The Complete Guide to app monetization for Publishers

In some cases, learning how to monetize a free app can provide the most return on your investment as a publisher. That's because users are far more likely to download free apps, and when you have more app users, you have more potential ways to generate revenue.

Below, we discuss the following free app monetization methods for publishers and how you can implement them:

• Removal of in-app ads through an upgrade
• App sponsorships
• Using your app for affiliate marketing
• Marketing automation via mobile
• Combining multiple monetization methods

Removal of In-App Ads Through an Upgrade

If you are running ads inside your mobile app, you are already generating revenue through cost per mille/thousand impressions (CPM), cost per click (CPC), or cost per action (CPA). But you can further monetize your app while leaving every feature free for all users.

You can do that by offering to remove in-app ads for users who pay a one-time or monthly fee to upgrade. For the most dedicated users of your app, this may be a great prospect if they would like to avoid intrusive banner ads or interstitial ads while enjoying your content.

Example:

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App Sponsorships

Even in the app development phase, a sponsorship can be a great way to generate revenue and income through your app. There are a few ways to configure sponsorships to monetize your app:

• Ask a company to invest in your app with the promise of in-app promotion of that company's products or services.
• If your app is already developed, ask a company to "sponsor" new or premium app features by paying a certain amount. Then add the company's brand somewhere prominent within the app or specific feature.
• Provide opportunities for businesses to promote sponsored content within your app. You can charge for this service and label the content as "sponsored" inside your app.

Using Your App for Affiliate Marketing

You can break into performance-based marketing by using your app as a vehicle to sell other apps or even products and services. This is called affiliate marketing, and with the right in-app placement of affiliate ads or links and a broad user base, you can generate a lot of revenue without charging app users a cent.

The major app stores like Apple, Windows, and Google offer affiliate programs that compensate you every time someone jumps from an affiliate ad or links in your app to download a different app.

You can also become a member of various companies' affiliate programs and use your in-app content to promote their products. When users click your affiliate link or graphic and go to the company's website and make a purchase, you get a cut.

Marketing Automation Via Mobile

Mobile marketing automation platforms allow you to segment users of your app based on information about their demographics, current location, or in-app usage behavior. Then, they allow you to reach each group of users in different ways, such as through mobile push notifications, emails, in-app messages, and text messages.

But how do you use mobile marketing automation to monetize your app? There are plenty of ways to integrate marketing automation with other app monetization methods:

• Partner with physical businesses. You get a cut of the revenue when your app directs a user near the business to check out a sale or special promotion in person.
• Bolster your data monetization strategy. Use marketing automation segments to generate distinct user groups and information about their preferences and demographics. That data can boost your in-app ad CPMs or be sold to third parties.
• Build sales funnels to target different user segments. Create app content that leads users down paths that match their preferences or behavior and feeds into affiliate ads or in-app purchases.

Combining Multiple Monetization Methods

You can artfully combine several app monetization methods to generate enough revenue while keeping your app completely free for users. This is particularly helpful for publishers who have not yet developed a large enough base of users to make any single mobile app monetization strategy profitable enough.

For example, you could use a combination of banner ads in highly visible parts of your app and affiliate links within your app's content to build out two free app revenue streams. Alternatively, you could combine app sponsorships with data monetization. The possibilities are virtually endless.

We've spent a lot of time talking about how publishers can monetize apps. Now let's talk about how you can reverse that.

If that sounds crazy, it's understandable. But reverse app monetization is a legitimate revenue-generating model for mobile apps.

How Does Reverse App Monetization Work?

At some point, most publishers struggle to grow their app's user base to the level they want it to reach. Even for free apps, getting enough consumer buy-in to make your monetization model profitable can feel impossible. Great content and perfect in-app experiences sometimes just aren't enough.

But what if you paid people to use your app? That would almost certainly help. And it's the basic idea behind reverse monetization for mobile apps.

Here's how it works: users complete a task that is either within the app or recorded by the app. The completion of that task earns them a form of currency worth actual money. And you pay it to them.

As you can imagine, reverse app monetization can generate a lot of eager users very quickly.

How Do Publishers Make Money Through Reverse Monetization?

This is the big question for publishers. You make money through reverse monetization of your app by directing users to complete a task that is beneficial to another company. And then you sell your technology to that company.

