posted by Bernd Leger
A well designed app that is useful or entertaining for its audience can garner hundreds - if not millions - of users. But per the nature of the app economy, oftentimes those users don’t directly pay for the product you offer. And if they do, it may not be enough to turn a profit. How do you capture the opportunity in mobile without compromising the mobile experience for your users?
In our upcoming webinar on the monetization of apps, Localytics VP of Marketing Bernd Leger and Director of Customer Success Lee Isensee will teach you how to identify your most profitable customers and achieve monetization with the strategy.
To give you a preview of what you’ll learn in next week’s webinar, here are 3 common ways that app developers are finding success and achieving monetization with their mobile apps.
The first method is the earliest and most straightforward, and that’s paid downloads. Charging users in the app store before they can actually access your app is a good one-time monetization strategy, and it works very well for unique evergreen content like games, books or productivity tools.
There are some disadvantages to paid downloads. First, users who have paid for your app, even if it’s 99 cents, often have loftier expectations and lower thresholds for bugs. There is also more resistance to further monetization methods, as paid apps come with an expectation of that being all there is to the money side of the app.
But the benefit of paid downloads is a predictable, guaranteed revenue per user. It’s very straightforward to report on - my app costs $1.99, I had 10,000 downloads, so my app revenue is $20,000.
If you want a less reliable, but potentially more scalable method of monetization, in-app advertising is a good option. Running ads in your app can impact the user experience somewhat, but it is an excellent choice for apps with lots of new, fresh, updating content like news or social media apps.
The challenge with in-app advertising is making sure your users are engaged. You have to make sure that your content is engaging, interesting and fresh enough to bring users back multiple times. Ad click rates can range from half a percent to five or six percent depending on the offer, so rather than generating a download you have to generate perhaps a hundred ad impressions.
Once your app is engaging, however, there’s no limit to the number of times you can monetize a particular user. While advertising doesn’t have as steady a monetization floor, it also doesn’t have any ceiling.
In-app purchases are a fairly broad method, and can work with a lot of different app types - mobile commerce apps are the most obvious, but publications can sell subscriptions, reading apps can sell books, games can sell upgrades, and so on.
The interesting part of in-app purchases is that, unlike advertising, they are tied directly to what the user is doing right now. For example, they may be skimming through your mcommerce app with sweatpants in mind, so an in-app purchase of sweatpants is extremely relevant to their needs. Alternatively, they may be struggling to complete a task in your game, so a power-up or paid cheat may be perfectly timed and perfectly targeted.
With proper analytics and in-app messaging, you can also increase the rate at which users make in-app purchases by studying overall user behavior.
The downside to in-app purchases is that you have to make sure your app warrants it. Apps that have an in-app purchasing model bolted on incongruously can be awkward and generate little to no revenue. Making sure that your purchase options - and your purchase timing - are appropriate to the user is vital.
How are you thinking about your app monetization strategy? Let us know in the comments!
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