12 Effective Mobile App Monetization Strategies to Try in 2024

As of January 2024, there were around 1.8 million apps available for download from the Apple App Store, and nearly 2.4 million apps available on the Google Play Store. However, the average app generates only $1.79 in revenue.

With competition so fierce, app developers and publishers need to stay informed on the latest mobile app monetization methods to ensure they stay afloat. In this piece, we look at some effective strategies developers can use to monetize their apps.

What Is Mobile App Monetization?

Mobile app monetization is the process of generating revenue from a mobile app.

There are multiple monetization methods that leverage a user base to generate revenue from a mobile app, including in-app advertising, in-app purchases, the freemium model, and more.

Why Is Mobile App Monetization Important?

While 77% of apps in the Apple App Store were paid apps in 2009, only 10% currently require payment at download. Meanwhile, in the Google Play Store paid apps account for only 3.1% of mobile apps.

This shift to free apps has meant app developers have had to think of smart ways to generate app revenue.

To ensure an app continues to grow its revenue while maintaining a stellar user experience, app developers can adopt one of the following app monetization models. Alternatively, they can implement a hybrid app monetization approach, combining two or more methods to generate revenue.

12 Best Mobile App Monetization Strategies In 2024

1. In-app Advertising

In -app ads are ads users see when using an app. These include banner ads, interstitial ads, video ads, native ads, and text ads.

This app revenue model is one of the most popular app monetization strategies, and it shows no sign of slowing down, with predictions showing ad revenues obtained from in-app ads will almost triple by 2025, reaching $226 billion

Advantages of In-app Advertising

1. Better Results

In-app ads have been shown to perform up to 11.4 times better than banner ads on mobile websites.

2. Better Targeting Capabilities

With in-app advertisements, your viewer chooses to download the app if you advertise relevant apps with a specific targeting audience, making your marketing more effective.

Disadvantages of In-app Advertising

1. Low Engagement

Although the audience is a captive one, the number of clicks can be low. With an average of a 0.1% click-through rate (CTR) on banners, these ads are probably not going to get a great deal of engagement.

2. Competitor's Promotions

Your competitors might end up appearing in the in-app ad so a user watching might end up clicking on the link and installing the app.

2. Use Interstitial Ads to Grow eCPM

With increasingly sophisticated analytics available to developers, app publishers now have unparalleled insight into user behavior. These insights have meant app developers have begun to pivot away from standard in-app ads such as banner ads in order to combat banner blindness and mitigate user disinterest.

One of the most effective in-app ad alternatives are interstitial ads. Unlike banner ads, which have size restrictions and are persistent and intrusive, interstitial ads are ads that cover the entire mobile screen and occur at natural transition points within the user flow.

This mobile app monetization strategy works most effectively when best practice is followed, with ads implemented at the end of a flow, for example in a gaming app, they should appear at the end of a level.

Advantages of Interstitial Ads

1. Powerful User Engagement

The level of viewability that interstitial app ads get cannot be matched by banner ads. A full-screen ad is effective as it is almost impossible to ignore.

2. High CTR and CPM Rates

Given their higher engagement rates and better CTR, advertisers are often willing to pay higher CPM for interstitial ads. Disadvantages of Interstitials Ads:

Disadvantages of Interstitial Ads

1. Penalties for Improper Implementation

Publishers need to implement interstitial ads considering Google's guidelines and recommendations. Failure to do so can result in a Google penalty.

2. Delayed Loading Time

Given their size, interstitial ads have the potential to cause slower load times. This can impact the overall user experience.

3. Use Native Ads to Improve CTR

Native ads are designed to integrate seamlessly into their host app, appearing as another post in the feed. When implemented correctly, these ads create minimal disruption to the user experience.

They have also been shown to have one of the highest engagement rates, with one eMarketer study (PDF download) from 2018 suggesting the click-through rate (CTR) on native ads to be 8.8 times that of regular display ads. According to 2022 stats from ZipDo, the CTR from native advertising was 0.23%, nearly double that of traditional banner ads.

