An integral part of the development process of any commercial mobile application is engineering the monetization methods. Inspired by the success of Instagram, Angry Birds, Shazam, Viber, and other uber-popular mobile applications, the creators of which have received and continue to receive considerable and stable profits, development teams are always trying to find the most rational ways to earn money from their projects.
What do statistics say?
The desire to earn money by developing mobile applications for the AppStore, Google Play, and other similar mobile marketplaces is primarily due to the number of consumers increasing every year. According to forecasts, by the end of 2017 the total number of mobile application downloads on various platforms will reach 200 billion and, more importantly, these figures will continue to grow. By 2020, this figure will exceed 350 billion, according to the prognosis of analysts. One can agree that this is quite a good growth trend for just three years, and in a fairly large market.
Most developers, at the stage of product release, wonder: "How do I earn money with mobile apps?" This is what we will outline in our article, below.
How to earn money on mobile applications
The main task of progressive IT companies is to find ways to monetize their solutions, with the ultimate goal of receiving a profit after the release of their product. This issue is especially puzzling for programmers who develop applications for Android. Once again, let us review the statistics. According to the Statista report, Android has been the most popular operating system for mobile devices in the world, and for many years. This popularity is the main reason behind the increase in the search term "how to monetize Android apps" today.
Below are the ten best methods for Android and iOS mobile app monetization, which will provide a stable passive income for developers. Let us consider them in more detail.
1. Advertisement placement
Advertising is perhaps the most ambiguous, but also the most obvious way to monetize mobile applications. To ensure that advertising does not look too intrusive, as it happens with massively promoted products, we recommend implementing contextual advertising. Partner with those companies, products, and services that do not compete with yours, but rather complement your business. An example is the similar cooperation of trading platforms and commodity brands. You can place a partner companies’ banners in your application - banners are small size commercials built into the page layout. The recommended sizes of graphic and text banners for smartphones and tablets according to the Interactive Advertising Bureau, the organization that develops advertising industry standards, are: 15-30kb for conventional text and graphic advertising elements, and up to 35kbfor Rich Media or Expand elements.
There are plenty of ready-made platforms on the market for mobile application advertising, the integration of which allows developers to make money on advertising. Here is a brief description of some of the most notable solutions in this area.
PlayHaven. PlayHaven is a platform which introduces advertisements into gaming mobile applications. Depending on the characteristics specified in the profile, as well as statistics of internet requests, each user receives the most viable commercials geared towards them personally. This way of promoting the product is called contextual advertising.
Admob. Admob by Google is a universal platform that allows for the studying of user behaviors. Thanks to this analysis, implemented through Firebase Cloud Messaging, developers can optimize the placement and appearance of ad units in order to maximize the number of their views. In addition, this platform supports the filtering of unwanted advertising, allowing you to fully adapt the work of your mobile application to a target audience.
Tapjoy. Tapjoy helps developers of free applications get the maximum benefit from each user. The data collection and monetization platform developed by Tapjoy uses the most efficient mechanisms for data processing and analysis, user segmentation, and forecasting, allowing for an improved interaction with each user.
Facebook Audience Network. This is the advertising network of the largest social media site in the world. Its main features are the transparent work directly within Facebook, as well as all the targeting possibilities provided by the social network.
AOL Millennial Media. One of the leading mobile advertising networks, professing the mobile-first approach, Millennial Media offers unique targeting options, the mMedia system for self-hosted advertising, and third-party network ads display.
AdColony. One of the leading advertising networks in the field of mobile video advertising, offering its own instant video delivery technology, it was acquired by Opera and integrated into Mediaworks, their advertising delivery platform. Recently Mediaworks itself was rebranded as AdColony.
NativeX. "The leading advertising technology for mobile games." Lightning Play Video can take into account what is happening in the game and offer "the right advertising at the right time." Developers and publishers can also specify contextual formats that correspond to the advertisement placement in the game.
UnityAds. Mobile game advertising platform made with Unity3D. Displays only video advertising (with the possibility of encouraging the player to view or demonstrate the full-screen intermediates) and only in games. The UnityAds advertising network makes it easy to earn income from existing players, while attracting new high caliber customers.
2. Development of a universal application skeleton
Having created a universal and easily-readable code, you will establish a wonderful source of income. Such software can become a base for highly specialized solutions. Template copyrights, in most cases, bring their developers quite a good profit; after all, as experience shows, many companies are interested in buying ready-made solutions. You adapt your product to the needs of the customer, allowing them to receive the branded software quickly and inexpensively. As a rule, such modifications concern the front-end exclusively - this concept is called the White Label Solution. For example, an accounting platform for fitness clubs can be redesigned to correspond to the corporate style of the specific club - color scheme, interface element composition, backgrounds, and emblems. In the field of IT, this type of customization is used frequently, as it is quite viable and profitable for companies that want to get a quick income, while not allocating a separate budget for self-promotion. Developers can charge per copy of product with standalone software or access fares with the platform hosted on the web.
