How to Choose the Best Mobile App Monetization Strategy

Option 1: The In-App Advertising Model

This is one of the most common — and most lucrative — mobile app monetization options available. Yes, we may be a little biased here, but the data backs us up. Non-gaming apps earn 76 percent of their revenue from native ads, banner ads and video, while gaming apps get 53 percent of their revenue from advertising.

  • Ad-supported apps are, more often than not, totally free to download. This helps to ensure more people likely download and begin using your app, to ensure greater scale right out of the gate.
  • It’s fairly easy to set up. By implementing one or a few ad network and/or ad exchange SDKs, you gain access to ads from the world’s top brands. This makes it much easier to generate revenue early on.
  • It’s profitable. There’s a reason so many of the world’s top apps monetize via advertising.
  • It’s flexible. There are many different flavors of in-app advertising, enabling you to determine how ads appear, what they look like and when they show up. For example, while a gaming app may like having rewarded video ads appear after key levels, native advertisements are often well suited for news apps.
  • It’s universal. Just about any type of app can be monetized through advertising.
  • It’s recurring. So long as an app has users, it can continue to generate ad revenue.

Option 2: The Freemium Model

With a freemium app, most of the app’s functionality is totally free to use, and likely the app itself is free to download as well. But, in order to unlock additional elements or features, in-app purchases are required.

Option 3: The Paid Download Model

This model is fairly straightforward: someone pays to download the app. The benefit here is that you earn money upfront for user access to the app, meaning lifetime value and user retention have less of an impact on the bottom line. Games, especially those from big-name publishers, will utilize this model, as will premium utility apps like high-end fitness trackers and business-centric apps.

Option 4: The Subscription Model

Under this model, users are asked to pay a recurring fee either for use of the app in its entirety or for particular features. Magazines and news publications have long operated under a similar model, which is why it’s popular with the likes of The New York Times and The Wall Street Journal. Apps that work well with the freemium model and the paid download model can make subscriptions work too, as a similar pay-to-play functionality is being offered.

Option 5: The Facilitation Model

This isn’t an official name, but it’s one way to describe apps that facilitate a purchase or another transaction even though they’re typically free to download, don’t feature ads or have in-app purchases. Ridesharing apps like Lyft are a good example, as are banking apps. Just about all of the apps behind the growing gig economy fall under this umbrella.

Option 6: The Combination Model

We’ve presented each of these models as an either/or proposition, but that’s not necessarily the case in real life. Many apps will utilize a combination of options. After all, a pay-to-download app could still have a subscription feature, while another app could feature both ads and in-app purchases. A combination can help an app generate additional revenue, but having too many ways to make money in one app can be off-putting to users.

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Matthew Kaplan is the Content Marketing Manager at InMobi (www.inmobi.com)