Advantages Of Native Ads

1. Improved User Experience

Since native ads are non-disruptive and non intrusive, they result in a better app browsing experience for the end user.

Disadvantages of Native Ads

Customer Targeting Seems Intricate

For launching hyper-targeted campaigns, advertisers need to pull more customer data, build unique audience segments, and make sure that their content is personalized to each demographic's interests and behaviors.

4. Freemium Subscriptions Can Drive Conversions

Falling under the broader umbrella of subscription apps, “freemium” is a mobile app monetization model with several advantages.

After users download a free app they are then offered in-app purchases that give them exclusive access to premium features, additional content, or digital goods.

Spotify is perhaps one of the best examples when it comes to the freemium app subscription model. Spotify, a music app that was developed in Sweden in 2006 was started as an alternative to the pay-per-song model of iTunes and the illegal pirating of downloaded music that was proliferating at the time.

Spotify offers many of its premium app features to its free users, however for a monthly subscription fee, users are able to unlock premium features, including an ad-free version.

Spotify is undoubtedly the king of the freemium app model when it comes to conversion. While most freemium apps see average conversion rates of 2-5%, research shows that Spotify converts 24% of users who start with the free version into paying subscribers.

But why is it so successful and how can other developers leverage this app business model to generate app revenue for themselves?

By constantly experimenting, A/B testing, and focusing on their users, Spotify has been able to create a “dynamically changing user-interface, behavioral prediction algorithms, and an ever-expanding catalog of music”.

Advantages of Freemium Subscriptions

1. The Freemium Model Is Scalable

One of the greatest advantages of this monetization method is that it allows a new venture to scale up and attract a user base without the costly overheads of traditional marketing and sales campaigns.

2. Try Before They Buy

Freemium subscriptions give users the ability to try out your app before they commit to paying for it.

3. Wider User Base

Freemium subscriptions can help you generate revenue from users who would not otherwise be willing to pay for your app.

Disadvantages of Freemium Subscriptions

1. Limited Interest in Upsell

There is a potential for decreased revenue if users do not upgrade to the paid app.

2. Affects User Experience

There is also the potential for users to become frustrated with the app if they feel like they are constantly being bombarded with ads or upsells.

3. Requires Careful Implementation

Freemium subscriptions can sometimes be confusing for users, which can lead to them unsubscribing or simply not using the app.

5. Premium Subscriptions to Deliver Stable Revenue

Premium mobile apps are paid apps that run via subscription models, however, they require users to sign up for a fixed fee immediately upon download.

This means revenue is directly tied to the number of downloads. Paid apps have been shown to have higher user engagement and customer acquisition.

Advantages of Premium Subscriptions

1. Reliable Income Stream

App subscriptions offer a reliable and predictable revenue stream for app developers.

2. Ensures Longevity

Premium subscriptions can help to ensure that an app remains accessible and useful for its users over time.

Disadvantages Of Premium Subscriptions:

1. Expensive

Premium subscriptions can be expensive for users, especially if they don't use the app often, leading to a decline in user numbers.

6. Use In-App Purchases to Create Repeat Customers

In-app purchases are another monetization method that is gaining momentum in the digital ecosystem, particularly in the gaming arena. Offering in-app purchases is a great choice for gaming apps, for several reasons.

In-app purchases allow users to use real money to purchase features or items while playing a mobile game.

Depending on the game type, this can be anything from free lives, to extra coins, to the ability to unlock hidden or previously unachievable levels.

While the option of in-app purchase can be introduced at any point in the game, the smart way to monetize your app in this way is to analyze user behavior and strategically offer in-app purchases at points throughout the gaming app where users need help.

The process of setting up payment for in-app purchases is also simple. When a user signs up to the Google Play store of the iOS App Store, they have the option to add a credit card to cover any in-app purchases and other app-related costs.

When a user decides to procure an in-app purchase, it is simply charged to their credit card, with app stores taking a commission (usually 30% unless you are a mobile app that is successful enough to be able to negotiate a different commission schedule)..

