How to Make a Profit from App Monetization Strategies in 2022

(This article was originally published on Udonis’ blog.)

You’re here, so I’m guessing you have an idea for an app. Also, you’ve probably started thinking about how you can make money off it.

The problem is, you’re not quite sure where to begin?

Don’t worry, I’ve got you covered.

Let me guide you through the first monetization steps you should take, the most common app monetization strategies, their pros and cons, and more.

App Monetization: The Basics

App monetization is the process of making money off your app. You can use different app monetization strategies to make that happen.

Some monetization strategies fit certain app types better. For this reason, a fitness app will probably have a different strategy than a financial or gaming app.

Whatever your app type is, one rule applies to all of them.

You HAVE TO define your app monetization strategy before you start developing your app.

The thing is, based on the strategy you decide on, the app will need features that support it. If you don’t do this on time, it will be more difficult to do later.

As an app developer, you need to ensure your app is profitable. But, at the same time, you need to make sure that monetization doesn’t ruin the user experience.

This is quite a challenge, but it’s doable.

Preparing for App Monetization

Before choosing an app monetization strategy, you should be able to answer some relevant questions about your app.

Here is a list of potential questions:

1. What makes your app unique?

2. How big is your potential target market?

3. How will your target audience use your app?

4. Do you believe users would be willing to pay to use it? If yes, how much?

5. Which app monetization strategies do your competitors use? Do these strategies work well for them?

6. Is your primary goal to get as many users or to quickly generate revenue?

Once you have the answers to these questions, you can start thinking about a strategy that fits your business goals.

In this phase, you should be able to determine on the ground strategy — whether to make your app free or paid.

Is your app simple to use and has a large potential target audience? If so, better make it free to install.

Does your app come with multiple unique and complex features? Is it intended for a niche audience? Then, it may be a good idea to make this app paid.

Top App Monetization Strategies

As I mentioned above, there are different app monetization strategies at your disposal.

However, this can leave app developers wondering — Which strategies are most effective? Which one fits my app best? What are their pros and cons?

By the time you finish reading this article, these things should be much clearer.

In the following section, I’m bringing you an overview of the five most popular app monetization strategies.

Period Tracker, a lifestyle app that monetizes with in-app ads.

In-App Advertising

If you’re wondering which app monetization strategy is the #1 in popularity, this is it. According to AdColony, 63% of all publisher revenue comes from in-app advertising.

In-app advertising allows developers to make money by displaying ads. Thanks to these ads, the app remains free to install and use.

Apps that monetize with in-app advertising focus on attracting large user bases. It’s pretty logical — the more users an app has, the more revenue it can generate.

In mobile apps, we can find different ad formats. Here are the top ones:

1. Banner Ads

Small ads that appear in dedicated areas on the users’ screens (e.g., top or bottom). They are usually static (e.g., text and image banners), but they can also be dynamic (e.g., videos, GIFs, dynamic CTAs).

1. Interstitial Ads

Ads that take over the users’ whole screens. They appear in different forms — as video interstitial ads, playable ads, or static ads. The users can exit these ads after watching them for a certain time (e.g., ten seconds). This ad format appears in content breaks (e.g., after app launch, after completing an action, after finishing a level).

1. Rewarded Video Ads

In exchange for watching a video ad, users will receive a reward from the app. For example, unlocking an in-app feature or earning in-game currency. Rewarded video ads are especially effective in mobile games.

1. Native Ads

Ad format designed to naturally blend with the app’s look and feel. As such, this ad format doesn’t significantly interfere with the user experience.

As you can see, each one of these ad formats has its advantages and disadvantages. Luckily, you don’t have to decide on just one ad format for your app — you can combine them.