Top Ways to Make Money From Ads in Your App

Remember the ads that appeared when you watched videos on YouTube or the banners that appeared when you visited an online shop? This is how businesses monetize websites. The same applies to mobile apps, whether they are paid or free. Free apps dominate the app market, with 96% on Google Play and 90% on the app store optimisation generating $71.3 billion in revenue. How do apps earn money if they are free?

This article is for you if you are developing or planning to develop a mobile app you want to know more about. We explain below how to make money with an app and how to select one that works for your app.

What is the Average Revenue from Free Apps?

The average mobile phone owner uses around 7-8 apps per day. Only 5-10% of mobile app users will pay for a paid application, while around 98% of downloads and profits come from free apps. This number continues to rise. The majority of mobile users prefer free apps. The number of Google Play free app downloads increased by 16.4% in the first half and generated $41.9 billion in revenues.

Remember the ads that appeared when you watched videos on YouTube or banners when you visited an online shop? This is how businesses monetize websites. The same applies to free and paid mobile apps. The app market is dominated by free apps, which generate $71.3 billion in revenue. 96% are on Google Play, and 90.3% are on the App Store. How do apps earn money if they are free?

Let's begin. How do you choose the right monetization strategy for your app? Check out these tips.

How To Select The Best App Monetization Strategy:

Consider the following factors when selecting the best strategy to monetize your mobile app:

Business goals: Each mobile app has a business goal. This is the way that it solves an issue for a user. Since users interact with apps in different ways, the business goals of an app can impact monetization models. In-app purchases, for example, would not perform well compared to a subscription. A subscription mobile app is also not the best choice for educational apps that have a lot of custom content. You can make the most money if you combine in-app purchases with advertising.

Target audience: Understanding your target audience, especially the paying users (also known as the core of money spenders), will help you determine the best monetization strategy. Create a profile of your app's users and think about what features they may need. Also, try to predict how long they will spend using the app.

Competitors: Each app is designed to solve a specific problem for its users. To find a way to make money with free apps, you should look closely at your competitors and similar apps. You may find that the monetization strategies used by apps in your niche will work for your business.

How do free apps generate revenue? See what strategies you can use to make money with your free app.

What Are The Most Popular Ways To Monetize Free Apps?

You can use one or more monetization models, depending on the type of app and your industry. App monetization includes the following models:

• Affiliate marketing and advertising
• In-app purchases
• Subscribe to paid subscriptions
• Freemium
• Sponsorship
• Crowdfunding
• Transaction Revenue
• Let's now look at each of them in greater detail:

Affiliate marketing and advertising

Seven out of 10 free apps earn money by running ads and promoting businesses. You can use this method to monetize your free app.

• Cost per mile (CPM) is also known as cost-per-impression. You will receive payment for every 1,000 views.
• Cost per click (CPC). When app users click on display advertisements, they receive payment.
• Cost-per-view (CPV). You charge advertisers based on the number of interactions with the ads.
• Cost-per-install (CPI). Cost-per-install (CPI): You get paid every time an app user installs the app that you promote.

How to Monetize Your App?

You can see that there are several different in-app advertising fees and methods for showing ads to users. You can show ads to app users in five different ways:

• Display ads, also known as banner ads, Banner ads appear at the top or bottom of the screen on mobile devices so that app users can use the app without interruption. The engagement rate is low for such ads (0.1%).
• Video Ads. These ads are shown during pauses in app usage and can last between 10 and 30 seconds. This category includes video ads that reward the user for watching the entire ad.

Native Ads. Native ads are seamlessly integrated into an app's layout. They do not cause distractions for the user. Native ads are less annoying to users than other types of advertising.

• Interstitial Ads. This type of advertisement looks like a full-screen popup that appears when the app is opened or closed. The user can choose to close the ad, or click it to find out more information about the promotion.

Influencer Marketing and Sponsorship

The app is more integrated. This is a similar method to advertising, but it is also a form of app monetization. Let us explain. You can also integrate sponsored content and special offers into your app. Find sponsors who have the same audience to make this monetization model profitable. If you are creating a fitness application, you may be able to find sponsors in fitness centres, personal training companies, or websites that promote healthy eating.

Influencer marketing differs from traditional sponsorship in that you are not dealing with a business but rather with a well-known opinion leader within your target market. This opinion leader will then promote your app and bring in new users. Asking an influencer to be an ambassador for your application is another popular strategy used by famous brands.

In-App Purchases

You can sell a variety of products using this model.

• Consumable items that the user can use in the app, such as digital currency or health points.
• Items that are not consumable but can be used indefinitely, like new games, maps, or blocking.
• In-app purchases can increase engagement and keep users glued to their screens. App stores charge 3% of each in-app sale.

Subscriptions

Try making money with free apps by using subscriptions. This model is only effective for 5% of the apps that have high engagement levels, like productivity, educational, music, or video streaming applications. This payment type requires the integration of third-party payment portals, such as Stripe and PayPal. App stores don't charge commissions. App subscriptions work as follows:

The user will receive a 30-day trial to test your app after downloading it for free.

If the user wants to continue using the app after the trial period, they will need to purchase a subscription.

Two types of subscriptions are available:

Non-renewing Subscriptions: When the user purchases an app subscription, it can be for a specific period, such as one, three, or six months. The user will not be surprised by any unexpected charges if they buy another subscription after the period of their current one. This method of app monetization is ideal for seasonal apps, such as those that focus on gardening, sports, or hunting.

If you automatically renew your subscription, the app will charge user fees each month, every six months, or once a calendar year. Users can only access the app after entering their credit card information. This is to ensure they will purchase a subscription following a free trial.

Freemium

The freemium model is similar to a subscription model and allows you to make money with a free app. The app user can use the basic app features for free without time limits. Users must pay a monthly or annual fee to get the advanced app version with more features. Statistics show that only 0.5-2% of app users purchase a premium version. A free version will allow you to reach a wider audience and help your app go viral.

Crowdfunding

It is a popular way to raise money, especially among startups. In North America, crowdfunding generated more than $17.2 billion in 2018. You can raise money for marketing or app development by using one of the more than 400 crowdfunding platforms. These are the most popular platforms to raise funds for mobile app projects.

• Kickstarter
• Indiegogo
• CrowdFunder
• AppsFunder
• You need to follow these steps to launch a crowdfunding campaign.
• Create fundraising goals for the campaign. Your goals should be SMART—specific, measurable, and attainable—as well as relevant, timely, and based on time.
• Create a story that explains what your app does, why you developed it, and the problem it solves. This will help you show the potential of your app.
• Video content is one of the most engaging ways to tell a story.
• Create a campaign webpage where you can provide detailed information about your project to investors.
• Social media can be used to attract investors to your campaign.

Transaction Fees

If your app is in a market segment where people transact money, you can charge a transaction fee to make money. This niche does not include only e-commerce apps but also:

• Apps for booking flights and hotels
• Apps for dog walking
• Apps for ordering meals
• You can also charge transaction fees in other places where there are buyers or sellers. Integration with a third-party API payment gateway is required to charge transaction fees. We recommend app developers for this task, as it requires coding experience.

In a Nutshell

Paid apps are more popular than free mobile apps. Display advertising in mobile apps can be monetized in many ways. Each strategy has a unique user engagement rate, which will result in a different income. Selecting the right monetization strategy depends on your app's niche, purpose, and target audience.

• You can combine several monetization methods to make your app more profitable:
• You can offer a paid version of the app that is ad-free. This will benefit both you and your customers.
• You can combine subscriptions and advertising, or in-app purchases with subscriptions.