3. Transaction commissions
Factorage is one of the most successful ways to monetize a mobile application. Establishing a transaction commission for their service, developers will be able to receive a stable income after releasing their application. In particular, some payment systems, like PayPal, charge the user a small fee when making a money transfer between accounts.
Gaming mobile applications often offer users the opportunity to purchase additional virtual goods that are necessary to "pump" their in-app status. For example, in a game, it can be a superpower for a hero, in-game currency or premium units. This is a fairly common and highly effective method for monetizing mobile applications, which is aimed at earning money from interested customers. In fact, users download the application for free but, to acquire a specific status within the game, they will be strongly motivated in gaining additional attributes or opportunities.
5. Paid services
Paid services are able to provide considerable and, more importantly, regular earnings for developers of mobile applications. They are intended for a particular category of users. Typically, these users need specific services in which the main consumer audience of your application may not be interested. In most cases, paid services are often offered by business types of apps. For instance, such services can be included in applications for transport companies (detailed tracking of goods), cellular operators, etc., and offered by various issuers. Wix, a platform for the rapid creation and deployment of websites, which has a mobile version for Android and iOS, offers both free and paid design templates. The Canva application, specially developed for creating labels, posters, banners, etc. works in the same way: most of the proposed content in Canva is free. The nuance of this proposal is the fact that stickers for famous brands have already been created on the basis of free templates; therefore, if a client needs to create a unique template, they will have to buy custom paid elements, and, probably, combine them to build their own composition.
6. Paid application versions
One of the most common ways to monetize apps is by offering versions limited in functionality or for demonstrative purposes. After testing and trying these versions, users may then be interested in purchasing a full, paid edition of the software. Such a transparent way of earning money with a finished product is profitably practiced by the majority of developer companies producing modern computer games, antivirus software, as well as various service solutions. An example of a paid service is the Cloud Recognition of the Vuforia Augmented Reality framework. In this instance, the user receives a certain set of functions which will be enough for the successful development of the mobile application; however, if they need specific additional services, like Cloud Recognition (a special marker technique for recognizing multiple images at the same time), they will have to pay for it.
7. Data collection
New, unknown information is precious. If the functionality of your application is solely aimed at getting new data, why not make money on it? Applications that collect information through questionnaires are textbook examples of this method of earning. The statistics obtained equal new and unique information and data that can then be sold, for a fee, to organizations. This can be instanced by Google’s open source programming interface or Google Maps API, which, if you receive more than 25,000 hits a day, will charge the user $4.
8. Your idea: interesting for investors
And what if your idea, embodied in a mobile application, is unique in itself? For example, Instagram has become popular world-wide in a matter of days. This software has become a real goldmine not only for its developers but also for venture investors. Back in 2011, the Instagram team gained a third-party financial backing of $7 million. Impressive, isn’t it? Even more impressive is that the application was created only a year earlier. Until Instagram was acquired by Facebook in April 2012, the total amount of investments exceeded $57 million. Currently, the market cost of the company is approximated at $500 million. Likewise, if you manage to popularize the mobile application created by your team, there is a possibility that another business or investor will make a sponsorship proposal for further development of the project.
9. Subscription tariffs
Subscription fees are one of the most trivial earning strategies for mobile application developers, and the most honest mobile app monetization method. After all, before buying, the user signs a public offer which lists all the terms and rules for application usage. As a rule, this method is used in a narrowly focused software, which was developed for a clearly defined category of users. Also, a similar method of charging was introduced by many mobile operators to sell their own applications, as well as different kinds of media content bases.
10. Open source software
To date, there is a widespread opinion that open source applications, such as Linux distributions or Apache Web Server, can be developed only by corporations. This occupation, though unprofitable at first glance, can work towards strong sales of future commercial projects. Open source is, above all, the customer’s trust - and it comes with a good reputation, "cool" image, and excellent advertising for you and your subsequent products. This means that successfully selected ideas for applications with open source code will help eliminate the need to pay for advertising of other solutions made by your firm. Moreover, such applications will help you promote third-party businesses, for example: a chain store, some offline service, etc. Though there are no direct earnings, there are significant savings from costs associated with marketing.
Based on the data in this additional Statista report, the most frequently used app monetization model in 2015 was the collection of advertising fees, but such fashions have a tendency to change quickly. Every described approach has its own advantages and disadvantages and choosing the one suitable for your application requires the careful consideration and serious analysis.
No matter which way you slice it, the method you use to monetize mobile apps is up to you. Keep in mind, however, that the simultaneous use of several methods of monetization within mobile apps can repel users from buying your software and harm your reputation.
What if your company doesn’t need a full-time programming team? In this case, your best bet would be partnering with an experienced outsource development services vendor. You need help with your idea? Check testimonials of our top clients.