Types of In-app Purchases

1. Consumable

The most common type of in-app purchases in mobile games, consumables refer to items such as in-game currency, bonus health, or power-ups.

As the name suggests, once these in app-purchases have been used they disappear, but can be purchased again at any time. While most games offer a certain amount of these consumables for free, consumables are a great option for users who don't like the hassle of waiting to gain these items and are happy to pay to save time.

2. Non-Consumable

Unlike consumables, when users buy non-consumable in-app purchases they have permanent access to them. Examples here include unlocking hidden levels, bonus characters or cosmetic items.

3. Auto-Renewing Subscriptions

In-app subscriptions refer to regular payments users make to access premium content (somewhat akin to the freemium model mentioned above).

In mobile gaming, subscriptions can be set up to last for varying periods of time and to unlock everything from exclusive gameplay items to premium versions of the game.

4. Non-Renewing Subscriptions

Non-renewing subscriptions act in the same way as renewable subscriptions, except that mobile users must manually renew their subscriptions.

Advantages of In-app Purchases

1. Convenience

In-app purchases are convenient for users as they can make purchases without having to leave the app.

2. Flexibility

In-app purchases allow developers to offer a wide range of content and features for users to purchase, providing a flexible monetization strategy.

3. Effectiveness

In-app purchases have become a major source of revenue for gaming and non-gaming apps alike. Indeed, one survey found that developers found in-app purchases to be the second most effective monetization strategy, behind only rewarded videos.

Disadvantages of In-app Purchases

1. May Alienate Users

Users may feel like they are being "nickel and dimed" if they are constantly being asked to make purchases. Moreover, if the developer is not careful with the types of purchases on offer, the game may be dismissed as a “pay-to-win” app.

2. May Damage the Brand

There is always the risk that users will make an in-app purchase and then be disappointed with the product, which can lead to negative reviews and decreased downloads.

7. Affiliate Marketing Offers

Many major technology companies, including Google, Apple, and Microsoft have affiliate programs open to app developers.

These affiliate programs involve promoting other mobile apps within your app. While the commissions offered in this app monetization strategy are generally not high, app developers do have the choice of which apps they wish to promote, which can encourage users to associate their app with similar brands.

Advantages of Affiliate Marketing

1. Cheap for the User

Affiliate marketing can be used to generate revenue from an app without having to charge for downloads or in-app purchases.

2. Build Brand Relationships

Affiliate marketing can be used to promote and sell products or services within an app.

Disadvantages of Affiliate Marketing

1. High Competition

Affiliate marketing can be quite competitive, as companies vie for affiliates who can promote their app effectively.

2. Risks Brand Trust

Affiliate marketing can be risky, as affiliates may promote an app in a way that does not reflect the app's quality or user experience.

3. Time Consuming

Affiliate marketing can be time-consuming, as affiliates need to be constantly recruited and managed.

8. SMS Marketing

While SMS marketing may be considered a little old school, when done with style, smarts, and a touch of humor, it can be an effective way to reach out to your users and offer them discounts on in-app purchases or premium subscriptions. In fact, a 2022 survey in the US found that nearly 47% of respondents preferred being contacted by brands via text messages.

It is essential to ensure that the people you are reaching out to have explicitly consented to your use of their data. Think carefully about the length of the message and time you are sending it—nobody wants to read a novel about your app at dinner time.

Advantages of SMS Marketing

1. Easy to Implement

SMS marketing is easy to implement. Data can be collected via in-app prompts and messages can be sent via mobile marketing automation.

2. Effective in Retaining Users

A recent study showed that reaching out to users who haven't recently engaged with an app via SMS can return a click-through rate (CTR) of up to 36%.

Disadvantages of SMS Marketing

1. May Be Perceived as Being Spammy

SMS marketing can be intrusive and disruptive, especially if people are not expecting it.

2. Reduced User Data

It can be difficult to track the effectiveness of SMS marketing campaigns, since people may delete messages without reading them.

3. Doesn't Suit All Brands

SMS marketing may not be well-suited for all brands or products, especially if the target audience is not likely to be responsive to text messages.

