Monetization Techniques for App-Based Commerce Enterprises: tips and tricks for boosting revenue
In the rapidly evolving digital landscape, businesses are striving to create competitive apps that not only stand out in the market but also generate revenue. Here are some of the most effective app monetization strategies for both new and established apps in 2022.
1. In-App Advertising: Ideal for free-to-download apps with high daily active users, such as gaming, news, and entertainment apps, in-app advertising generates income through ad impressions and clicks. Ad formats include banner ads, interstitial ads, rewarded ads, and native ads. However, it's crucial to balance ad frequency to avoid user churn.
2. In-App Purchases (IAPs): Popular among gaming apps and productivity tools, IAPs involve selling digital items (e.g., extra levels, premium features) or physical items directly within the app. About 50% of non-game apps and 79% of game apps use IAPs, making it a reliable monetization method.
3. Subscription-Based Model: Apps offering ongoing value, such as streaming services or productivity tools, can benefit from a subscription-based model. Users pay a recurring fee for access to premium content or features, providing a steady revenue stream if users perceive ongoing value.
4. Freemium Model: Offering a basic version for free and charging for additional features or upgrades, the freemium model builds user trust and can lead to paid upgrades.
5. Sponsorship: Apps with a dedicated user base in a specific niche can partner with brands to display sponsored content within the app, enhancing its credibility and reaching a targeted audience.
6. Paid Apps: Premium apps with high value or niche appeal can be monetized through a one-time fee for download.
7. Crowdfunding: New apps seeking initial funding can raise funds through platforms like Kickstarter or Indiegogo to support app development.
These strategies can be combined to maximize revenue. For instance, a freemium app might also use in-app advertising and in-app purchases. The choice of the right strategy depends on the type of app, its target audience, and the level of user engagement.
In addition to choosing the right monetization strategy, understanding key metrics such as funnel conversion rates, Customer Retention Rate (CRR), churn rate, Lifetime Value (LTV), eCPM, and conversion rates is crucial. The average CRR for mobile apps worldwide in 2019 was 32%, while larger companies typically have lower churn rates, whereas startups frequently experience higher churn rates, sometimes as high as 60%.
Affiliate apps can also earn money through affiliate marketing by promoting external products. Lastly, eCPM, or "effective cost per mille (thousand)," is a variation on CPM or the cost to reach 1,000 users. The formula for eCPM includes the CPC rate, the number of clicks, overall revenue, and the number of CPM units (total number of impressions divided by 1,000).
With over 2 million apps available on the Apple App Store and over 3 million apps on Google Play, standing out and monetizing effectively is more important than ever. By understanding and implementing these strategies, businesses can create successful apps that engage users and generate revenue.
- Businesses aim to create apps that excel in the market and generate revenue, recognizing the immense competition in the digital landscape of 2022.
- In-app advertising, particularly suitable for gaming, news, and entertainment apps, generates income via ad impressions and clicks.
- Banner ads, interstitial ads, rewarded ads, and native ads are different ad formats used in in-app advertising.
- Balancing ad frequency is crucial to prevent user churn in in-app advertising.
- In-App Purchases (IAPs) are popular among gaming apps and productivity tools, involving the selling of digital or physical items within the app.
- Approximately 50% of non-game apps and 79% of game apps use IAPs as a monetization method.
- The subscription-based model benefits apps offering ongoing value, such as streaming services and productivity tools.
- Users pay a recurring fee for access to premium content or features in subscription-based models, ensuring a steady revenue stream.
- The freemium model offers a basic version for free and charges for additional features or upgrades, building user trust and potentially leading to paid upgrades.
- Sponsorship, where apps partner with brands to display sponsored content, appeals to apps in specific niches with a dedicated user base.
- Paid apps can be monetized with a one-time fee for download, particularly for apps with high value or niche appeal.
- Crowdfunding platforms such as Kickstarter or Indiegogo can be used to fund new app development by raising funds from individuals.
- Combining monetization strategies can maximize revenue, such as using in-app advertising and IAPs in a freemium app.
- The choice of monetization strategy depends on the type of app, its target audience, and user engagement levels.
- Understanding key metrics, such as funnel conversion rates, Customer Retention Rate (CRR), churn rate, Lifetime Value (LTV), eCPM, and conversion rates, is essential.
- The average CRR for mobile apps worldwide in 2019 was 32%, while larger companies typically have lower churn rates.
- Startups frequently experience higher churn rates, sometimes as high as 60%.
- Affiliate apps can earn money through affiliate marketing by promoting external products.
- eCPM, or "effective cost per mille (thousand)," includes CPC rate, number of clicks, overall revenue, and CPM units (total number of impressions divided by 1,000).
- With the enormous number of apps available, standing out and monetizing effectively is a necessity in today's digital landscape.
- By understanding and implementing these strategies, businesses can create successful apps that engage users and generate revenue.
- Lifestyle apps, such as interior-design and cooking apps, can implement monetization strategies to generate revenue from users.
- Investing apps can benefit from users' interest in personal-finance, stock-market, and wealth-management.
- Real-estate, home-and-garden, and home-improvement apps can leverage monetization strategies to provide users with valuable content on food-and-drink, dining, outdoors-living, and beverages, while offering shopping deals and discounts.
