Effective app monetization is the ability to turn your app into a cash cow without compromising user experience. This type of strategy is imperative considering the level at which people are using apps in their everyday lives. The main indicator of an app’s success is obviously the value that it provides but just as important is the type of monetization model that it follows.
Back in the days of desktop gaming on desktop circa 2009-2010, there was an ad format that was introduced to provide extra revenue for games that friends would “invite” you to play. It became apparent that offer walls could provide that extra surplus in ad revenue outside of the tighter margins that direct payments generated for in app purchases. Fast forward a couple years and monetization options began to expand in a manner that allowed for publishers to choose from a variety of strategies.
Let’s do a top-level dive into some of the freshest app monetization strategies that are continuing to succeed and let’s try to fathom where the pendulum is swinging most.
Non personal data is a massive business for advertisers. Selling personal data is not only a serious breach but is something that many third-party tracking companies take part in unbeknownst to the app developer, but the platform indeed has ways of detecting this type of activity and can kick the tracker off with no recourse. Non personal data however can yield supplemental revenue to a developer while providing useful information to aggregators by which this anonymous data can provide insights for clients and extra revenue for developers. This strategy while being compliant is non-intrusive and invisible to the user. This is a very precarious type of strategy with very strict guidelines to follow and it is unclear how much revenue is generated through the selling of data.
Just look here at smartphone usage and physical distancing leveraged by a third party tracking platform and notice how California is completed excluded due to new regulations. Always wonder what data is shared as people need to be extra vigilant.
Advertising may yield the most revenue out of every app monetization solution at least for freemium type apps. The different types of formats that are employed are numerous and are applicable to some apps while to others they are not.
Display advertising will always be an integral part of advertising
Native advertising is the most non-intrusive form of a campaign if it is executed well and that really depends on the context of an ad and how it is to be contextually relevant to the environment. A good rule of thumb for this type of format would be if one doesn’t notice that a promoted article is indeed one, then that is a success. News publishers can yield a ton of revenue with native advertising, but it is a skill to ensure that the article aligns with genuine interest to the audience and is positioned in a manner within the user flow that ensures that it’s presence is as subtle as possible while following author and or network compliancy.
Banner ads are the bread and butter of ad monetization however, it is now an antiquated, old and tired strategy. Video ads are a much better option, specifically rewarded video. This gives off the impression that it is indeed a native in app experience that can be user initiated while providing a reward that can be exchanged for a virtual good. Rewarded video along with playables yield the most revenue and are very much part of the marketing mix of gaming publishers. Playable ads provide an avenue for a user to test out an app or game before deciding to download it or not. Proper segmentation and behavioural targeting are essential for these types of strategies to yield their maximum uplift in revenue along with engagement.
While some apps may follow a freemium model, they will utilize an in-app purchase strategy in order to provide virtual content at a price. This allows a developer to really set the bar on currency as if it were printing money within a new economy. These types of features can provide premium type access to one’s experience within an app and can range from a variety of different options including and not limited to removing ads, upgrades, power ups, customizations, virtual goods and currency etc.
Many apps rely entirely on this business model and chose not to include any ads within their app. This is interesting because advertising will never go away. Ads could inherently wipe out in app purchases at some point if the economy sways in the pure freemium direction.
Subscription based models on a handful of apps probably represent the largest chunk of revenue that anybody can envision when you look at the streaming, publishing and premium type app businesses. When users are prepared to sign up to a monthly charge, the app developer has essentially made into the big leagues.
No need for ads, no need for in app purchases, the subscription takes care of it all. That being said it’s worth touching up on freemium content walls to understand the nuances between core subscription models and paywalls.
Dynamic Paywalls flip the scenario and target users by personalizing content and segmenting people into buckets based on what their level of commitment might be. Let’s say if a user is redirected via a social media platform to an article of genuine interest, they may be categorized into a segment whereby their interest level is piqued. This would be an opportune moment to introduce the paywall. Traditionally, leaky paywalls would be presented such as in the case of The New York Times where a reader can only access a finite number of articles without a subscription. Eventually they’ll stumble upon their last complimentary piece of content where the leaky paywall goes up and a premium is provided for access.
Machine learning and AI enables the ability to collect and action data around users. Their mobile behaviour can be assessed & likelihood in subscribing while pinpointing the precise moment they may do so. Furthermore, a customized paywall can be presented that exhibits flexibility for access to content and payment options. When a publisher can combine its data with paywall solutions, this helps decipher audience development and identify targeting categories. Most importantly it determines the most successful scenarios utilizing algorithms in order to measure the effectiveness of a dynamic paywall.
Sponsorships are becoming more available to brands that are able to increase their user base while increasing revenue. Casual games have had in game advertisements and level take overs for quite some time. This can be executed at a very high level. This requires experienced sponsorship expertise that is not so native (no pun intended) to the in-app advertising space. So far there hasn’t been a bespoke solution in place that allows a simple, seamless and automatic set up within an in-app environment. This is something to look out for in 2020 and beyond.
There is not one size that fits all for publishers who need to be open minded when it comes to having the optimal mix of app monetization solutions. It’s not enough to maximize long term revenue, but to do so in a way that enhances user engagement. Many apps are benefiting from the surge of earnings due to the lockdown. As the storm settles monetization strategies will still need to be improved upon as this is an ongoing strategy that requires careful management.