertising methods. A banner is placed somewhere in the UI of the app (therefore it usually requires change of the UI of the app). There are different kinds of banners and different sizes according to the monetization platform used. It’s up to the developer to place them in a place within the app that will deliver better conversion rates. Their content varies from text to rich media. Some types of banners include expandable, floating and interactive banners. A few of the top players in this category are AdMob, iAd and Millennial Media.

  

·       Interstitials

Interstitials are usually placed between transition points within or while entering or exiting a mobile app (e.g. the change of a game level, app launch, app exit and others) and are usually rendered as full screen or big popup.  Some of them render videos, images or other rich content. They are usually used to drive downloads of another app, visit a website, show a video and others. These kinds of ads are usually more expensive for the publishers, deliver higher revenue when used appropriately by the developers and get more attention by the users. Well known players at this category are TapJoy, Flurry, LeadBold, and AdColony while Chartboost enables developers to cross-promote directly with other apps, providing them this a way an option to drive installs on their own apps.

·       Offer Walls

Offer walls is a monetization model where users are prompted with a landing page full screen wall of targeted offers that provide users with virtual items/credits/features or levels unlocks in exchange for registration, downloads or others. Some of the key players in this area are Tapjoy, StartApp and {FIKSU}.

          

·       Notification Ads

Notification Ads are one of the most intrusive models widely used nowadays. Users receive a notification for an ad even without having the app open. This kind of model usually pays better for the developers, however excessive use can really end up with a lot of unhappy users of the app. Some of the key players in this area are Airpush and LeadBold.

  

·       Surveys

Surveys as a monetization method for mobile is a new and emerging trend with very promising features. Surveys are rendered as an overlay within the apps and therefore developers do not have to change anything in app’s UI and flow. Since surveys are rendered as an overlay, integration ends up as a drag and drop, one line code activation. Developers are paid for each completed survey through their app. Users are prompted to take a survey in order to get into a draw for a prize. The key player in this area is Pollfish, which claims that surveys deliver revenue up to 20 times more than classic ad clicks.

 

·       Lock Screen Ads

Another emerging trend in mobile ads is ads on smartphone’s lock screen. Users can choose either to engage or not with the ad and if they do so they get paid with real money. One of the downsides of this approach is that these platforms can focus only on Android. Check out key players in this space, like AdLatte.

  

·       Other

There are other monetization models for ads out there that are not listed in this article such as audio ads, capture forms, app icons, caller ads, widget ads etc.

Paid applications

Choosing to follow the paid application approach model, developers have to specify a price for the app that the users will have to pay upfront. Higher price for an app does not reflect more revenue. With a paid app a developer gains a new customer, with much higher expectations than a regular mobile app user, who also expects free lifetime updates. Usually for the majority of the apps users get disappointed easily since bug free operation, or quality app experience and updates frequency do not reflect the purchase expectations. Another notable fact here is that users do not pay for apps from new developers and tend to buy from well-established ones. In addition cross-platform wise this is a model more successfully used on iOS rather than Android platform where users seem to prefer staying on free applications. Finally, it worth mentioning here, that app stores keep a percentage of developers’ revenue for each purchase.

Fremium models / In-App Purchases

The developer provides the basic features of the app for free and then requests a price to unlock the rest of the app functionality or provide enhanced features. In-App Purchases is a flexible model that can be used with free (fremium) or paid apps. Different types of in-app purchases exist. Users use in-app purchases to unlock/proceed to a new level, receive new features, use a new weapon in a game, receive an update and many others. Only quality, useful or engaged apps can be used with this model.

Subscriptions

Subscription model works by distributing the mobile apps for free. User has to login into the app using an account who is usually charged for the service provided. The model works either for delivering live feed data to the user in exchange for a monthly payment fee (e.g. newspapers subscriptions, magazine subscriptions etc.) or for using software as a service. This kind of model is usually used in combination with web solutions, something that usually requires much more effort both on the developer side and on customer/users acquisition.

Choosing the right monetization model for an app, is one of they key choices towards its success. The right choice depends heavily on app’s content, quality and engagement potential. In most cases traction plays a significant role in app monetization. Capitalizing on this traction the right way is one of the major decisions in a mobile app’s monetization strategy.

P.S. – Hosted originally as guest blog at IndpiredMag