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Home » Blogs » Mobile App Monetization Strategies for eCommerce Businesses
By Gaurav Parvadiya | Last Updated On February 21st, 2024
App monetization describes how a company can use its mobile app’s user base to generate revenue. While many businesses expect creating and distributing a mobile app to bring in money immediately, this is different.
But the truth is far away from instant solutions.
With over 2 million apps available today on the Apple App Store & over 3 million apps on Google Play, more is needed to launch an app that users adore. Businesses must be able to make competitive apps that stand out from others and build their own space in this competitive market.
Once the app is created, it’s required to strategize things that allow customers to use your app and download it. So that you can monetize your app and make more revenue. Leaders must choose the right app monetization strategy to convert these users; otherwise, revenue will be lost.
Due to the availability of paid apps, in-app purchases, and other options, there are numerous methods for achieving this. This blog will give you all the information on the most recent app monetization strategies, whether you’re trying to monetize your app for the first time or want to maximize the revenue from an established app. So, let’s dive into the basics first:
Generating revenue from a mobile application by leveraging its user base is called mobile app monetization. It entails a variety of strategies and approaches for extracting value from users directly or through partnerships with third-party networks. Because of the exponential growth in mobile app usage across various industries, the concept of app monetization has gained prominence.
The fact that apps have taken over as people’s preferred method of consuming content underscores the significance of app monetization. Mobile apps have established themselves in almost every significant industry, including education, finance, healthcare, and entertainment. In fact, a recent study found that ecommerce apps are preferred by 85% of consumers over mobile websites.
This pattern is not exclusive to online shopping. Additionally, projections indicate that by 2020, there will be an astounding 2.4 billion mobile gamers worldwide. These figures show how widely used and influential apps are in our daily lives.
Considering some statistics further reinforces the significance of app monetization:
One of the more popular methods for monetizing apps is through in-app purchases. Numerous well-known apps use this model to generate revenue. In-app purchases are the most popular app monetization method, preferred by the most popular mobile games and e-commerce companies.
This app monetization method is the most reliable due to many reasonsThe in-app purchase model of app monetization is the most dependable for various factors. People are much more likely to purchase after downloading the app. This is due to the fact that it reduces the risk a typical user feels when purchasing.
Driving in-app purchases requires a lot of work from the marketing and development teams. But the most challenging part is to make customers feel worthy of downloading the app.
Marketers must plan their strategy and employ funnels to encourage app users to purchase. On the other hand, developers must create a system that makes it simple to make in-app purchases and makes those benefits clear.
Subscription monetization models offer a popular approach to in-app purchases, providing paying users a distinct experience compared to free app . Rather than adopting an all-or-nothing strategy, you can create multiple subscription packages of varying value levels, catering to different user preferences.
A prime example of this model is the renowned dating app Tinder. While the app can be downloaded for free, Tinder introduces two subscription tiers: Tinder Plus and Tinder Gold.
Let’s delve into the specifics of their subscription services for various users:
All subscription levels can be purchased for durations of 12 months, six months, or one month. This model ensures that the app generates revenue from its entire user base.
Applications for banking and transactions have become very popular, allowing users to finish transactions for a small fee. Beyond the world of Bitcoin, several wallet-based applications are thriving in India that allows users to conduct transactions and charge a fee for transfers to bank accounts.
This type of mobile banking is still relatively new, but it has a lot of potential for monetizing apps in the future. Transactional apps have quickly grown in popularity, devaluing cash and even eclipsing the ease of credit and debit cards.
The main challenge, however, is finding effective ways to monetize these transactional apps through creative development. Businesses must develop distinctive transaction apps that set them apart from the competition to succeed in the market.
Thanks to the wide usage of mobile phones, the transaction app market is full of hope and anticipation for the future. However, the real challenge is creating an app that goes above and beyond expectations and effectively performs its function.
You can earn through affiliate marketing by telling your audience about external products. Affiliate marketing is used by website owners, particularly bloggers, to monetize their work by promoting goods offered for sale on other websites.
Similarly, you can register as an affiliate and market goods and services from other companies in your app. Affiliate marketing is more covert than ad monetization and doesn’t have the same overt drawbacks like ad fatigue and quality control.
Affiliate links are simple to add to your app, so you can start earning money even using a different monetization strategy.
It is a quick and easy way to include worthwhile links in your app that will ostensibly boost sales. You can enroll in the appropriate affiliate program and market goods that fit your niche based on your app’s category.
In-app advertising remains the most prevalent method among app owners, sparking numerous discussions and debates. The strategies employed for in-app advertisements are far from one-size-fits-all; they vary greatly across different apps. However, general guidelines can be followed for effective app advertising.
