Mobile app monetization is a must for most of today’s mobile apps. Given the sheer size of the mobile app market, mobile app monetization has almost become a science in its own right with various tactics you can use not just to secure visibility to your mobile apps, but also to make money out of them. Unfortunately, due to somewhat clogged market, mobile app monetization has become very hard and you will need a lot of patience, diligence, knowledge and creativity to create an actionable monetization model, one that brings revenue both long and short term.
During the last four years, we have worked with many people who were both successful and unsuccessful in monetizing their mobile apps. Being a digital marketer myself, mobile app monetization is one of the areas that shines the most when it comes to various marketing tactics. Although this guide can’t cover all the mobile app monetization models out there (like I said, it’s incredibly complex), it will give you enough insights to get you going so you can hopefully get the most out of your mobile apps.
In it you’ll learn:
a) The importance of planning for mobile app monetization before development.
b) What the most popular mobile app monetization strategies are and how to put them to use.
c) How to break the barrier and think outside the box when it comes to mobile apps and games monetization.
Mobile app monetization is the process of finding a suitable and sustainable bankable model that will help you earn money out of the mobile app you developed.
Unless you have been living under a rock for past couple of years, you must have noticed that mobile app development has become a serious business. Some mobile developers have become rich overnight and we all know what that means. When something can turn you rich overnight, everyone wants to do it. This has quickly lead to market oversaturation.
Enormous amounts of money that some apps have brought to the table can trick inexperienced developers into thinking that mobile app monetization is an easy task, but it’s not. Like I said numerous times on this blog, developing something isn’t where the work stops and modern developers should think like business developers. This is the 21st century software market we’re talking about.
Mobile app monetization is a difficult task and you should take it seriously if you want to achieve desired results. Even then, nobody can guarantee you success.
Mobile app monetization assumes that you have a clear understanding of what your app currently is and what you want it to be.
I hate it when I have to state the obvious, as everyone will tell you to plan beforehand, but this is something that can’t be stated enough. You need to have a plan.
Unfortunately, a lot of people tend to overlook and underestimate the importance of planning. Planning your mobile app monetization should be of utmost priority to you and it should be as detailed as possible. Actually, the plan itself should be so good that you could even monetize the plan itself if you wanted to.
A lot of developers fall into the trap of building first and monetizing after. This is problematic as it undermines the importance of mobile app monetization planning.
It is important that you develop your mobile app monetization plan even before you actually start developing your app or in the early stages of development. A lot of your app’s core features will depend on the monetization plan and vice versa so it’s important that you have that figured out.
I know that a lot of developers display certain disdain for this sequence of doing things, thinking that it puts a lot of restraint upon them. I call this bullshit. The fact that you’re trying to make money out of it means that you should start thinking like a business developer and that includes the dreaded marketing and planning. Mobile app monetization plan means that you should:
Having a plan forces you to look at the development process from another perspective.
It helps you decide how your app should look like and how it should function. Knowing your audience will help you adapt your monetization model to their specific profile, their wants and their needs.
Defining your target audience not only helps you develop the mobile app monetization strategy but it also allows you to market it accordingly. Users not only spend their money but also.
You will have to model your mobile app monetization strategy according to your target audience. The difference in tolerance threshold when it comes to ads varies greatly across various demographic groups. For example, using ads is ok if you are developing a casual app aimed at teenagers but common reason alone tells you that this isn’t the brightest idea to have glittery ads flying all across your serious B2B app. Knowing your audience and your app/game will help you make easier development decisions and, ultimately, it should make it easier for you when you face the hardest question of all – should you go free or paid?
Deciding whether you should go free or paid is probably the biggest mobile app monetization decision you will face. It’s a decision that will have profound impact on how the app behaves on the market and it influences how your app or game will behave in terms of available features.
As I mentioned in the previous chapter, this should be an integral part of your mobile app monetization strategy and needs to be decided upon even before you really start developing your app/game. There are two reasons to do this:
Make your life easier and figure out the mobile app monetization strategy on time. It’s a two-way relationship that shows just how important preparation is.