A few notable apps have made reverse monetization work for them:

• Sweatcoin. This app pays users in "sweatcoins" to reward them for walking. These sweatcoins are redeemable for real goods like smartphones. The app makes money via several app monetization channels: a freemium model that allows paid users to earn more sweatcoins each day, in-app ads, and partnerships with other companies.
• Lympo. Lympo is similar to Sweatcoin in how it generates revenue, but it actually pays users in a bona fide cryptocurrency using blockchain technology. The goods users can buy with LYM tokens are focused on health and fitness items and sports tickets.
• Bitwalk. Another crypto currency-generating app, Bitwalk pays users in Walking Dollars for the steps they take. Walking Dollars can be used for in-app purchases and exchanged for real money. The company has said it plans to partner with employers to offer Bitwalk to employees as an incentive to keep fit - an app monetization idea that presents a win-win-win to employees, employers, and health insurers.

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How Do You Stay Afloat While Building a Reverse App Monetization Strategy?

Building your own app-based digital currency and paying people to use your app sounds like a great idea - if you have a broad enough user base to impress potential partners who would help you generate actual money from your app.

So how do you stay afloat as you build your app's audience? You incorporate more traditional app monetization ideas for publishers into your app's scheme while paying users from the very get-go.

Sponsored posts and products, classic in-app ads and even data monetization can help you keep your head above water while you build your reverse app monetization strategy to its full potential.

You can be the world's most-informed expert on the "how" part of app monetization. But actually making money with your app involves more than just raw knowledge - it requires strategy.

The first choice to make is which of the above app monetization strategies for publishers is right for you. When you are trying to make this choice for your app, consider the following:

• What do your app's users want to see or not see inside your app?
• Are your users typically in a place where they can afford to pay a monthly subscription or one-time fee for your app?
• How much do users trust your brand or app? Are you trusted enough to recommend products or services to them?
• Does your app have something to offer to other companies that could make them consider partnering with or sponsoring you?
• Are you comfortable recording data about your users and using it to make money?

If, for example, you suspect that your app's users would not appreciate banner ads inside your app, you may want to consider a less intrusive app monetization model. On the other hand, if your users typically do not have a lot of disposable income, a subscription or upgrade model might not work.

Startups help big, new, exciting ideas roar to life. Centered on solutions, startup ideas often pack market-disrupting potential - the kind that can turn fledgling operations in 10 X 10 offices turn into billion-dollar corporations.

That kind of profit-making potential is exciting. It's so exciting, in fact, that many startups completely miss an enormous revenue opportunity inside their own mobile apps.

Focusing on the big idea is great, but when startups don't work out specific, high-performing methods, they miss out on huge monetization opportunities.

For publishers, app monetization means heavy competition and a lot of false starts. But following a few best practices can ensure that your monetization efforts never fall flat.

See How Competitors Monetize Their Apps

When you set out to implement a new app monetization strategy or increase your app's revenue, check out what your competitors are doing.

You don't have to copy them. You probably shouldn't - your app and content are unique. But you do need to see whether they are doing something you haven't considered before. And you need to see whether it's working for them and whether it might work for you.

Keep in mind that your competitors in the mobile app market might be different than your competitors on the internet at large or elsewhere within your industry.

Here are a few strategies to identify apps that compete with yours:

• Search the major app stores for a broad category that would include your app. The most downloaded apps in that category are good contenders to be your top competitors.
• Search the app stores for your app specifically. Your app should be the first search result, but which apps show up directly beneath yours? These are apps that are likely to be highly similar to yours, which makes them potential competitors.
• Read reviews of your app. If you pay attention, you may see reviewers comparing your app to other apps. These comparisons can reveal other apps with similar offerings to yours.

Once you have identified your mobile app competitors, do some digging. Download their apps and see how they're making their money. Do they have banner ads? Are they offering a freemium subscription model? See what's working and what isn't, and let that inform your app monetization strategy.

Balance App Monetization with UX

When you start researching app monetization for publishers, you may find yourself getting excited and eager to try out some new methods. That's great! But even though monetization is critical to the success of your app, don't let it blind you to the importance of the user experience.

UX is one of the single most important factors in whether a user will continue using an app. Of course, you need people to use your app if you plan to generate revenue with it. So, you'll just want to make sure you balance your monetization goals and activities with maintaining a good UX for your user base.

The easiest way to do that is to put yourself in the mind of your typical user.

Is that big, flashing banner ad taking away from their ability to enjoy the game, watch the video ads or read the article? Or does it complement the experience well?

