In late first quarter of 2013, research powerhouse IDC published a report entitled: “Mobile App Advertising and Monetization Spotlight 2012-2017: The Economics of Free.” The report explored their findings on models related to app monetization that was broken down by country, and included mobile advertising projections through 2017.
With the app market continuing to explode, publishers are always on the lookout for new ways to monetize that will best suit them and their app. However, there is no surefire way to monetize and developers need to be clear on which app market they see getting involved in before they reach decisions on how best to monetize. While the freemium model is still on top as far as monetization, the report mentioned above shows that in-app advertising is overtaking PC and mobile browser-based ads in revenue growth, positioning it as a growth model on the rise. However, not in every market.
The statistic presented below represents the CTR rate for in-app advertising in the selected countries as of March 2014. In the course of the survey period, it was discovered that 24 percent of smartphone users in the US click on in-app ads a portion of the time. CTR rates in China for in-app advertising was the highest with 65 percent.
Best Practices for App Monetization
With the move forward to monetization, I’ll go over just some of the strategies app publishers are using to monetize.
These ads are sometimes confused with banner ads, but they should not be as they are very different. We’ve all seen these. Those ads that appear suddenly as you navigate from one screen to the next with an X in the upper corner or other buttons to close or dismiss.
The Interstitial has been proven to be a very effective type of ad when monetizing. They deliver great eCPM (Effective Cost Per Mille) and are very popular among app and game developers. They are a proven app monetization format. See the chart below on how quickly Interstitial ad revenue is rising from the first quarter of 2014.
This ad format is gaining in popularity because of its seamless feel that blends right into the mobile user experience. Via the integration of native ads on an app’s screens, users are presented with ads that do not disrupt their UX as much as banner ads do.
Native ads are able to deliver messages in a clearer way and generate more revenue. Because they do not disrupt the user experience and become more a part of it while blending in with the design, apps that use this style of advertising retain users at a higher rate while keeping them active.
A Facebook feed is a great example of where you might see native ads. App developers are free to create native ads that blend in with their design by implementing a relevant API. They can place them how they want, where they want to integrate them in a seamless fashion within their app.
Native ads deliver high CTR and conversion rates by not annoying users and are a proven way to monetize an app and to keep revenue streaming. Below is an example from the Facebook’s developer page that shows how a native travel-related ad fits into the end of an article about travel.
App developers who are believers in the freemium model, are high on this tactic to monetize.
The diverse types of purchases that users can make run the gamut with the freemium model. Users can make an in-app purchase to unlock a feature, gain added functionality such as exclusive content, the purchase of time to use an app beyond a free trial period, pay fees for the removal of ads, the list goes on. It is all about using creativity and knowing your audience to get the perfect fit.
In the mobile gaming sphere, in-app purchases to gain more lives or more power have driven the growth of such games as Candy Crush Saga, where users can purchase candies with certain powers. Below is an example of an in-app ad, coaxing the user to pay for unlimited use of the app.
The statistic presented below shows the total mobile in-app purchase revenue globally through 2017. On a global scale, revenue generated from in-app sales reached $2.11B in 2012 and is expected to surpass $14B in 2015.
As you can see, there are a wide selection of strategies to monetize your app. App developers need to decide on which one or which combination to employ in their app, based on their target audience.
Monitoring is Key to Optimizing App Monetization
By monitoring the behavior of users and how they interact with your app monetization tactics using visual mobile app analytics solutions, such as Appsee provides, you get to understand the why behind user actions. This type of analytics goes beyond traditional analytics such as Google Analytics by showing you more than just key metrics. You can learn a lot about what works and what doesn’t, go back and refine as needed and re-release. This type of monitoring should be active from the day you launch your app. You will see that with constant monitoring, you will be empowered to discover the why behind users dropping out or making purchases off one screen over others, and hence you’ll be able to maximize your app’s monetization power.
Let me briefly go over the features of a mobile app analytics tool and provide examples of how you would utilize each one in order to maximize your app monetization strategy.
Take a deep dive into your user’s experience and behavior with User Recordings. This feature allows you to see firsthand how your users are using your app with their eyes. Witness in real time every action that users are making with regards to gestures (Tap, Pinches, Swipes).
By applying this feature to your app monetization efforts, you can optimize where certain ads go. Say, for example you had an interstitial ad come up in a user’s journey from one screen to the next. Not only were users not clicking on the ad, but many were bouncing from your app. You might want to dig further into the issue. Upon investigation you realize that the Ad was really disrupting the user experience while users were reading a piece of content. You refined where the ad was placed and you saw your CTR rates rise and dropoff rates fall.
See a visual aggregated report on all gestures made on each of your screens. See where your users are putting their focus.
Say, for example you see a large amount of unresponsive taps on a particular screen where you have an image. You discover that users are thinking that the image is actually a call-to-action (CTA). You could be missing out on revenue. Via this report, you find the spot where you have your image is actually a great spot for an ad. You place a perfectly contextual native ad in that spot where the image was, and see your in-app monetization skyrocket.
Real-time Visual In-App Analytics
See a visual report of all your users’ action and be provided with insights into how users are navigating from screen to screen, where they spend the most time. You can also see where a confusing UI element is causing them to drop out of your app.
Here is a great example in the form of a technical problem that is costing you revenue and will continue to cost unless fixed. Say, you notice a high CTR for your one time offer to unlock the “unlimited lives” feature on a game. When the user makes it to the payment screen, they are unable to make the purchase due to a technical problem. You fix the issue and you see your revenue closely matching your CTR rate.
As I’ve gone over in this article, app monetization can be a steady source of revenue. It’s up to you to decide what works and what doesn’t. Monitoring the user’s experience and behavior is imperative in seeing what ad model works for your target audience and planning accordingly. Plan it right and you can be monetizing your app well into the future.