$2.4 million dollars.
At one point, that’s the amount of money Clash of Clans (a combat strategy game) made…in a day. That success led Supercell, the game’s developer, to a $3 billion valuation.1
That’s a lot of money. You’d probably be okay with a fraction of that success.
To get there, it’s up to you to create a compelling app that attracts a large, engaged audience. But it’s also your responsibility to use tactics and strategies that will allow your app to produce ongoing revenue.
Monetization is more than just making money with your application. It comprises an evolving, complex set of opportunities to boost your profitability. Advertising is the primary component of monetization, but not the only one. Let’s take a look at how to turn your app into a consistent revenue stream with a comprehensive range of monetization tactics.
Steps to Mobile App Monetization
- Start with strategy.
Without a monetization strategy, driving business success isn’t likely. Application development and monetization need to be part of the same overall strategic plan. Your plan must fit your target audience and overall objectives. What are your revenue goals? Which audience segments do you want to target? Do you want to increase your reach into certain demographics?
- Consider freemium.
Many publishers today use a freemium model, in which the application download is free and there are items available for purchase within the application itself (extra features and functionality, virtual purchases, etc.). This friction-free download model lets you turn samplers into committed, engaged users.From 2012 to 2013, freemium saw 211 percent revenue growth, while paid and paidmium (in which users pay for the app and in-app purchases) declined. Once you have an audience’s attention, there are many ways to monetize it, including mobile advertising, in-app purchases and subscription models.
- Find the right monetization partner.
Advertising within your mobile app is a common monetization strategy, with click-through rates that exceed 12.5% in some cases.2 Since mobile app developers aren’t advertising experts, it’s critical to find a partner that understands both app development and advertising.Are you going to devote some of your app’s real estate to advertising? Are you going to purchase mobile ad space in other apps? The right mobile ad network will be able to help you with both strategies, and will offer features like:
- A brand-safe publisher network to make sure your ads don’t appear anywhere you wouldn’t want them to.
- Deep data sets that enable predictive mobile ad targeting for the highest ROI.
- Stateside account managers who are available when you need them.
- Pick the right kind of in-app ads to fit your preferences and goals.
For mobile advertising, one size doesn’t fit all. Maybe you don’t want your app to display banner ads, but you do want to use cutting-edge video ads. There are many kinds of mobile advertising, and each has its own benefits and drawbacks. Some come with higher development costs than others, but may drive higher click-through rates. You’ll have to find the right mix of ad types to hit your objectives. You may also want to consider native advertising options, where in-line or other native ad types mesh more seamlessly with your application experience.
- Don’t let advertising wreck your app.
If the ads displayed in your app are relevant, attractive, appropriate for your customer profile, and they don’t block basic usability, many of your app’s users may end up tapping on them. But if ads pop up too often in your app, are ugly, block app functionality, or don’t align with your customer profiles, they may actually work against you. Your choice of ad network can play a role here, too: The right partner will help you make sure that your mobile ads are as successful as possible.
- Localize your advertising.
Relevance is the core of successful advertising. Some mobile advertising partners can localize (or hyper-localize) your advertising to make it more relevant using technologies like beacons, Wi-Fi, and GPS. This technology allows real-time mobile ad targeting that connects to real-world customer experiences.Think about it: Would you be more likely to respond to a mobile ad containing a coupon for a certain store if you saw the ad when you were in the parking lot of the shopping center, rather than sitting at home in your bathrobe? Of course you would. And so would your users. In fact, 63 percent of smartphone owners say they are more likely to click on a mobile ad that offers a coupon to a nearby store.2
- Consider advertising outside your application to grow your audience and increase revenue opportunities.
Look into CPI (cost-per-install) advertising, where you pay to promote your app in other applications, leading the audience to install your app. Since the cost of CPI depends on the number of installations the ad generates, the ad network has skin in the game. In other words, it’s in the best interest of the ad network to place your ads where they will be successful—the network only gets paid when someone installs your app.
- Push relevant information outside the app.
Push notifications don’t necessarily generate immediate revenue, but they do improve long-term engagement with your app, giving advertising more time to work. Users who enable push have 88 percent higher engagement and nearly three times higher retention than those who disable it.3
- Explore in-app purchases and mCommerce.
You can encourage users to spend money within your app. This approach works better for some apps than others. If you play mobile games, you know all about upgrades, consumables and in-app currency.Maybe your app isn’t a game, but think deeply for a moment about what you could sell through your app. Examples include extra functionality and tools, enhanced features and deeper content. Aside from their revenue potential, in-app purchases are also great for giving you insight into what interests your users—so you can do more of it.
- Look into offbeat monetization tactics.
Consider some unusual ways to make money. For example, traditional media relies on subscriptions. Could you create a premium subscription model for your app that provides behind-the-scenes information or strategies, unlocks codes, or gives access to hidden levels? Could you develop auxiliary apps that attract new users and drive cross-promotion? Could you “white label” your code (license it to developers who use it as the core of their apps)? Are there opportunities to sell the data your app collects to marketers?
- Optimize your efforts.
It’s much easier to optimize and track your efforts with robust analytics, and a data-driven strategy gives you better results and a better ROI. Learn which efforts are most successful with your audience, pursue those, and your margins will increase accordingly.
Finally, there’s one major consideration to keep in mind. Mobile monetization is an evolving space, with lots of innovation and evidence to help you tune your efforts. You need to keep in touch with trusted advisors who can help you stay attuned to emerging capabilities. There’s no reason your app can’t turn into a dependable revenue generator.
For tips on marketing your app to increase your mobile ROI, download our eBook, App Marketing 101: 12 Ways to Help Users Discover Your Mobile App.