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App monetization is a collection of techniques that create additional revenue within an app. These techniques include in-app ads, cross-sells, and abandoned shopping cart reminders.
With the current prevalence of free apps, mobile marketers must work harder to create revenue within their app. Usually this is done by influencing user behavior to encourage more ad impressions, purchases, or other conversions.
Increasing ad revenue can start as early as the point of app download. For example, a retail app might offer users an incentive to convert by way of a discount, effectively thanking them for downloading the app. Even if this is a small purchase, users will remember this and return to convert at a later date. Ideally, marketers should aim to monetize users via this method within the first three days of app download — especially when we consider that just 21 percent of us retain an app after the first day.
Upselling and cross-selling is another way to create additional revenue within an app. Leanplum’s analytics platform can record purchase data from users, and then present them with related products suggestions later on. Moreover, marketers can encourage users to return to their shopping cart with push notifications. If the person was searching for hotels in an app and did not complete the purchase, marketers could send a reminder outside of the app to encourage them to return.
Influencing behavior is one form of app monetization, but another is external sources. In-app ads can generate additional revenue for app owners. More ad impressions usually means more ad revenue for marketers. At the same time, users can pay for an ad-free upgrade. Another option is affiliate programs or sponsorships, which benefit both the app developers and the sponsors by increasing brand awareness.
Ideally, marketers should use multiple app monetization methods to guarantee the best return on investment — from encouraging in-app purchases to earning commissions by working with big names.
App monetization is essential for marketers who want to remain competitive in a world of free mobile apps whilst still making a healthy ROI. An additional benefit to making money from these marketing methods is a better user experience. For example, marketers can personalize ads to target specific users, which in turn delivers more relevant content while encouraging them to re-engage later on. Similarly, users who have been targeted early on with personalized incentives will feel more valued and may continue using the app on a long-term basis.
Free apps are certainly no barrier to earning a profit; they simply must employ monetization strategies to ensure long-term success.
To learn more about how Leanplum managed to monetize 100 percent of an app’s users, read our TextNow case study.