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Ultimate Android App Monetization Guide

Android App Monetization Guide

It’s no secret that smartphones are popular. In fact, estimates show that almost two-thirds of Americans have smartphones and rely on them daily. With these kinds of numbers, it’s no wonder that people are looking into clever ways of monetizing their apps. What is an app? Well- simply put an app, short for application, is a program or piece of software designed to create a specific result for its user. That may be an organization tool, it may be a business tool or it may be a recreational tool. As cell phone usage grows, so do the amount of apps that can manage any function.

Whether You're a Retailer or a news provider, game creator or social networker, your app should act as an integral and profitable part of your business plan. Apps have become the preferred digital channel for your audience members, and given the growth in app usage year-over-year, your app should capitalize on growing behaviors and drive revenue.

When To Monetize With App Ads?

The best time to monetize your app is when you are getting a decent number of downloads/installs and people use your app on very often. If your app does not have a high activity rate, then it would better for you to rely on in-app purchases or charging a small fee for your app upfront instead of relying on ads.

Many successful developers are launching two versions of their app. One light version with ads and another professional version without ads and with additional features.

Defining A Monetization Strategy

There are three essential questions you need to address in order to set up an effective robust monetization strategy.

1. What is the nature of your app?

Get to know the value your app offers to its users, then think what your users might pay for or what kind of ads would work. Primary, you need to understand your audience and analyze the nature of your app. Depending on the type of app that you are launching, the monetization method differs.

2. Who are your potential users?

Discover who your app users are and how their preferences will be incorporated. Understand the behaviors and expectations of your users before monetizing your app.

3. What are your future goals?

You mainly need to determine the balance between earning profits and gaining new users. They relate to each other but a certain harmony between the two should exist for best results. In addition to that, you need to know your timetable and how much you can wait while accumulating users before earning revenue.

Understanding The Mobile Ads Terms

There are 4 different types of terms that you need to be aware of before starting up with mobile ads or advertising in general. You can find them listed below:

  • CPM (Cost Per Thousand) - In this model, the advertiser pays a certain amount of money for every 1,000 times their ad is displayed. You get paid a percentage of that payment, as the publisher.
  • eCPM (Effective Cost Per Thousand) - This is calculated by dividing total earnings by total impressions (in thousands).
  • CPC (Cost Per Click) - In this model, the publisher will get paid a certain amount of money per click on the ad.
  • CPI (Cost Per Install) - In this model, the publisher will get paid a certain amount of money per installation.

The Types Of Ads

There are 7 popular different types of ads that you need to be aware of when monetizing your app. They have been listed below:

  • Banner Ads - Those are the ads that you see all over the web. They usually appear at the top or the bottom of the screen.
  • Interstitial Ads - Those ads pop up during the transitions such as between screens, at the launch of the app, or at the end of a certain task.
  • Video Ads - Those are video-based ads that pop-up in the app when a certain event or action is triggered.
  • Dialog Ads - Those ads are usually shown as boxes that ask the user to check the website or the app of the advertiser.
  • Offer Wall Ads - Each of those ads displays a single in-app interstitial which shows multiple promotional offers.
  • SmartWall Ads - Those ads can take the shape of any format based on a triggered action or a certain factor.
  • Rich Media Ads - Those are interactive ads that behave differently depending on the user input.

Check the infographics below for more clarifications on the different types of ads that you can consider.

App Mobile Advertising

Android App Monetization Models

There are 6 types of monetization models that you need to choose from when building your own app. Each one of them has its own advantages and disadvantages. 

Model #1 - Paid Apps

Description: Those apps charges the user an upfront fee before downloading and using the app. Those apps charge the user an upfront fee before downloading and using the app.

Those apps charge the user an upfront fee before downloading and using the app. Those apps charge the user an upfront fee before downloading and using the app.

Advantages:

  • App developers can earn review upfront for every installation.
  • App developers can easily track their profits and measure the success of their marketing plans.
  • High level of engagement since it is a paid app.
  • The beauty of a clean interface without ads.

Disadvantages:

  • Selling a paid app is a hard process due to the high competition and the availability of free apps.
  • Some stores take a certain percentage of your profits.
  • It is extremely hard to get a large database of users.


Model #2 - In-App Advertising

Description:

Those apps display a certain number of advertisements to its users. They are also offered for free.

Advantages:

  • Ability to collect proper data on the users.
  • Easier to promote since they are offered for free.
  • Effective when the ads are relevant and used at the right spots and time.

Disadvantages:

  • Ads are generally annoying.
  • Ads decrease the quality of your app and the user experience.
  • This model does not work well for utility apps that are made to perform certain functions.


Model #3 - Freemium Apps

Description:

Those apps are offered for free but certain extra functions and features inside them are locked and require a certain payment or fee to use them.

Advantages:

  • A popular model that allows you to build a large database of users with the capability of an upsell.
  • Flexible and can be used in various types of apps.

Disadvantages:

  • Requires a great balance between the free and paid features. Few free features can result in high dissatisfaction rate and lots of free features can limit your profits to a great extent.


Model #4 - In-App Purchases

Description:

Those apps are offered for free but they contain paid items or goodies in their built-in storefront.

Advantages:

  • Perfect for eCommerce businesses.
  • A Popular model that is used in both shop apps and games.
  • High level of engagement can be generated if the model used properly.
  • A flexible scalable model that can include affiliate programs, referrals and partnerships.

Disadvantages:

  • App stores usually take a certain percentage of your profits if you are selling virtual items.
  • Many parents dislike this model as their children might purchase items accidently without their permission.
  • App developers who use this model should be totally transparent about this model to meet up with the latest regulations of the app stores.


Model #5 - Paywalls Apps

Description:

This model is similar to the freemium model with the exception that the apps gate or lock content instead of features. Initially, those apps allow the users to view some content for free before asking for a subscription fee or a one-time payment to view more content. 

Advantages:

  • High engagement is granted since the users will experience all your app's features before paying any fees.
  • Profitable if done right since it utilizes the subscription model.

Disadvantages:

  • It only works in certain niches and verticals. Mostly in the news, lifestyle, and entertainment types of apps. 
  • It is not easily to determine the premium content and the right limit for free users.


Model #6 - Sponsorship Apps

Description:

This model entails partnering with advertisers, who provide the app users with rewards and bonuses for completing specific in-app actions. It is an incentive system where brands and agencies pay to be part  of. The app developer earns money by taking a share of the revenue from the redeemed rewards.

Advantages:

  • New and innovative business model that can be used in many niches and verticals.
  • It uses an advertising strategy that grants a higher level of engagement and relativity. 
  • Much more attractive than normal ads especially for end users who can benefit from certain promos or bonuses.

Disadvantages:

  • Not all app stores like this model and marketers need to use it wisely.


Check up the image below for a friendly visual guide to the different monetization models.

Android App Monetization Models

Android App Marketing Resources

  • Our latest special App Store Optimization (ASO) guide.
  • Our complete list of app review websites.
  • Our recommended list of app keywords tools.
  • Our top list of alternative app stores.
  • Our list of app awards websites.
  • Our recommended list of mobile ads networks.

Download All Of Them

(Last Updated On: 30/11/2017)
Roland Zelhof
Roland Zelhof

An online entrepreneur and the founder of Labinator.com. He has more than 8+ years of experience in web development and digital marketing. He is also a video game developer and open source advocator.