The Mobile app market has been thriving now for a number of years and it has shown no signs of slowing down too. In fact, we are already witnessing record number of downloads and consumer spending month on month.
In 2017 downloads on both Apple’s App Store and Google Play touched 26 billion globally. The revenue generated from apps reached approximately $17 billion, which is actually an all-time record.
If closely examined, you’ll notice that a lot of growth is from the emerging markets where smartphone penetration is on the rise, hence we can safely conclude that we are likely to see much more growth in global downloads in the near future.
The amount of time people spend on their mobile devices is now highly dominated by the usage of apps and that is one of the reasons for consistent growth within this area. With the boom in the mobile retail market, apps now play an important role across all the industries. How are these apps being monetized? Whether its iOS or Android, there is no one-size-fits-all approach for them because the overall landscape is now ever more complex and competitive. Making it very important for app developers and publishers to focus their strategies and decisions on data.
1. Paid Model
Purchases made at the app store follow a 70/30 model. This means that for every App purchased, the app store receives 30% of the subscription fee and 70% goes to the Publisher. In case of subscriptions, after completion of one year, the publisher’s revenue will increase to 85%.
Because of its high perceived value this turns out to be a great revenue generating model. Each and every download generates money, making in-app purchases possible, and building a strong base of loyal users. This approach helps you in keeping your app free of ads.
However, if you’re going to move forward with this app monetization model, you need to develop a first-class quality app to meet your end-user expectations.
2. Freemium Model
Freemium means that the basic app features will be available for free to the user while they will have to pay a small fee for a variety of in-app purchases. Sometimes this can be used in the form of paying a fee to remove ads or for unlocking advanced features.
Like the paid model, the publisher receives 70% of the revenue generated from in-app purchases and 30% will be paid to the app store. But this App monetization model is difficult to achieve.
To make the freemium model work, your app has to be highly engaging, making the users pay the fee. The end user has to feel like it’s worth investing in and have an economy which enables generating substantial revenue from top users.
3. In-app advertising
In-app ads are very similar to the pop-up ads of the 1990s, but they are not as intrusive or irritating. In-app video ads also help in certain cases. According to a study conducted by App Annie, 57% of respondents said that video ads were their top revenue generator in comparison to other ad revenue formats.
In non-gaming apps, one third of the respondents mentioned that static banner ads generated the maximum revenue for them. However at the same time, full-screen static ads and video ads were alleged to have the most negative impact on user experience (UX).
This makes it crucial to test different ad formats and evaluate user engagement. It’s also very important to let users know how to get rid of the ads if that ad renders the app to become temporarily unusable.
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