Market Data

Best Practices for App Monetization

App publishers are constantly seeking new methods to improve their app monetization. The app publishers who capitalize on the leading app monetization strategies in the multi-billion dollar app industry will see massive revenue gains. In March 2014, App Annie and IDC evaluated the current and future state of app monetization in a comprehensive 38-page report, detailing the latest app monetization trends that will shape the industry.

In most cases, an app monetization strategy varies from one app to another. In other words, there is no silver-bullet app monetization strategy. In our report, we revealed that the freemium business model drove a disproportionate volume of app revenue across both the iOS App Store and Google Play. But that shouldn’t mean that freemium is the ideal business model for your app.

You can learn from some best practices that are employed by successful apps. Below we divulge nine best practices for app monetization:

Start Early

It’s paramount to determine how your app will monetize before you start building your app. Currently, there’s a variety of business models that app publishers employ to generate revenue. Popular business models include freemium (Puzzle & Dragons and Candy Crush Saga), Paid (Minecraft - Pocket Edition, Sleep Cycle alarm clock), paidmium (Grindr Xtra, Bloons TD 5), in-app advertising, or a hybrid model such as a freemium app that also generates revenue from in-app advertising. Additionally, there’s apps that monetize beyond the app stores, such as retail apps, which drive online shopping conversions. Lastly, the beauty of apps lies in the fact that you can always change your business model — it’s not set in stone.

Value Proposition

After sorting out a business model for your app, it’s now time to formulate how your app will provide value by solving a problem. In our App Annie Index for General and Business News, we found select top news apps, including Flipboard, BuzzFeed, Zinio and Pocket, that aggregate news content from other sources — solving the headache of jumping from app to app for reading news content.

App Discovery

With more than one million apps in both the iOS App Store and Google Play, it’s becoming increasingly difficult for any app to stand out in a sea of apps. There’s a bevy of free and paid techniques that aid your app’s discoverability. You can pay to get your app noticed through a variety of ad channels.

You can also gain free exposure through the app stores. Some best practices to improve your discoverability in app stores include choosing an ideal category for your app in each app store, generating positive reviews and ratings, using screenshots of your app in the app store description that clearly demonstrate what the app does, and optimizing your app description with the right keywords. Fortunately, our free ASO tool helps you grow your apps’ organic reach in app stores — providing access to metrics such as your keyword rankings for both your own apps and your competitors’ apps.

User Acquisition

You need a large user base to bring in enough revenue. In our InMobi App Annie Interview Series, InMobi’s Atul Satija said mobile advertising is an ideal medium for acquiring new customers.

App Usage

It goes without saying that if you don’t constantly engage with your users, you’ll lose them. Top news apps from our App Annie Index for General and Business News, such as USA Today, CNN and BBC, keep users engaged through user-generated content. These news apps allow users to upload stories, photos and videos to share with the community.

Ad Sales Channel

With worldwide revenue from mobile in-app advertising increasing by 1.6 times from 2012 to 2013, outpacing both mobile and PC browser-based ads in revenue growth, it’s important to find the right ad network for your app. In our App Annie and IDC report, we found that ad networks are still the most commonly used platform for app publishers to fill ad inventory. Beyond ad networks, mediation platforms and real-time bidding exchanges are gaining popularity. 

Ad Content

Your app should only show ads that are relevant to your users. In a survey we conducted in February 2014 for our App Annie and IDC report, we found that app publishers will use more interstitial, incentivized and native ads in their ad campaigns for their apps in 2014.

User Experience

Don’t implement a monetization strategy that deteriorates user experience. If you go down the in-app advertising route, then don’t use intrusive ad formats that interrupt the core app experience. If you choose freemium, it’s best to steer clear of in-app purchases that hinder an app’s design.

Track, Analyze, Research and Optimize

Always measure what makes your app work and improve in areas that need some extra attention to keep your users both satisfied and engaged. Additionally, it’s important to keep an eye on market trends, including where the downloads and revenues are flowing in which app stores and countries. Luckily for you, you can perform your own analysis for all your apps’ downloads and revenues with App Annie Analytics, and rankings, feature data and more with Store Stats.

Remember, app monetization strategies should be experimented with since it’s not a one-size-fits-all method.

Continue to visit the App Annie Blog for the latest news and in-depth reports on the app industry. And don’t forget to follow us on Twitter, Facebook and LinkedIn, as well as subscribe to our weekly digest email.

June 20, 2014

Market Data
Mobile Gaming

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