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Hey you! App marketer, don’t leave ad revenue money on the table! – Part I

mobile app monetization

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Everybody loves to talk money! So let’s.. If you are in the app business, there is 42% chance that you use ads for monetization. I’d argue that the industry, as a whole, hasn’t yet fully optimized monetization through ad revenues (put aside the top 10% lucky ones). This is the first part of a comprehensive training that includes valuable overview, guidelines, tips and references to innovative ad platforms.

It’s so hard to make money of apps that I even lose faith from time to time, thinking we better all pack up and head to the nearest employment agency. There’s no way that we can make it, with over a million apps out there, per platform! Are we all heading for bankruptcy? But really, almost nothing comes easy in life. Nothing. How tough is it to find your mate, finish your degree and get a job, make a livin’, buy your first apartment and raise kids? Still, millions of people are doing it every day. Some are doing better than others, but we are all in the game. And we all know that the more we learn, try and experience, the better we understand the rules of the game. We learn to be patient, plan ahead and aim at the right direction. Mobile-app ad monetization is no different.

Millions of apps are paving their way to success. Not all will reach their goals, but some have better chances than others. Those who will optimize on elements that are in their control will significantly increase their chances to succeed. How well we monetize our app depends on how strong we squeeze the lemon. And leave no drop uncollected!

Remember Fluffy Bird? Sorry but NO! I have no intention of using (again) this worn out example. Moreover, Fluffy Bird is just one example. One lucky indie developer who won the lottery, and even he did not dare dreaming this would happen. When it did, he sort of freaked out…  He must have done something right, I admit. But for most of us, this is not real life. You DO NOT need to become Flappy Bird to become a huge success. Having said that, this training series will discuss ways to optimize and get the most out of your app ad revenues – again, it’s about optimizing the elements that you can control.

App monetization main business models in a nut shell

I know, this training is about ad revenues, but we’ve got to have some context. The main business models for generating revenues from mobile-apps are:

  • Publishing a paid app (submitting it in the “paid” section of the app store)
  • Offering in-app purchases (premium upselling)
  • Enabling e-commerce activity
  • Serving advertisements

Recent researches indicate that the paid apps ship has sailed. At least for 96% of grossing apps (according to App Annie data and as recently written by Mashable).

Now, this is definitely a trend that justifies evaluating and leaning on additional business models.

Some super interesting stats were lately released by Visionmobile:

  • 60% of developers are below the “app poverty line” – meaning they earn less than $500 per app per month (OMG!!)
  • iOS app revenues are significantly higher than Android’s, with median revenues between $500- $1000 per app / month (for Android it’s $100 – $200 per app / month)
  • Use of e-Commerce as a revenue model for apps grew significantly, from 5% of app developers in Q3 2013 to 8% in Q1 2014
  • Median revenues of organizations involved in e-Commerce are $2,750 per app/month, by far the highest among all app revenue models.

The image below presents revenue streams of app developers, split by popularity and monthly revenue.

vision mobile

Click the image to enlarge

Here are some of my insights after looking at the graph above:

  • “Contract/commissioned apps” refers to those who get paid for developing an app for someone else who is the publisher. So they do not own the app. You will sure agree that the high median revenue here is not surprising.
  • E-commerce revenues are very impressive, indeed. So far, a relatively small portion of developers have joined this game (8%) though the trend is positive. I would expect number of developers offering e-commerce to significantly grow as platforms like Amazon’s mobile associates emerge. This means that the e-commerce revenue per developer will shrink, accordingly. Still, e-commerce as a revenue steam sounds interesting and worth further investigation.
  •  While advertising is the most popular revenue model for app publishers (26%), the median revenue here is $150/m. I am not surprised here as well and I plead you to not be discouraged. On the contrary! I say that there is a lot of optimization that can be done here, that can increase ad revenue results.

Fresh and new data from App-Annie and IDC, indicates that the percentage of app developers that have displayed paid ads on their apps had reached 42%.

developers using advertising for monetization_appannie and IDC

Click the image to enlarge


OK, so now we know a bit more about the eco-system, and the challenges we are facing. Perfect time to start discussing the elements that can be optimized in order to maximize ad revenues.  This will be discussed in part II of this training.

Elli is one of Co-Founders, a mobile expert and a mentor. Having years of experience in the mobile and marketing industry promoting popular mobile apps and B2B related services. Presenting specific expertise on users' acquisition strategies, PR, social media, product marketing, BizDev integrations and more
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