This approach offers a quick and straightforward path to monetizing apps. However, the revenue generated greatly depends on the size of the app’s audience, which can be a cause for concern.
It’s a simple reality that many apps owe their existence to mobile ad networks and in-app advertising. Simultaneously, mobile app marketers have recognized the significance of preserving the user experience to sustain their apps’ longevity and popularity.
In the case of sponsorships, you work with marketers who give prizes to your users for carrying out particular in-app tasks. By utilizing your large user base, you can entice companies to enter into sponsorship deals for extensive exposure to your target audience. With this strategy, you can take advantage of sponsorship opportunities and give your users worthwhile incentives.
In contrast, partnerships entail working with other apps with a comparable user base. By utilizing the advantages and user base of the partner app, you can improve your offerings and draw in more users due to this mutually beneficial relationship. Working together can produce a synergistic effect that broadens your audience and adds distinctive value for your users.
Depending on variables like the size of your user base and the potential to offer special value through a partnership arrangement, you should decide whether to use sponsorships or partnerships. Both strategies present promising opportunities for app monetization and expansion.
There are many more ways to make revenue from apps and make it a money machine. The above were the most common ways to monetize your app.
Choose a method that suits your business needs and audience type, and most importantly, invest in an app that helps you stand out from others.
Let’s look at some of the metrics that mobile app companies have been using effectively to plan, measure, and evaluate their performance.
The Customer Retention Rate (CRR) measures the percentage of users who have downloaded and installed your app and who have continued engaging with it over a given period. It is an essential metric for mobile marketers because it reveals how successful an app is at keeping its existing users.
Statista reports that the average CRR for mobile apps worldwide 2019 was 32%.
Another research conducted by Andrew Chen, general partner at Andreessen Horowitz, revealed that the typical Android app lost 77 per cent of its daily active users within the first three days after it was installed. Monitoring and enhancing your CRR is necessary to ensure the continued success of your app.
A churn rate metric measures the percentage of users who stop using a mobile app within a given period. It is calculated by any of the given two methods
Churn rate (%) = 1 — retention rate
Churn rate (%) = No. of lost customers / total No. of customers at the start × 100
Customer retention rate (CRR) and churn rate are closely related metrics. Depending on the size and industry of the business, different churn rates are acceptable. For SaaS companies, a 3-5% monthly churn rate and a 5-7% annual churn rate are acceptable. Due to higher customer acquisition costs and more extended contracts, larger companies typically have lower churn rates, whereas startups frequently experience higher churn rates, sometimes as high as 60%.
Conversion rates show how many users buy in-app items or subscribe to premium features. Conversion rates reveal your app’s user journey’s efficiency from engagement to monetization. Analyzing conversion rates help you find conversion funnel bottlenecks and optimize user engagement to increase conversion rates. A/B testing pricing, streamlining checkout, and offering limited-time promotions can boost conversion rates.
Determines how valuable a user is for using an app or lifetime value (LTV). The data aids marketers in deciding how much they should spend on advertising to bring in new clients while still making a profit.
The funnel conversion rates determine the quality of users moving through the marketing funnel, from the time they first see an advertisement to the point at which they complete an important, money-making in-app event after downloading an app. By identifying the points in the advertising/purchasing process where users are losing interest, this data enables apps to optimize their monetization strategies.
CPM, or “effective cost per mille (thousand),” is a variation on CPM or the cost to reach 1,000 users. E CPM matches CPM.CPC campaigns have effective CPMs because even non-clickers see ads in your app.
There are three parts to the formula. The CPC rate must first be multiplied by the number of clicks. You are then given your overall revenue. To determine the number of CPM units, divide the total number of impressions by 1,000. To calculate your eCPM, divide the total revenue by the CPM units.
A necessary component of the process of monetizing an app is obstacles. It takes skill to navigate multiple challenges and careful analysis of user behavior to monetize an app successfully. Let’s look at typical issues encountered during app monetization and possible strategies to address them.
One area for improvement is when adverts are placed uncomfortably within the program, which results in a lousy user experience. Low click-through rates (CTR), decreased customer retention, and eventually lesser rewards are possible outcomes.
When choosing an app monetization approach, it is essential to put the user experience first to handle this issue. You may continue to provide your users with a great ad experience by introducing strategically positioned and pertinent advertising that improves rather than detract from the user experience. Conduct extensive testing and experimentation to find the best ad placement that balances user delight and income generation.
