Virtually everyone uses mobile applications, and creating a quality product is a great way to obtain additional income. What is the most efficient mobile app monetization strategy for you? Here we outline the main advantages and disadvantages of the most popular methods.
Free application with in-app purchases
In-app purchases are one of the best-known ways of app monetization. The users get access to the basic set of tools and functions; in order to get hold of the whole array of features, they need to pay. This method is often used by mobile game developers as this sphere often attracts novices who want to progress faster and more efficiently. This model can be very lucrative, however, you will need to provide a high download rate as only around 5% of the audience pay something within the app. It means that the app must attract the maximum possible number of users to sustain profitability.
The most direct way of monetization is to set the price for each download of your product. The amount asked should not be very high (the average market price is around 5 EUR). Only the largest and the most well-known companies have the privilege to ask for a high price for their services. In most cases, the purchase is paid for through iTunes or Google Play user accounts. Some companies choose to set up regular payments, which means paying for a monthly or yearly subscription.
App monetization via advertising
This model means the rent of ad banners, as it is done on websites. Sometimes the ads are in the form of offers with internal or external links. The app owners are paid for the number of impressions, banner showings, or on other bases determined by agreements. This monetization tool should take into account the user experience; the ads must not annoy the users, they need to be engaged. The method is relatively simple and does not require a vast advertising budget.
How to choose the right monetization model?
Free application with occasional ads is one of the most popular methods. It is particularly efficient for the users who do not want to pay for a paid subscription. If you go for this strategy, it is important to choose the platform that will manage your advertising process.
For instance, Asgard’s automated advertising platform uses the technology that allows you to obtain the maximum number of impressions due to the mechanism of precise targeting. As a result, the users only see the ads that they are likely to be interested in and their experience with your application stays positive.
Your ad inventory is sold to the advertisers with the help of technology used in the ad exchange networks. The whole process takes place on a real-time basis (RTB – Real Time Bidding), which means that the ad space is granted to the advertiser offering the best price. The programmatic advertising algorithm fully automates the process and takes place within seconds.
There are several viable business models for mobile applications, however, the strategy choice should be well thought over as it influences the rates of your app revenues.