9. Email Marketing

While email marketing may not seem like a logical fit for mobile app advertising, it can be an effective way to engage existing app users and turn them into paying users.

Studies reveal that wiith social media channels flooded with users, 79% of millennials in the United States preferred being contacted via email by brands in 2022.

Advantages of Email Marketing

1. Emails Speed Up the Buying Process

Studies show that email marketing is up to 40 times more effective than social media marketing, with the buying process being three times faster than via social channels.

2. Easily implemented

Email marketing is relatively easy, and cheap to implement. A simple in-app subscription gives access to user email addresses, which can then be used to send a variety of marketing emails.

Disadvantages of Email Marketing

1. May Devalue the Brand

Email marketing may be considered spammy, especially if users haven’t subscribed to the brand’s emails. .

10. Sponsorship Ads

Another overlooked, but highly beneficial, app monetization model that is available to publishers is a sponsorship arrangement. If your mobile app has a large user base with high user engagement, this model may be ideal.

It involves finding a single company to become your app's investor/sponsor and giving them exclusive access to advertising to your user base.

This can be done through your sponsor covering a more significant portion of the app's interface with its logo, via a splash screen that is visible to your app users, or via push notifications.

When considering sponsorship as a way to monetize apps, developers should think deeply about their user base, and which products and services would be the best fit for their brand to further user acquisition.

Advantages of Sponsorship Ads

1. Audience Targeting

Sponsorship ads can be targeted to a specific audience, which can result in higher conversion rates.

2. Cross-Promotion Opportunities

Sponsorship ads can be used to cross-promote other products or services, which can result in increased user acquisition and revenue.

Disadvantages of Sponsorship Ads

1. Difficult to Find Sponsors

Not only do developers need to find a sponsor willing to partner up on this strategy, it needs to be a brand that has a similar user base—otherwise this strategy can fall flat..

11. Use Licensing for More Predictable Revenue Streams

If your application sits in one of the app categories that by its very nature collects user-generated data (think geo-locations), you may want to consider licensing this data as a monetization model.

Again, it is imperative that any data you collect and license has been explicitly signed off on by the users involved.

Licensing can be a great route of app monetization, as it allows the users to access the app for free, while the app is paid for by the licensing.

An example of this app revenue method can be seen with the highly successful traffic and navigation app Waze, which licenses its community-driven data collection to businesses wanting to place location-based ads.

Advantages of Licensing

1. Consistent

It can provide a reliable and predictable stream of revenue.

2. Data Control

It can help to ensure that data is used in a way that is consistent with the company's brand and values.

Disadvantages of Licensing

1. Cost

Licensing data can be expensive for app developers, especially if they are small or independent developers.

2. Time

Licensing data can be time-consuming for app developers to find and negotiate with data providers.

3. Limits Other App Monetization Methods

Licensing data can limit the ways in which app developers can use and monetize their data.

12. Crowdfunding

Crowdfunding can be an effective way to inject funds into a venture, especially in the early stages of a free app's development,

If done right, crowdfunding platforms such as Kickstarter, IndieGogo, GoFundMe, and Patreon can offer app developers monetization opportunities matched by few other strategies.

For instance, as of 2024, the top three most-funded apps on Kickstarter are:

Fluent Forever: A language app that has raised $587,000 from 4,434 backers since 2019.
Seedtime: A garden planning app that has raised $341,796 from 2,212 backers since 2021.
MemoryOS: An AI-powered memory improvement app that has raised $642,000 from 2,862 backers since 2021.

Advantages of Crowdfunding

1. Provides Access to a Large Audience

Crowdfunding allows developers to tap into a larger audience of potential app users and supporters than you might be able to reach on your own.

2. Injection of Funds

Crowdfunding can provide a quick infusion of cash to help you get your app development project off the ground.

3. Community Building

Crowdfunding can create a built-in community of users and supporters who can provide valuable feedback and help promote your app.