Adding new users to an app can be expensive, which might affect the budget and jeopardize the app’s profitability. Without a thorough understanding of user behavior and preferences, acquisition costs may soar, impeding attempts at long-term monetization.
Publishers might spend money on user experience (UX) research to learn important information about consumer behavior and preferences. By being aware of their wants and expectations, you may make your app’s features and capabilities more engaging for users. Improved user experiences increase app engagement and word-of-mouth referrals, eventually lowering user acquisition costs and boosting profitability.
The creation of premium memberships is a well-liked monetization technique. However, it may unintentionally give readers a wrong impression if publishers only emphasize the benefit of banning adverts. Users can believe that the premium membership aims to alleviate the discomfort from advertisements, which might differ from what they expected.
It is essential to ensure that premium plans provide more than just an ad-free experience to address this issue. Give premium users unique access to features and added value to improve their app experience. Offering individualized recommendations, access to premium material, cutting-edge features, or expedited customer support are a few examples. You can justify the cost of the premium membership and raise user happiness by offering concrete advantages.
Businesses without apps face investment issues. Custom app development is expensive. This can prevent businesses with limited budgets or app development apprehension from utilizing app monetization.
Twinr is a good option for low-budget app developers. Twinr converts websites into mobile apps for businesses. This method eliminates custom app development and reduces the cost of creating a mobile app from scratch.
Twinr’s cost-effective and efficient mobile app market entry has helped many businesses overcome the investment issue. Twinr’s seamless conversion process lets businesses create mobile apps while focusing on their core operations and financial stability. Even with limited investment, businesses can adopt app monetization strategies and take advantage of the mobile app ecosystem.
Best practices improve mobile app monetization. Following proven strategies and optimizing your monetization model can boost app revenue and success. Let’s discuss app monetization best practices:
Increased revenue/earnings can be achieved through the use of in-app ads since digital advertising has become a tried-and-true method of app monetization ever since the explosion of mobile sales in 2008. App banner ads were quickly adopted by app developers and have since evolved to include interstitial, video, native, and text advertisements.
The market for this prevalent strategy is anticipated to increase to a staggering $226 billion in the year 2025.
Interstitial advertisements, which take up the entirety of the screen on a mobile device and appear at points of natural transition, provide a viable alternative to combat banner blindness. Because of their tremendous eCPM growth, which is projected to increase by 34% on US Android devices in 2021, they are an effective method of monetization.
Native ads are native to a particular app and appear as natural posts in the feed. They are designed to disrupt the user experience as little as possible and boast high engagement rates, boasting a click-through rate (CTR) up to 8.8 times higher than standard display advertisements.
Freemium apps allow users to download the app for free but require in-app purchases to access premium features. This business model has been very successful for Spotify, which has converted 24 percent of its users into paying subscribers. Spotify has been successful thanks to its commitment to continuous experimentation, A/B testing, and user focus.
The trend of making purchases within apps is gaining steam, particularly in gaming apps. Users can spend real money to unlock in-game features or items, which are strategically placed for purchase at points in the game app where assistance is required. The procedure is straightforward, and payments are made using credit cards saved in app stores.
Affiliate programs, such as those offered by Google, Apple, and Microsoft, enable app developers to promote other developers’ apps within their app storefronts. App developers have the freedom to choose which apps to promote, allowing them to align their brand with similar offerings. However, commissions may be low.
App developers can maximize the effectiveness of their monetization strategies and bring in significant revenue if they follow these tips and put them into practice. The constantly shifting landscape of in-app ads, freemium subscriptions, in-app purchases, and affiliate marketing presents many opportunities to maximize app revenue and deliver a valuable user experience.
App monetization plays a vital role in generating revenue for businesses. Building apps goes beyond altruism; companies seek substantial returns from their investments. Although monetization may not be at the forefront of your mind while creating an app, it is essential to consider it. Various channels exist to help businesses capitalize on their apps, and selecting the optimal option is crucial for maximizing returns.
Shifting focus to Twinr’s capabilities, it offers an excellent solution for businesses looking to own an app and generate income through monetization. Twinr provides a comprehensive platform that simplifies developing and monetizing apps. By leveraging Twinr’s powerful tools and resources, businesses can create and monetize user-friendly apps. Let us help you make your app make money and become a money-making machine.
Gaurav is the founder and CEO of Twinr, a tech entrepreneur with a decade of experience and a passion for SaaS. With a Master's degree in Computer Science, he specializes in no-code development, driving innovation in the mobile app industry. When he's not busy growing the company, you'll find him writing about tech, growth, software development, e-commerce, and occasionally sneaking in a game of badminton.
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