App Monetization Strategies: Myth vs. Reality

If you want your app to be a financial success you need to have a clear understanding of the mobile monetization landscape. It is important to have a monetization strategy as part of your plan from the very beginning. While there are a number of app monetization strategies, not all of them are created equal.

This post will debunk some common app monetization myths in order to help you find a strategy that is right for you.

money pricing

  • Myth: The best way to make money from an app is to charge for it.

It would seem that charging money for an app is a good way to monetize it, but recent statistics have shown that, even if intuitive, this model seldom works.  There are a couple of problems here. First, any amount of money creates a barrier to people downloading your app. With the number of free apps available, most potential users will just seek out a free alternative – particularly if the app has yet to gain notoriety.

The second problem with charging money upfront as an app monetization strategy, is that it does not take into account the important metric of user lifetime value (LTV). LTV is the amount revenue a user brings to an app, not once, but across the entire time he uses the app.

  • Myth: I can make the app free, but then charge for everything.

Another tempting option in terms on monetization strategy is a kind of bait and switch. You offer an app for free but once users install, it you charge them for every feature, level, option etc. While this may be an effective way to acquire new users, it is a highly ineffective way to retain them and keep them engaged. You may also want to keep up with dynamic pricing like the ones retailers use according to Techsling. Charging for everything to the point that users begin to feel frustrated or taken advantage of, is a sure way to decrease LTV. When apps make it difficult for users, they will simply find a new one.

  • Myth: Ads disrupt user experience

Here is another point in which the truth goes against initial intuition: In many ways, television informs our opinions about the place and function of ads. Watching television is a passive experience, in which advertisements represent nothing but an interruption of the experience (the ads themselves are neither interactive, nor capable of being acted on in any way at the moment of viewing). Ads placed within apps operate on a totally different logic. No matter what form the ad assumes (see below), the user is in a highly engaged state, primed to act, and capable of doing so. So, far from being an interruption, app advertising when done correctly can become a kind of service for users.

  • Myth: All mobile ads are the same

The mobile advertising world has become increasingly diverse and complicated. What began as banner ads, has grown to include push notifications, rich media, video, and more. This range of offerings means two things. First, there are an increasing number of ways to monetize apps. Second, app monetization strategies need to be smarter than ever, and need to use this range of ads in the best possible way. You want to choose the mobile ad formats that suit your app, and fit well with both its user interface and experience.

  • Myth: I don’t need to localize the ads in my app

In order to take full advantage of the global marketplace of billions of users, and generate significant revenue from your app, you want to appeal to specific countries or regions through localized ad content. To accomplish this, it is important to work with a partner that both understands the mobile ecosystem and has an extensive advertiser network across geos and verticals. By working with a partner with experience in localization and global reach, you increase your monetization through higher fill rates, more carefully targeted campaigns, and higher conversions.

 

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