What is mobile app monetization?

Glossary App Monetization

The definition mobile app monetization

App monetization is the means by which app developers and publishers generate sustainable revenue via the user base of an app. Simply put, it’s how an app makes money.

Models of app monetization

There are several app monetization models. These models vary in user privacy, user experience, and cost to developers. It’s an important aspect for app developers to bear in mind when building their apps as the monetization model(s) chosen can affect the user experience (UX), app layout, features, and more.

Many app developers today find success in utilizing a combination of the following app monetization models.

  • Paid apps

in the pay-to-download model, sometimes called the premium model, users simply pay to download the app. This model was previously the most popular model among app developers as the technology needed for the other models had yet to be developed. However, as of January 2022, only 3% of apps worldwide are paid. As most apps are free today, a paid app must establish its unique value to compete in the market.

  • In-app purchases

With the in-app purchase-based model, the app is free to download and use as it generates revenue from the users’ purchase of items, events, or content within the app post-install. In-app purchases (IAPs) exist to enhance the user experience. They vary depending on the vertical—upgrades in a productivity app, exclusive access within a fitness app, or items and unlocks for gaming apps, to name a few. A recent report by App Annie projected that consumers would spend $380 billion globally on in-app purchases in 2022.

  • In-app advertising

In this model, publishers offer free downloads and content to users. The app serves third-party ads during app sessions and receives payment for every ad click, or even impression. For example, rewarded videos are a form of in-app advertising in which a user is rewarded for watching a full-screen ad. The reward can be an app currency, completion of a level, etc.

As in-app advertising enables publishers to keep their content free for users, downloads are generally much higher than paid apps. In-app advertising is often used in the freemium model discussed below.

  • Freemium/Subscription

The popular freemium pricing model allows users to download and experience an app free of charge. Users will always be able to use the app for free, but certain features are reserved only for paying customers. Should a user wish to unlock premium content or remove ads, they’ll need to make an in-app purchase or pay for a subscription.

Spotify is one of the most well-known apps leveraging a freemium model. Users can download the app and listen to its content for free with ads. However, Spotify gives users the option to purchase a monthly or yearly subscription, allowing them to listen to Spotify’s music and podcasts ad-free.

Ready to build your freemium app? Check out How to make a freemium app for further details on this model.

  • Free trial periods

A free trial period of an app is an excellent way for developers to demonstrate the full capabilities of their paid app. Users can download and try the app for free for a set time period to determine if they want to commit to the paid app. For example, Amazon’s audiobook app Audible gives subscribers one audiobook per month with their subscription. Audible offers a 30-day free trial so potential customers can experience their app to discover its value before subscribing.

  • Sponsorships

In this model, an app developer provides sponsorship opportunities to companies by offering them brand exposure within the app. Sponsorships work well for apps with a large user base, but also if an app is widely-known within a niche market as relevant companies will likely be interested in the app’s user base.

The sponsorship model differs from in-app advertising as developers do not need to integrate their app with an ad network to run ads. Instead, the ads are typically more static and further tailored to the needs of the sponsor’s brand. For example, a developer could add a sponsor’s logo to their loading screen.

App monetization platforms

Most mobile app developers select an ad network that also functions as an app monetization platform to help them easily generate revenue from high-quality mobile ads. These platforms typically support developers in marketing, monetizing, and analyzing their apps. The following popular platforms offer a variety of tools for app monetization.

Top app monetization platforms:

  1. Google AdMob

  2. AppLovin MAX

  3. Chartboost

  4. Unity Ads

  5. IronSource

Adjust and mobile app monetization

At Adjust, we help app developers accurately measure in-app monetization with our User-Level Ad Revenue. You can easily view the exact amount of revenue specific users generate, the channels they come from, and other user behavior information. User-Level Ad Revenue provides even more granular insights regarding user engagement with different ads, ad placements, and ad products. This information enables our clients to optimize their user acquisition strategy.

To learn about the ad revenue integrations Adjust offers, check out our Ad Revenue Reporting for further details.

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