Each one of these model has its strengths and weaknesses and the sheer amount of available mobile app monetization models just makes the decision harder. Not only is every model fundamentally different in terms of how it’s used, not every model fits every mobile app or game. If you want to get the most out of your mobile app or game, you will have to use the right monetization model for the right kind of product.
Disclaimer: There are no strict rules regarding mobile app monetization as every app or game is unique and draws unique crowd with unique preferences and unique consumer behavior. Most of monetization strategies are purely anecdotal and you should make the decision with a grain of salt. You are welcome to experiment and see what works for you. My oppinions laid out in this article are based on the analysis of hundreds of various mobile apps and games, and while some of the strategies might not work for you, they are strategies that work for most people most of the time.
Luckily for you, this decision isn’t hard as it used to be. The sole reason – everyone is going for the free-to-use business model these days. Let’s look at the numbers. As of this day, according to appshopper, out of 200 top grossing iPhone apps, only eight of them are paid apps. Among those seven apps, only two crack the top100 list and only Minecraft: Pocket Edition barely cracks the top20.
The fact that most of apps and games nowadays are free to use doesn’t mean that you should automatically opt for the free model. True, it is the most popular mobile app monetization model at the moment and it will probably remain the most popular for a very long time, but paid model will not go down without a fight. It’s still a go-to model for many apps and games, especially high quality ones. No matter how much momentum the free-to-use model gains, there are still thousands and thousands of paid apps and games, some of which are making serious money. Don’t be fooled by various top100/200/500 ladders. While it’s hard for paid apps and games to enter that company these days, it’s hard to enter that company in the first place, even for free apps. This exclusive company shouldn’t be discouraging. It should inspire you to join it. Proceed cautiously and be smart, picking the model that works the best for you.
As I already mentioned, paid apps aren’t the go to model nowadays. There are various reasons why this is so. If you look at your average user, the lifespan of average app or game is very short. They often install numerous apps and games at once, give it a shot, get bored quickly and delete them. The mobile app market has become cluttered with thousands and thousands of apps that make it hard for average developer to monetize a paid mobile app.
Simply put – users just don’t want to pay money for something that they will use casually for a day or two and delete it afterwards, not unless they get really high levels of utility from it. While most of authors tend to call the paid model dead, I disagree with this statement as there are numerous apps that prove otherwise. It is true that this monetization model isn’t as viable as it used to be, but it’s too early to call it dead.
The real question you should be asking yourself here isn’t “is the paid model dead?” but “is the paid model the best model I can use to monetize my mobile app or game?”. The answer, as always, is – it depends.
If you ask me, there are two questions one must have in mind when considering paid mobile app monetization model.
If the answer to at least one of these two questions is YES, it would be wise for you consider the paid model. It doesn’t mean that you should use that model, but you should at least consider it.
First of all, let’s consider the pros of this model in relation to free model:
Bear in mind that going paid means you’ll have to develop a quality product. The quality of your product will be a judged a lot more than the quality of a free mobile app or game. After all, the users paid for finished product so it’s perfectly normal that they expect it to look and behave like it’s finished. Their patience threshold concerning various bugs is inversely proportional to the amount of money they paid for the app or game. If you’re not going to make absolutely sure that the quality matches user standards, don’t even think about going paid.
Now, let’s see what it takes to successfully monetize a paid app.
First, let’s take a look at eight paid apps that somehow crawled their way into the top200 and see what do we have there:
True, this is a small sample, but looking at 200 top grossing PAID apps enables us to put things in perspective and see the bigger picture. Here are some of my conclusions concerning monetization for those who wish to pursue paid model.
Paid model goes relatively well with mobile games, especially mobile ports of big name PC or console games. It is a good monetization option to consider if you are developing a high quality mobile game that provides players with quality, bug-free, gameplay and content that most of other mobile games can’t provide.
This is a suitable monetization mode for serious games, or just for games that offer an innovative concept to the player. Since developing such games usually takes a lot more time, effort and resources, going paid is a good way to recoup the losses. It’s not a good monetization strategy to use with casual games as they are called “casual” for a reason and an average casual player isn’t really too keen on paying for a game that will most likely be deleted in two days.