Is that interstitial ad between levels a smooth and comfortable change or is it overly jarring?

The best approach is to measure user engagement metrics as you test new monetization strategies so you can find a way to have the two goals work in harmony.

Test to See Which Monetization Strategies Work

Good mobile apps are light, easy to use, and fast. You need to be like that, too.

You can do that by testing everything to see what works. Stay agile - and maximize your app's revenue - by making changes based on the results of your A/B tests.

As you perfect your app's monetization model, consider A/B testing the following:

• Freemium vs. free trial. Which method converts more free users into paying users?
• Traditional ads vs. sponsored posts. Which method provides a better UX? And which generates more revenue?
• Clicks vs. impressions for ad revenue. Between cost per mille/thousand impressions (CPM), cost per click (CPC), and cost per action (CPA), which gives you a better return?
• Higher prices vs. lower prices. For subscriptions or in-app purchases in your app, is it better to charge more and make fewer sales or charge less and make more sales?

You can A/B test nearly every aspect of your mobile app. And if the answer to any A/B test could sharpen your app monetization abilities, it is worth your time and effort.

Forget About Your Gut — Go with the Numbers to Monetize Your App

It's your app - you dreamed it and made it real - so trusting your gut about how to monetize it makes sense, right? Not always.

If you think an app monetization strategy will work well for your product and user base, that's a good place to start. But let the data inform how you move forward. Do your users actually engage with your mechanisms of monetization the way you want them to? Do you have enough users at this point to make it work?

If the answer is no, your gut was wrong and that's OK. It's a learning experience that will inform your future efforts. For your app to survive and even thrive, go with what the numbers say will work.

Keep Building Your App’s Audience

A publisher's ability to make money through an app is all about the user base. To increase revenue, you have to increase the size of your audience.

That means you can't set it and forget it when it comes to app monetization strategies. Over time, you will naturally lose users, but you won't naturally gain users unless you go viral.

Continually growing your audience is essential to growing your revenue. Publicize your app, run ad campaigns to promote it, and market it on your website.

Pay Attention to the App Stores

Unfortunately, it's the app stores' world and publishers are just living in it. They make the rules, and publishers who want to monetize their apps have to pay attention.

Read the developers guidelines from Apple and Google, and routinely check for updates. Apple and Android both used to favor paid apps as the top app monetization model. Now, pay-to-download apps are often among the least profitable, and both companies recommend models that look more like freemium or subscriptions.

Mobile apps have been around for a while, and they have changed rapidly. But the world of app monetization is still coming into focus. There is no Old World of app monetization - publishers are still mapping the New World, and the opportunity is boundless.

In 2021, we are already seeing cutting-edge publishers take the shaky first steps toward new frontiers in-app monetization.

Here are some examples:

Augmented Reality (AR) App Monetization

The ability to experience an improved version of the world around you has innate appeal, and it's already happening. With early AR adopters like Pokémon GO leading the way, AR has quickly become the hot new app monetization trend in 2021.

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Mobile App Marketing Automation

Automation doesn't so much change the user's in-app experience as it changes the publisher's ability to delegate menial tasks to a computer. The end result is getting more done and having more time to refine your app monetization plan.

In-App Bidding 

The advent of in-app bidding for ad inventory has exponentially increased publishers' ability to make money with their apps.

This technology - in which advertisers can bid on your app's ad inventory, increasing competition, and estimated cost per thousand impressions (eCPM) - is new to mobile apps, but it isn't really new. This is the mobile app version of header bidding, a hugely successful monetization strategy for desktop publishers.

Check out the complete app monetization resource center, or dive deeper into any of the following related topics:

• 10 App Monetization Statistics to Know
• 6 Ways to Monetize Your App with Ads
• 8 App Monetization Strategies to Consider
• App Advertising Cost Breakdown: From Investment to ROI
• App Monetization: Building Your App Advertising Revenue
• Attribution on iOS 14.5: What App Publishers and Advertisers Need to Know
• How to Monetize an App
• Measuring the Performance of Your App Ads: 6 KPIs to Monitor
• Mobile App Monetization: 6 Questions to Ask Before Getting Started
• The Complete Guide to In-App Advertising Revenue Generation
• Playwire's Mobile Ads SDK
• App Mediation: Then vs. Now
• In-App Native Ads with RAMP for App
• Changing the Face of In-App Ad Monetization