January 19, 2023

Maximising Revenue with App Monetisation Strategies

So, you’ve made an app and you’re satisfied with how it’s going. Yes, the benefit you get out of it could just be the rewarding aspect of providing a useful app to people that you yourself would use. But, you’re not completely happy with it. Something’s missing. Let’s cut to the chase, it could be even more advantageous if you were bringing in some revenue. 

Now you’re thinking, “what are the best ways to maximise revenue from my app?”. This is where app monetisation comes into the conversation. 

What is app monetisation?

The first thing many people think about when it comes to making money from an app is introducing a download fee, where users must pay a specified fee in order to download the app onto their device. Unsurprisingly, this fee can actually deter many potential users from downloading the app. Say you have two journaling apps, similar in visual design levels. One free, and one that’s $3.99 to download. Before even looking further into the apps, which one are you going to be attracted to the most? Further, about 97% and 94% of apps on Google Play and Apple Store, respectively, are free. Thus, we will not be discussing this strategy. 

App monetisation looks at methods of acquiring revenue from an apps user base. One very popular approach (which I’m sure you’ve heard of) is in-app purchases. But as with many things, which strategy you should use depends on many factors. 

6 App monetisation strategies

Let’s go over 6 different ways to go about app monetisation:

In-app purchases (or, microtransactions)

As is self-explanatory in the name, in-app purchases (IAPs) are transactions completed within the app. Here, the app and some basic features tend to be free. IAPs can take on three forms: consumable, non-consumable, and subscriptions. The first is purchases that are temporary or limited, such as in-app currencies in game apps. The second is a one-time purchase, such as unlocking a premium feature forever. 

The third, subscriptions, is when the user pays a certain price in order to access certain features or benefits for a select amount of time (e.g., every week, month, year, etc). Subscriptions can either be auto-renewable or non-renewable (in other words, the user would have to manually renew their subscription). Further, there could be different tiers of subscriptions, with each higher tier offering more and/or better features. 

An arguably lesser-used form of IAPs is ecommerce integration, where you can also choose to sell physical and/or digital goods on your app. For example, if your app is in the ebook industry, maybe you’ll have a section in the app dedicated to the sale of digital/physical copies of the books. So although these purchases are made within the app, unlike the previously mentioned IAPs, these goods would be external to the app.

Upselling is always something that can be combined with these IAPs. For example, say your user just bought an in-game feature; you can create a “frequently bought with” section just underneath to encourage another purchase. 

The good and the bad

This strategy offers the advantage of convenience for your customers; they don’t have to leave the app to gain access to more content, and it’s effective immediately. However, bear in mind that, if thrown in their faces too much, users may start to feel badgered by all the in-app purchase offers. This could lead to negative experiences with the app, lowered customer satisfaction and loyalty, and more. 

In-app advertising

With a good user base, there will likely be other companies who would like to utilise that to advertise their services/products. In this case, you could offer advertising space within your app. There are a few different types of in-app advertising we can look at, including app banner ads, interstitial ads, and native ads. The main difference between all three is the appearance of the ad in the app. 

App banner ads are those that typically just display at the top or bottom of your screen. Interstitial ads are full screen ads that pop up at natural transition points (e.g., after you’ve completed one activity). Native ads are those that are meant to appear more natural to the app platform. For example, you’re scrolling through your feed on an app and see a post by a company that you don’t follow. Then, you see a small sticker on the post that says “advertisement”. This company paid for their ad to appear as if it were a regular post on your feed. 

Banner ads: Advantages

  • Cost effective and easy to integrate into host app
  • Don’t disrupt user
  • No effects on user retention

Disadvantages

  • Not engaging
  • Relatively lower click-through rate (CTR)
  • Low conversion rate

Interstitial ads: Advantages

  • Higher CTR and eCPM (effective cost per mille, revenue earned per 1000 impressions)
  • Higher engagement due to large size → noticeability

Disadvantages

  • Intrusive to users
  • Can lead to penalties if guidelines aren’t followed
  • Higher bounce rates

Native ads: Advantages

  • Can help build customer trust
  • Higher conversions and eCPM

Disadvantages

  • Difficult to measure performance 

Sponsorship advertising

A good option when you already have a good user base is sponsorship advertising. This is an arrangement where another company is given exclusive advertising rights to your users. In other words, there are the sole advertiser on your platform. This can be done in a number of ways, such as by including the sponsors logo throughout your app.

This method becomes easier as your user base increases, as the deal becomes more attractive to potential sponsors. However, be sure to only accept a sponsor that you think would fit well with your brand and your customer base. 

Advantages

  • Cross-promotion opportunities
  • Brand loyalty

Disadvantages

  • Can be difficult to find sponsors

Freemium upgrades and premium features

Freemium. Great coined word by Jarid Lukin. This is when users can download your app for free and enjoy a basic, free version. Here, they can really test the value and usefulness of the app. If they really like the product, they then can pay an extra price for premium features, whether it be via subscription or IAP. 

Premium apps are similar in that they are free to download; but, they don’t offer a free version. Once a user wants to start using the app, they must pay a price. So, the app’s revenue is directly related to the amount of downloads. 

Freemium: Advantages

  • Gives users opportunity to test the app
  • Can build user trust
  • Scalability

Disadvantages

  • Can ruin customer experience if upselling is too strong
  • Can cause user confusion about what is/is not free

Premium: Advantages

  • Revenue easier to predict

Disadvantages

  • Inflexible to users
  • Can be harder to acquire users

Data monetisation: selling user data

Let’s talk about data monetisation. Data are very insightful pieces of information for which many companies are willing to pay a good price. Data about target audiences is crucial in correctly addressing their needs and wants in the most efficient manner. Thus, if you have user data to leverage, you’ve got gold. I know this sounds a bit unlawful, but as long as you follow proper guidelines, it should be completely safe for you and your users.

There are many different companies/people looking to purchase data: marketers, insurance companies, research firms, etc. As for which data is being collected and how, you decide what you give about your users (warning: only after your users have already given permission for their data to be used!!).

Then, you can sell user data either directly to companies by reaching out to them. Or, you can sell data indirectly, through data aggregators, who essentially summarise your data and repackage it for prime data analysis.

It’s worth noting that the larger your user base, the more successful you should be in selling your data. With data monetisation deals consisting of anonymous data, clients will likely only be interested in buying large amounts of data. Thus, this may be a strategy that should wait until you reach 50 000 daily active users.

Advantages

  • Revenue can be earned from the same user multiple times
  • Does not affect user experience
  • Very high eCPM

Disadvantages

  • More difficult with small user base
  • Risk of detrimental use of data

Conclusion

There you have it. Already with everything mentioned, you can see that there are many different ways and variants to monetise your app. There are even more out there in addition to the ones listed. 

Which one you apply should be reviewed against your goals and the function of the app. For example, if you have a small user base, I would probably advise against sponsorships and data monetisation. Sponsors are much less likely to be interested in working with you if you have fewer users, and selling data may not be very valuable with a small amount of data.

Use these strategies as you please! But, if you’ve already hit your revenue goals and have no have the desire to further expand, at Appic, we can take over and grow your app and revenue even more. 

However you do it, you’re more than capable!

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