In 2016, U.S. consumers spent five hours a day on their mobile devices, according to Yahoo’s Flurry Analytics, and Smart Insights claims more than 80% of this time was spent in apps. Unfortunately, those numbers show consumers’ fierce appetites for mobile app downloads don’t always lead directly to dollars.
However, with the right knowledge and strategies, profits are attainable. If you’re considering developing an app, you might be curious to know how much money you can expect to make with it. Fortunately, despite the time and cost involved, you can expect a return on investment and make your project profitable by considering the following options.
Deciding Between A Free Versus Paid App
Whatever option you’re considering should be based on your target audience and how much you think they’ll use your app. It’s true that you would generate considerably higher revenue per download if you were to make users pay to download your app. However, you also might scare off potential users who aren’t willing to pay, considering that the vast majority of Apple App Store and Google Play apps are free.
Game apps are today’s highest revenue-driving free apps on the U.S. Apple App Store. If we take a look at Think Gaming’s report of the top three free game app revenues, you might be wondering how those three free apps manage to earn over $1 million daily. The answer is more units, ad-free experiences, special in-game content and in-game currency earned by making in-app purchases with real-life cash. As the cost of developing them is not too high, we can say that game apps are today’s most profitable apps on the market. With app builders becoming more and more prevalent across all types of projects, development costs no longer represent a major setback.
Another option would be considering a freemium business model. In practice, users would be able to download your app for free and get the basic features. Premium content or features would, however, be based on a monthly subscription. This is how most dating apps work, and it could help you significantly increase your app revenue.
It’s no news that in-app advertising can generously increase your revenue. A large audience size would be capable of generating revenue, but niche apps that attract smaller but very valuable audience segments would also have great potential to do so.
Several types of ad formats can be integrated into an app in order to generate more revenue, including banner ads, interstitial (full screen) ads, notification ads, opt-in capture forms or interactive overlays. Choosing the right ad format is essential for ensuring revenue.
According to Statista, global mobile ad spending should reach $247.4 billion by 2020. However, keep in mind that some ad formats perform better than others. By gathering as much data as possible to understand your users’ interests and demographics, you should be able to figure out the best options for your app and pick the most effective mix of video ad formats, frequency and placements.
Let’s take a look at the gaming app industry for example. One of the ad formats those apps use the most is rewarded video ads. In practice, users agree to view an ad in exchange for rewards such as unlocking a higher level or earning an additional game life.
A good way to monetize your app without jeopardizing your user experience is by setting up an integrated partnership. Sometimes these partnerships are purely favor-based, as the brands are just promoting each other, but nowadays, brands are more likely to set up paid agreements, such as affiliations or sponsorships.
For example, Citymapper, the public transit app and mapping service that uses open-source data from local transport services to provide options on journey routes, turned to integrated partnerships for its monetization. Anyone who’s tried that app would agree that a free app that requires no subscription and doesn’t display ads is heaven for its users! Therefore, so as not to jeopardize its user experience and with the aim to extend its service and provide more reliable journey options, Citymapper integrated other transportation services such as Mobike to generate revenue from each booking.
There are a few benefits for business owners in giving integrated partnerships a try. You can improve and even extend the range of services you provide to your users, broaden your business in new markets or geographical areas owned by your partners, and save money thanks to shared resources and functionality that, without a partnership, would have to be acquired.
Not all apps make money. Like with any other business, you should first start working on a strong business strategy along with considering the options mentioned above. Needless to say, without any traffic, none of these options will lead to good results.
A strong content strategy goes hand in hand with your user engagement. Don’t forget to think about the future of your app and to ask yourself what will make your users want to come back to it. If you want to keep their interest, make sure to regularly refresh your content and update your app with new features. If you use advertising, it will also increase your visuals and ultimately your ad revenue.
So, are you ready to take the plunge and create a successful money-making app?