Disadvantages of Crowdfunding

Competitive Marketplace

With a large pool of apps competing for funders' attention, having a strong brand voice and the resources to get this voice heard through the surrounding “digital noise” is essential. Without a clear vision, it may be difficult to get the crowdfunding ball rolling.

Three Best Practices for Mobile App Monetization

.There are two ways to ensure an app monetization strategy is effective. The first is to ensure that the user experience is protected. No matter which popular app monetization strategy a developer decides to employ, it is essential that app monetization does not override the importance of the user experience

For example, if in-app ads are part of the strategy, the correct ad format—be it video ads or interstitials—should be chosen to ensure minimal disruption to the app's user flow. Ad revenue is great, but not at the expense of paying users.

In addition to this, developers should consider the following when looking at revenue building for their mobile apps.

1. Invest in User Acquisition

As there will always be user churn, developers should be constantly investing in user acquisition. New users are an integral part of any mobile app's ability to not just survive, but thrive in the current market.

2. Hybrid Monetization

Implementing several app monetization models can be extremely effective as it acts as an effective hedge against the drawbacks and limitations of any one strategy.

3. Analytics and Data

One of the most effective ways to optimize an app's revenue-generating abilities is through analytics. If a developer partners with an app monetization platform, they should ensure they are receiving robust insights including revenue, user behavior, and geography. This data can then be put to good use- or sold to marketers for an ongoing income stream.

Which Monetization Model Is Best for Your App?

As with everything in digital marketing, there are several things to consider when deciding which of the different app monetization strategies an app owner should use for their app. Often app developers will decide to employ several of the above approaches to generate app revenue.

However, with advertisers pouring more than $352.7 billion into in-app advertising in 2024 in the US alone, it is clear that the digital advertising ecosystem is increasingly bullish on the capabilities of this app monetization strategy.

When looking to adopt an app monetization method, an app developer should consider the following:

What Does the App Do?

App owners should consider exactly what their app's function and purpose is—what problem does it solve and how does it solve it?

This in turn, will play a large role in deciding how the app should be monetized. So, for instance, where subscription models work well for news and entertainment apps, gaming apps are more suited to in-app advertising.

Who Is the Competition?

As with all product development, competitor research is an essential part of understanding where an app sits in the marketplace.

By researching apps in a similar vertical, developers can get an understanding of which monetization strategies their competitors are using, and see if the same works for them.

Who Is the Target Audience?

Finally, app publishers need to know their target audience. Who are they? What do they want? And most importantly, what are they willing to pay for?

By establishing the above, developers can work to create a strategy, or range of strategies to ensure ongoing success.

Final Thoughts

We’ve covered the 12 most popular app monetization strategies in this post. The strategy that best suits an app developer will ultimately depend on a host of factors including the purpose their app serves and its target audience.

App monetization is complex. If you’re new to the ecosystem it is best to get expert help.

Publift has helped its clients realize an average 55% uplift since 2015, through the use of cutting-edge programmatic advertising technology paired with impartial and ethical guidance.

If you're making more than $2,000 in monthly ad revenue, contact us today to learn more about how Publift can help increase your ad revenue and best optimize the ad space available on your website or app.

FAQs

How Do I Monetize My Mobile App?

There are several ways publishers and developers can monetize their apps. The most popular of these are mobile advertising, in-app purchases, and subscriptions.

Which Are The Best Mobile Ad Networks in 2024?

The five best ad networks for mobile-based publishers in 2024 are as follows:

Publift
Admob
Smaato
Unity
InMobi

How Much Money Can an App Make?

The amount of money an app will make depends on several factors, including the user base, the ad network, and the chosen revenue model. In many cases, a successful app can earn up to thousands of dollars per month.

How Do I Choose a Monetization Strategy for My Mobile App?

There is no one hard or fast rule for how to choose the best app monetization strategy for your app.

While the in-app purchases model may work well for a gaming app, for example, in-app ads will be a more effective way to monetize your app if you are offering news content.

The user experience is also a crucial part of the decision-making process. Will the app monetization strategy suit your target audience and how they interact with your app?

Android apps and iOS apps may also require different strategies to suit the platform and audience.