Also, various free to play monetization tactics are better when it comes to casual games, but I’ll talk about that later. It enables ad-free, complete gameplay that is mandatory for a game that takes itself seriously. Imagine playing Silent Hill and having ads popping out every couple of minutes. That wouldn’t be so fun and scary, don’t you agree? If the game you are developing is being played just for fun or for a quick time killing, having paid content and/or ads isn’t so bothersome for the casual player. Again, as I mentioned before, this is a decision you will have to make by yourself, but if you are looking to develop an immersive, quality game that offers exceptional GAMING experience, going paid seems like a good decision.
In case you decide going paid, absolutely make sure your app works exceptionally well and is well tested, as there is no room for errors and bugs.
Compared to free apps and games, paid ones are much more review-dependent, meaning that your paid app or game will be judged by the reviews more than apps and games that are free to use. Make sure do everything it takes to get the best possible reviews. Also, make sure to talk to your audience. Answer their complaints. Acknowledge their praises. Create a culture where the users know that you are listening to them and that you are willing to admit and correct your mistakes.
If someone downloads a free app and finds it shitty, he has relatively low incentive to write a review because it was free so who cares, right. If someone pays $15 for an app and finds it shitty, expect a shitstorm of biblical proportions to be heading your way. Free app developers do get second chances. Paid app developers don’t. Remember – the users are ambassadors of your app/game. Treat them that way.
Make sure to provide them with as much valuable material as possible. Include attractive screenshots, vivid descriptions, gameplay footages, etc. If you expect users to pay in advance, at least make their decision easier. Work on your promotion. You should provide users with as much relevant and valuable information as possible.
Put that limited amount of space to best use for promotion. Not a lot of users decide to spend money on apps and games (compared to free variations) and they will make sure to gather as much information as they can. Go out there and help them.
Be careful when developing social apps as the paid app strategy isn’t the best you can use when dealing with this kind of apps. It does work pretty well with social apps that aim at specific target niche group, but that’s the only case of paid model being good model for paid apps that I can think of.
Let’s say you are developing an app aimed for Harley Davidson owners. Yeah, sure, you could charge for that. Maybe you are developing an app that only rich kids or fishermen will use. Charging for the app would be a good idea. You are targeting a specific group here – a group that expects a good value for money so, as always, make sure to provide them with specialized and relevant content in case you decide to go paid.
Specific target groups expect specific utility from your social app so, in order to make them pay, use that to your advantage and include features that other social apps don’t have. If there is a reason for them to pay for a social app that they will benefit from (professionally, for example), they will, trust me. Let’s say you are developing a social app targeting hunters – for a group that gives big amount of cash for various tools that make hunting easier and more enjoyable, paying $3 for a social app that connects them with other hunters and provides them with relevant content is a bargain. Specific target groups that benefit greatly from specific features of your apps will pay, but bear in mind that most of social apps rely on monetizing large numbers of users. So, if your goal is to develop new Instagram – don’t even think about going paid. Choose free instead.
If you are developing some kind of a B2B app, paid is usually the way to go, especially if it’s a niche B2B app we’re talking about. Almost all (if not all) of its users will use it ease or improve their own business and they won’t be counting every penny nor do they have time or patience to fuck around with various ads and payment options. Keep it simple, keep it useful and keep it relevant.
If you are just starting out, paid model probably isn’t the best for you as modern users are suspicious about new developers, on top of being reluctant to spend money. That being said, if you are sure that your app or game has potential and is going to be high in quality, feel free to go paid, but for the most part, new and inexperienced developers should make their apps and games free and pursue some other mobile app monetization options. Once your name gains some weight to it, it will be easier for you to go paid as your name will start selling itself.
As I already discussed, going free is the go-to mobile app monetization model for most developers. In a world where, well, everyone has a smartphone, apps have become a sort of fast moving consumer goods so it’s not surprising that most of the users just don’t want to paid for something that they use casually or something that can easily be replaced with a free alternative.
Consider this – why would anyone want to pay for your flashlight application, even if it costs just 1 cent, if they can get one for free? What? Your flashlight app is ad-free? Don’t make me laugh.
See, as I mentioned before, it’s all about the kind of content you’re offering and the amount of utility users are getting from it. If the app they are downloading is used for fun, like an app that mimics the sounds of guns being fired, the users aren’t likely to be bothered by various ads. The same goes for ultra casual games which they play just to kill some time.
