How Do Free Apps Survive?

The app boom isn’t over and it won’t in coming years either. 90% of apps in the market are free and surprisingly, paid app revenues fell down from 75.9% to 37.8%. The aforementioned stats clearly depict the dominance of free apps in the app stores globally.

Free apps rake in money and popularity but the question of the masses is how? Well, there are several methods of app monetization and believe me, they do wonders. Ever wondered how Pokémon Go, Angry Birds, Instagram and other free apps mint money? Let this “not so secret” disclosed.

Various app monetization methods are used to make an app a cash cow. The most popular among the app creators and app marketers are listed below.

App Advertising

Probably, the most widely used monetization method, app advertising is done via third-party ad networks. Ever saw commercials for various products and services while using an app? Exactly, that is app advertising and it chips in a lot of money too.

Majorly, app ads are of four types. Interstitial ads, Banner ads, In-app video ads, and Native Ads. Whenever the displayed ad gets an impression, a click or an install, the app gets a certain ratio of money. While app advertising is an extremely easy way to earn dollars, it is only placed on popular apps with better app store rankings.

Subscription

Make them feel valuable and then, charge for that value. Same is the case with the subscription-based free app monetization method. Glance through the various cloud, music, news, and content apps. They would offer free trial period of 14 days after which, they would charge a certain amount in terms of subscription charges.

The app subscription business model is one of the most successful ones because users are hesitant to pay for something they see as valuable. The percentage of subscription-based apps is comparatively low in the app market but the numbers are ringing up by every passing day.

In-App Purchases

Officially, the most successful revenue generation model, In-App purchases are dominating the free apps market. Clash of Clans, Candy Crush, Fortnite and various other apps bagged humongous amount of cash via In-app purchases.

Once the users get going, they tend to purchase tools, kits, characters or anything offered in the app to scale up the usability. There isn’t any rocket science behind this revenue generating method and all that one needs to do is hooking its app users.

Sponsorship

Relatively a less used app monetization method that offers good revenue, sponsorship is an interesting strategy to work upon. It usually works for niche targeted apps that are built for a specific target audience.

These free apps are launched for the sponsoring company, business or an organization. With a specific app, companies get to access their preferred audience and they can advertise the services or products by choice.

Referral Marketing

Promoting products or services of another to optimize an app’s revenue, referral marketing is a popular and more practiced app monetization strategy. App publishers sell affiliate products upon which, they get a good commission on each sale.

Cost per acquisition (CPA), Cost per click (CPC), Cost per view (CPV), and Cost per install (CPI) are some revenue generating models used in referral marketing. Pop-up ads are also used for promoting and selling affiliate products or services.

Using Data

Researchers are always on the hunt to collect usage and behavior data of apps and this is where app revenue generation from data comes into play. The data contains links to social media accounts, email addresses of users and their online surfing and buying preferences that undoubtedly worth lots of money.

The data can be used by the free app publisher too. One can create another app targeted to certain app users that are more likely to generate another stack of cash for the same app publisher. Companies are eager to market their offerings to the right users and leveraging the app data can make one step into the cash pit.

Merchandise

An app with the huge following would be getting more request for personalized merchandise and this is the time to cash the opportunity. Angry Birds made an enormous amount of cash by selling cushioned birdies. Same is the case with every other popular app.

With the aspect of e-commerce integrated into an app, one can make huge profits by selling tangible products relating with the app, it’s characters, its theme such as shirts, shoes, caps, mugs, etc.

This Isn’t It

By every passing day, the free app industry is getting bigger, better and wealthier. Various other app monetization strategies tap the market but the above-mentioned tactics are used by millions of app moguls to earn big bucks from free apps.

While apps are to stay in the limelight in the long run, users are already addicted to apps that add value in their lives and after installing an addictive app, they spend money to keep their addiction alive.

Guest article written by: Rameez Ramzan is a Senior Digital Marketing Executive of Cubix – mobile app development company. He specializes in link building, content marketing, and site audits to help sites perform better. In his leisure time, he likes to read blogs related to Content Marketing and by the way, he is also a big fan of Neil Patel.