Monetization Solutions for Mobile Apps

Monetization is one of the most important aspects of sustaining and growing your mobile app business. Whether you are developing your first mobile app, or have a portfolio of Android and iOS apps, understanding different monetization strategies can help maximize your revenues, and will yield other benefits to your business as well! In this guide, we explore key monetization solutions, focusing on ad-based models, in-app purchases, as well as some alternative methods to monetize your users.

Understanding Monetization Models

Monetization strategies vary greatly depending on the type of business or app you are running. Fortunately, you can utilize a variety of monetization strategies to best suit the needs of your business and users.

Free-to-Play (F2P) Model

Especially popular in mobile games, this model allows users to download and play for free, with monetization occurring through in-app purchases and ads. This model has seen great success due to its low barrier to entry, attracting a wider audience.

Pay-to-Play (P2P) Model

As the Free-to-Play model has exploded and become the most common type of app monetization model, there is still great value in Pay-to-Play games, especially where a brand already exists, and consumers are aware of the game or app (ie: think boardgames that have gone mobile such as Monopoly & Battleship). Pay-to-Play apps typically are premium apps that cost the developers a lot of money and/or time to develop and want to ensure that they are generating a minimum amount of money for each user of their app. While this can turn many potential users away from trying the app, users who have need for a premium product or service can be encouraged to buy and use your app.

Ad-Supported Revenue Models

Display ads, interstitial video ads, and rewarded video ads are some of the most common forms of monetization, especially for gaming and mobile apps. These methods allow users to engage with ads in exchange for continued access to free content, creating a win-win for users and businesses.

Ad Monetization Strategies for Mobile Apps

For mobile apps—especially free-to-play games—ad monetization is a significant revenue driver. There are several ad formats that developers and businesses can leverage, each offering different benefits.

Rewarded Video Ads

Rewarded ads (also known as User-Activated Ads) are particularly popular in gaming apps. Users choose to watch a video ad in exchange for in-game rewards, such as extra lives, currency, or premium content. This format not only improves engagement but also drives higher retention, as users feel they are gaining value through the experience. Since Rewarded Ads are NOT skippable, and the user must watch the entire ad to be rewarded, Rewarded Video Ads provide a premium, high CPM monetization solution for app developers. Building Rewarded Video Ads into your app’s logic and user flow is crucial for tapping into this amazing monetization source.

Interstitial Video Ads

These are full-screen ads that appear at natural pauses or transition points within the app, such as between levels in a game. Interstitial ads are highly engaging due to their full-screen nature and can generate higher revenue compared to static banners. Often, interstitial video ads are skippable, thus offering lower CPM’s than Rewarded Video Ads, but the amount of inventory across all ad networks for interstitial ads is tremendous.

Display Ads

Banner ads are one of the oldest forms of online advertising. In mobile apps, they are usually placed at the top or bottom of the screen. While simple, they can be effective when used correctly and when they do not interrupt the user experience. CPM’s will generally be relatively low, and so it’s always important to consider if the user experience of banner ads on your app is worth the value that it drives. In some cases, it absolutely is, in others, the user experience is far more important than the revenue display ads can produce.

In-App Purchases (IAP)

In-app purchases are another popular monetization method, especially in free-to-play mobile games and apps. IAPs allow users to purchase virtual goods, premium content, or additional features, enhancing their experience within the app.

Consumable IAPs

These are items that users can purchase and use, such as in-game currency, extra lives, or power-ups in a gaming app. Consumable purchases are often repeatable, making them an ongoing source of revenue.

Non-consumable IAPs

These purchases provide permanent benefits, such as unlocking premium features or content, removing ads, and more. While non-consumable IAPs are a one-time purchase, they can drive significant upfront revenue, particularly for apps with loyal user bases.

Other Monetization Options

While ad-based models and in-app purchases are common, there are other alternative methods that businesses can explore to monetize their apps or digital products:

Offerwalls

There are many Offerwall companies that provide an in-app experience for your users to complete tasks, surveys, or even download other apps in exchange for in-app rewards (ie: free lives, in-game currency, etc.). While on their own would not be an ideal way of monetizing most types of apps, Offerwall use as an alternative to IAP’s and as an alternative method of acquiring more in-app currency or perks can be very beneficial.

Sponsorships & Partnerships

Companies can partner with brands to offer sponsored content or co-branded in-app experiences. This not only generates revenue but also enhances the user experience by providing relevant offers.

Affiliate Marketing

Act as an affiliate marketer and promote 3rd party businesses or apps on your platform, or via your other marketing channels. Leverage any non-monetized traffic by promoting other products or services in exchange for commission.

Monetization strategies vary widely depending on the type of app you’re running, but the goal remains the same: to maximize revenue while enhancing user experience. From ad-based models and in-app purchases to affiliate marketing and premium content, businesses have numerous options to explore. PSMTrack has over 20 years of experience with app and website monetization and offers consulting and other marketing services to app developers. If you need some help with your monetization strategy, get in touch with PSMTrack today!