If you plan on developing a casual Tetris rip off, monetizing it by putting a price tag on it isn’t the best idea. Sure, you could get a download or two, but the majority of users don’t get the level of utility needed to make them pay, nor do they seem to be bothered by ads or paid content in games such as this. As a general rule of thumb – if you are aiming at casual, heterogeneous, userbase – go free.
Now that we have that figured out, let’s see what “going free” actually means.
Going free is one of the two most popular mobile app monetization models out there. First model, the paid model, is a natural model of monetizing stuff and has been discussed in the previous chapter. Rather paradoxically, the most popular way of making money out of mobile apps and games is to make them free. Going free means to offer your app or game for free and then use certain strategies to make money out of it. Here is where the fun starts. The sheer amount of variations can sometimes be overwhelming, but I’ll try to cover the basic and most popular ones.
Freemium mobile app monetization model is based on offering apps and games for free, but charging for certain features. Users have access to basic app’s and game’s features but in order to access all of the features, they have to pay. Now, what do we mean by “accessing all the features”? Well, that varies drastically from one app/game to another. Some apps and games just offer a slight glimpse of its possibilities and charge for almost anything. Other apps and games charge just for particular cosmetic content. Some apps (especially games) offer everything for free, provided that you grind meticulously enough.
At this point, freemium is the king and seems to be the most popular mobile app monetization option worldwide. The reason is simple – casual users/gamers get their share of casual usage and those who are in need of higher amounts of utility, well, they pay for it. If there was a certain mobile app monetization model I’d advise you to stick to, freemium would be that model.
Before you decide to go freemium, make sure that you realize that freemium isn’t a goldmine. Developing an app and blindly deciding to charge for some features isn’t how freemium is supposed to be done. Quality freemium mobile app monetization, as any other monetization model, requires you to think of a strategy and stick to it. Again – there are no monetization models that allow you to sit back, do nothing and watch your bank account skyrocket. If you think such a model exists – I think you should stop doing this before it’s too late.
To successfully launch a freemium monetization model, you should fine tune your app or game in a way that you find a right balance of free and paid content. Put too little free content and you’ll have a hard time convincing the users to buy premium content. Put too much free content, and most of them will see the value of paid content as negligible and you won’t earn anything. There are couple of options you can chew over if you decide to go freemium.
#1 If you are aiming at making a social app for heterogeneous userbase, your revenue will most likely depend on its size. I would advise you make all the basic features free to use and leave premium only for those features that serve as cosmetic features. Let’s say you are making a photo sharing social app. Leave all the basic functions free but charge for content such as having custom visual templates or something like that. The main obstacle you’ll be facing here, though, isn’t the monetization model itself (it’s pretty straightforward), but your ability to draw a large enough userbase. Good luck with that.
#2 Don’t overdo it! If you ever downloaded a freemium game you know just how frustrating it can be if the game requires you to pay for every life, star, candy, mushroom or whatever you collect in the game. Sure, Candy Crush is doing the same and they are doing just fine, but let’s be honest here – you are not making a new Candy Crush game. Try to find a good balance between various elements. Don’t charge for every single breath they take while playing your game. Make it challenging and engaging enough that it encourages casual play but requires payment for those who want to spend more than 20,30 or whatever minutes with it.
#3 If you are making a mobile game, please, avoid the “pay to win” model, meaning you should avoid the kind of monetization that makes your game beatable only if you pay for certain features, items, etc. It’s true that there are some players willing to spend large amounts of money just to beat a game or be better than others if the game is multiplayer, but they are not really so common. On top of that, once players place a “P2W” label on your game it’s almost impossible to shake it off. That usually results in huge drop of player experience and leads to drop in active playerbase. Instead of going P2W, make all necessary features obtainable with enough grinding but offer a chance to pay for them if players don’t want to spend time grinding. As for various cosmetic improvements and features – put a price tag on them as they are not an integral part of user experience.
For the last few years, freemium mobile app monetization model has been extremely popular and it rightfully remains so. In-App Advertising comes in as a close second.
What In-App Advertising does is that it removes the price tag from your mobile app or game, thus making it free to use. The monetization part consists of you making income through various ads being displayed to users using your app or playing your game. The ads are usually for other apps and games.
