Even after putting in their best effort in app development, why are so many app developers still unable to generate revenues successfully? In this article, our guest author Lina Lugova from Appgrow will reveal what’s working and what’s not in this new age of app monetization.
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App developers revenue: expectation vs reality
Despite the discouraging stats you may have seen, apps can still make money. However, the days of just developing an app for a constant revenue stream are pretty much over. Apps have become the most powerful tools for user engagement. Even if your app does not compliment a bigger software or service, you can still strive for constant growth and development.
Surprisingly, almost 54% of all apps have no decent monetization strategy. There are several reasons for this: some of them are made by non-profit organizations (eg Wikipedia), brands or corporations. But the main reason might be the fact that the vast majority of apps have not yet reached a decent amount of downloads to apply at least one monetization strategy properly. Here are the stats of Android app downloads per week – so the better your ASO strategy, the more likely you are to get users on the first couple of weeks after the app launch:
Three revenue blockers for in-app monetization
When monetizing an app, there is always the risk of a glass wall, when you can’t scale up your app revenue no matter what you do. Sometimes it’s all about your app quality, but sometimes the reason is external.
1. Overcrowded market + low user loyalty
You may all remember the good old days when the user was not so demanding. He had an all-time favorite game and played it daily on his way to the office.
Today, with thousands of apps being added to the app stores every day, the chance to reach the top of the chart or become viral is nil. The absence of brand awareness results in the pursuit to capitalize on earned media, eg TheVerge, Techcrunch and more. But even if the media is getting pickier, the user gets even more demanding.
He doesn’t forbid bugs in UX or app functionality and if he sees an ad at an inappropriate time, he goes to the play store and rates the app badly. App ratings are important to developers, they influence downloads in the Google Play Store.
2. Wrong monetization model
When building an app, you always have app superheroes in mind: an app that you consider successful, or an app which idea you took for developing your own app. You see which app monetization model works for it, and decide to implement it too.
There was a quiz app for children 9 – 11, which bombed them with banner ads and interstitials and charged 0,99 for each hint. Guess what happened — parents sued this app, rated it a 1 and abandoned it forever.
The app monetization principles were the same as in many other quiz games but…for adults. If you are dealing with a children’s app, make sure you provide your audience with real educational value or entertain them. Add a “parental control” option which allows parents to control how the app is being used, it will surely make them feel safe about your app.
3. Managing multiple SDKs
According to the stats, 74% of the top free apps have more than 20 SDKs integrated. It’s painful even to imagine how they manage all these. Basically, they just install the ad network SDK to find out what works and then forget to uninstall it even if it’s useless.
The best way to keep all monetization SDKs together and manage them is to use app mediation platforms like Epom, InMobi, and more. They maximize your app profitability with the vast variety of ad formats. If you haven’t tried anything better than AdMob, then now is the time: some ad mediation platforms offer expert advice, free optimization and exclusive demand (Epom), some of them — exclusive geos (InMobi).
Working and non-working strategies to boost your app revenue
When you are monetizing an app, you’ll most likely choose the most obvious and proven monetization strategies: advertising, in-app purchases, or both. It’s widely understood that ad revenue is highly dependant on user engagement – the amount of time users spend on your app. So the first dilemma of an app developer is figuring out how to balance between being loyal to the user while harnessing the desire to put an ad in every visible part of the app to recoup investments.
According to the Research gate publication stats, the amount of downloads drastically affects the monetization strategy that the app developer chooses.
But why is data monetization among them? The reason is that the benefits of using data monetization have been finally discovered by app owners. As controversial as it sounds, data monetization can bring decent revenue to app developers if it’s done right. Let’s compare the do’s and dont’s of every strategy, to help steer you in the right direction.
In-app ads are widely considered as a one size fits all. Video and display ad formats offer a great choice on how advertisers can reach the user without irritating him. However, the evergrowing mobile advertising industry attracted a lot of fraudsters, that are offering higher CPMs for showing fraud and auto downloads. Mobile fraud affects the entire industry: the ad networks, advertisers and app owners prefer quality over quantity in terms of traffic volumes.
Aside from that, users still tend to hate in-app ads, and here’s why:
- The ad has no incentive: why click on it if it does not provide any value?
- Small ad size: in-app banners are usually too small, and they irritate users while providing zero conversions. Most of the banner clicks are accidental, and most likely you’ll just end up spoiling your karma. Use smart banners instead.
- Bad UI in general: no escape button, ad buttons that are not optimized for fingers (so-called “fat finger”), the sound is on, etc. A bad ad in the middle of maximum user engagement can result in no less than app abandonment.
- Zero relevancy, zero trust: an ad about donuts in a running app, or a credit offer in a child app is not that uncommon. If you aren’t on a first name basis with advertisers, brand safety can be a major concern for both you and him. Nowadays, less than 25% of users trust online ads, and it happened because app owners are usually a yes-man to scummy ad networks that pay more.
Give users a choice: ads shouldn’t always appear unexpectedly. Rewarded videos, offer walls and surveys must provide real value for the user. 71% of users would rather watch video ads than spend money on in-game content. You can find the full list of best practices on banner ads here.
App data monetization
Data monetization at its core is collecting, analyzing and passing non-personal identifiable app user data to get app revenue. For app developers, it’s a good source of passive income and an opportunity to earn money on users. Why am I saying non-personal? Because data monetization of non-personal identifiable user data is the only 100% GDPR and Google compliant form of earning money on users.
With a minimum of 50 000+ DAU, and about an hour or two you can get your app ready for data monetization. The full data monetization guide was published earlier, I’ll just cover the major dos and don’ts of data monetization.
1. Make sure you actually have 50 000+ DAU. App developers with low DAU install a data monetization SDK in hopes that it will earn them a fortune in the future.
2. Get clear user permission before collecting users non-personal identifiable data.
3. Combine data monetization with other monetization strategies.
1. Don’t judge others for earning with data monetization without researching the subject. Data monetization entails non-personal identifiable data like screen size or Bluetooth connection that is used only as quantitative data for researches and thus is paid less than personal data. It keeps the user anonymous.
2. Don’t neglect your app security. This pic looks fun, but make sure your users are protected from accidental bugs:
3. Many app developers are searching for more revenue. It comes with adding some personal data information to non-personal in the pursuit to get +50% in-app revenue. Remember the weather app, ‘Weather Forecast—World Weather Accurate Radar’, which subscribed users to paid services without permission.
The statistics show that 9.2% of apps use personal data as a monetization strategy, 6.2% of apps combine personal data with advertising, and 1.2% combine all three monetization strategies.
Knowing that only 5% of app users spend money in-app, the total amount of revenue from in-app purchases is 20 times larger than the total revenue by all the other methods put together.
In-app purchases include things like access to exclusive features, virtual currency, extra health, the ability to use the app without ads or any other consumable things to be spent in your app.
In-app purchases can still work if you put them in the places where the user has completed the workflow and still feel engaged. Candy Crush has 23 localized versions of its app. Can you imagine the volumes of their audience? In December of 2013 more than 500 million people downloaded the game. By offering users a variety of possible in-app purchases like extra lives or gold bar packages, Candy Crush converted some of their users into paying customers. Today Candy Crush makes nearly $1 million daily.
Offer the user all the possible upgrade features as a single package or bundle, like the 7-minute workout app:
The app store is too saturated to expect to be discovered there. But just like a real store, the brands on the shelves do everything they can to get you to want to buy their products before you ever get through the door. It’s the same in the app world.