This model is popular as it is fairly simpe to set up and use. Also, this is one of the safest and easiest methods to generate revenue as mobile apps and games are a perfect way to collect enormous amounts of user data, making the ads very effective. On the other hand, apps and games that use in-app advertising are among most popular as they usually offer all features for free at the cost of rather small nuisance that ads are.
Compared to freemium model that gives you free gameplay, but charges for extra lives in case you want to play some more (or you can wait for 2 hours for your life to replenish), in-app ad monetization model works like a glove as it gives you unlimited gameplay in exchange for a few ads. That’s what I call a bargain. Personally, I believe that this model is going to be the most popular model BY FAR in the near future, especially as the advertising part gets more subtle and better integrated.
Like with other mobile app monetization models, in-app advertising is not a goldmine. True, it’s simple, it’s popular, but it’s not a goldmine. It’s usability and effectiveness depends on various factors, such as active userbase, how engaging the apps are and how many ads are displayed during a session. Here are some general tips regarding the in-app ad monetization model.
#1 Make sure that the ads displayed are as relevant to the user as possible. Let’s be honest here – people don’t like advertisement. If they really have to go through advertisement, help them by making sure that the ads they are getting are relevant. Nobody wants to play a medievalesque RPG, running around slaying demons, while being shown ads for prostate pills. So, unless you want your app/game to become tiresome really fast, make them relevant.
#2 Choose the ad placement and timing wisely. The ads shouldn’t be placed in a matter that they are too distracting, especially if it’s a game we are talking about. You don’t want ads to interrupt users/players when they really don’t want to be interrupted. Basically, you’ll have to take care of WHERE and WHEN do you place ads, both of whom are equally important. There is no specific answer to this question, as it depends on the features and layout of the app/game. If you’re developing a mobile game, try to display ads during the completion of a certain level/quest, during “game over” screen, during saving game or similar game elements that don’t have to do a lot with the gameplay itself. Try to avoid ads being displayed during the gameplay because it can alter the gameplay experience so hard that you risk losing playerbase due to your game being overly irritating.
#3 The more user data you can gather, the more effective the ads will be. This is especially true for social apps as they usually require specific user data in order to register and use the app itself. User data can be collected in mobile games, as well, but not as easy and precise as in case with mobile apps. By collecting relevant user data, it’s easier for the ads to target specific audience, thus making them more effective.
#4 In-app/in-game advertisement works wonders for both microapps/games and large, complex games/apps. This may seem paradoxical at first, but think about it. If we are talking about microapps (such as flashlight apps) or microgames (such as Flappy Bird), ads are, basically, your only source of income. Your app or game isn’t complex enough that people would pay for it (well, Flappy Bird was an exception, but you get the deal), nor do they have enough complex features to make them freemium. In case with microgames, this is especially true. Microgames are usually fast paced with player restarting a lot and dying a lot. The game over screen, shown so often in microgames, is a perfect place to place ads as they are not tiresome, nor do they alter gameplay in any way. Large, complex apps are another case of ad-friendliness. This requires a good marketing strategy, though. Going free allows you to reach large audience who will be more than willing to use your app/play your game for free. This requires a lot of tinkering as the costs of development are probably very big, but if used smart and subtle, a lot of ads can be placed inside apps and games without driving users away.
In case you read the whole damn article thinking “when is he finally going to shut up and tell me what to do?”, I’m very sorry, but there are only two answers I can give you and none of them will be really satisfactory as you heard them before:
· I don’t know
· It depends
I guess these weren’t exactly the kind of answers you wanted to see, but that’s the only honest answer I can give. Anyone saying otherwise is either a mobile app monetization god or a liar. The sole purpose of this giant ass article was to explore some of the most popular methods of monetization in order to get a grasp of turning lines of code into cash. While I am no developer, I am marketer who, for the purpose of this article, analyzed countless of various mobile apps and games and this is what I have learned. The more I explored, the more I started to realize that there is no such thing as the universal approach, as not every app and game is the same. They all have serve different purposes and have distinct features that make some monetization models suitable and some utterly useless.
You can use this guide as a source of valuable information and you will probably do good, as it analyzes what the most successful mobile games and apps used as their go-to monetization model. But, if you truly wish to reach the highest levels of monetization, you will need to sit your ass down and think.
What does my app bring to the table? Am I copying someone? Is someone copying me? Are these features revolutionary? Who is my audience? How much money do they make? Will they pay? Are they going to crush their smartphones at the first sight of ads popping out? Are they crazy enough to spend hundreds and hundreds of dollars for additional wheat in my cute farming simulation? Do I have to have ads? Maybe I can put the “donate” button? Are ads really the best solution for my soon-to-go-viral micro game? Am I working on this alone? Are there other people working for me? Can I afford to risk?
These are just some of the questions you will have ask yourself even before you type the first line of code. Choosing the right mobile app monetization strategy for your mobile app or game requires such a relativistic answer that it’s simply impossible to provide a unified monetization strategy. No matter what I tell you to do, you will still need to adapt your mobile app monetization strategy to the specific attributes of your app/game. Think about your users. Become an user and learn how to think like a user. Now, how do you get out the most of them? How to make them pay?
From my perspective, I’d like everything to be free to use. But you shouldn’t give a shit about me. I am your user, so what? Sure, we all like solidarity. If you are a gamer, you know how irritating monetization can sometimes be. But, you are not a gamer now. You are an developer. Maybe you have mortgage. Maybe you recently got married and need to pay for the ceremony. Gamer solidarity won’t feed your kids – you will, so stop giving things for free. Just stop it. It is possible to provide good user/gamer experience while making money out of it. You just have to think. You don’t have to be a scumbag developer to feed your kids the same way you don’t have to rob banks to feed your kids. You just have to think.
Think about core functions of your apps. Does your app/game depend on large numbers of users/players? Think about how you can make the users recommend it to their friends? Maybe luck plays important role in deciding whether people can pass a certain level in your game. How about including some paid power ups to help those who aren’t patient or lucky enough? Find their weak spot. If you aren’t content with acting like a predator, you are probably not too interested in making a living selling mobile apps and games. Yes, you should act like a predator and that’s perfectly ok. Just don’t make the users think that you are trying to rip their guts off (don’t try to rip them off in the first place). The only way of keeping both sides satisfied is to act like a predator with silk gloves. The more time and effort you put into it, the less you can afford to act like a “good guy”. It’s easy to say that gameplay matters when you are a gamer, but if you are employing 20 developers each of whom requires a hefty sum, you will have to do whatever it takes to get them paid. That’s what being a predator is all about. It doesn’t mean you should use scumbag tactics, it means you should be as tactful, prudent and wise as possible to ensure long-term returns. Successful mobile app monetization means you should:
If you succeed at this, I have absolutely no doubts that your mobile app or game is going to be successful. Congratulations, you made it and I am happy for you.
As I have highlighted numerous times throughout this article, paid apps aren’t in the best sport right now and that’s likely to continue during next couple of years. However, I do think that paid apps and games are poised for a comeback. It’s not going to be big enough to make paid apps and games reach the headlines, but I do think that users are slowly beginning to realize that free apps and games are usually costing them much more than paid apps, although that cost adds over time and isn’t visible at first. This has a lot to do with various scumbag monetization models out on the market. True, these models are popular for a reason, but their effectiveness depends on general level of computer and Internet literacy that is, unfortunately, still quite low. As the time goes on, this won’t be the case.
The industry is slowly running out of various scumbag tactics which, if you ask me, is a good thing. This will rebuild the trust in the industry. The image of mobile app and game industry as money grabbing scumbags has gone too far. While I don’t care what that means for casual games and apps, it has most certainly made some developers quit on interesting ideas due to fear of not making enough money to cover the costs of development. The less popular various scumbag tactics are, the higher the content quality has to be in order to draw audience to it and I don’t need to explain why this is a good thing.
While I don’t think that paid mobile apps and games will ever again be a dominant force they used to be, I do think that we are approaching the end of a scumbag era and that’s wonderful. Free model is here to stay, which isn’t a bad thing since it seems that most of the free monetization tactics seem to favor the production of good and useful content that is monetized using subtle and often useful (from user’s perspective) monetization technique.