App monetization trends: How are apps making money in 2022?

User-Level Ad Revenue also enables you to make more accurate lifetime value (LTV) calculations. This is because you can use Adjust to track the acquisition cost of your users, the revenue contributed in-app and how much revenue has been generated by that user from converting on ads. Having these data points means your LTV can be calculated with greater accuracy.

2. Freemium / subscription monetization modeling

Many apps offer a freemium service, whereby users can download the app for free and enjoy the functionality with ads. Users are unlikely to purchase an app they’ve never tried, so it’s a popular choice to implement a freemium service so that users can try your app before committing to a subscription. When offering a freemium service, you can show your value to the user and convince them that your product is worth their money. The freemium model is likely to remain popular because it’s much easier to acquire users when your app is free. Moreover, users who do not subscribe to your premium service can still be monetized with in-app ads.

They also have an option to remove ads (and any number of other benefits) via a subscription monetization model. A Sensor Tower report shows that U.S. revenue for the top 100 subscription apps grew by 21% in 2019. Another report found that in-app purchases, premium apps, and subscriptions grew 15.1 percent Y/Y to $33.6 billion from $29.2 billion in the third quarter of 2021.. Anybody can download Spotify and start listening to music with intermittent ads but the premium ad-free service must be paid for monthly. Users can also try the premium service as a free trial for one month – giving users a taste of their superior offering.

How influencer marketing can help

You can also use influencer marketing to advertise your subscription service. Influencer marketing is the practice of working with popular social media personalities and brands, often paying to feature your product on their accounts. Influencer marketing is a smart way to market your brand. One out of ten brands say they will invest more than 40 percent of their marketing budgets in influener marketing. Health & Fitness apps, for example, could partner with various fitness influencers to advertise your premium service. You can also go one step further and offer fans of that influencer a discount code, enabling them to support the influencer as well as purchasing your services. This is also a smart way of identifying which users have converted as a result of your influencer marketing. The current increase in DAU on gaming platforms such as Twitch also makes influencer marketing an important part of your marketing mix.

It’s also important to integrate social media platforms with your app. This makes it easier for users to share context related to your game, such as a high score, on their social media account. This is free exposure for your app and is another way to build a community for your game. Integrating social media platforms into your app also means you can analyze trends and stay ahead of your competition.

3. In-app purchases

In-app purchases are essential to many mobile apps: 95 percent of all Google Play Store apps are free, relying on monetization methods such as in-app purchases to generate revenue. Users are spending $380 billion worldwide on in-app purchases, making it a great way to boost your app’s revenue.

For mobile games, in-app purchases can be divided into two categories: consumables and non-consumables. Consumables are temporary, such as in-game currency, while non-consumables only need to be purchased once. An example of a non-consumable in-app purchase would be to unlock a level or character skin.

In-app purchases aren’t limited to mobile games – social media app Reddit successfully created an in-app currency called Reddit Coins. The company’s official website describes this as “a virtual good you can use to award exemplary posts or comments.” Reddit also relies on brand loyalty in order for users to invest in in-app purchasing, stating that Reddit Coins will “encourage your favorite contributors to keep making Reddit better.”

Monetization forecast: What to expect in the not-so-distant future

In addition to following current trends in app monetization, it’s also essential to look ahead at possible trends that will affect the market in the near future. Here are a few app trends and monetization methods that need to be on every marketer’s radar.

Multiple revenue sources will become increasingly important

It’s smart to have several ways in which your app can be monetized. Not only can this act as a safety net, it also allows user preference to dictate how your app is utilized. The problem many apps face is that only a small percentage of their audience contributes monetarily. A 2017 report by app testing firm Swrve revealed that 2.2 percent of gamers spend money on an app, while 46 percent of all revenue came from the highest-spending 10 percent of that group. That number hasn’t changed much in the ensuing years. Diversifying your monetization model means you are less reliant on a small group of highly valuable users, increasing app revenue and building a more robust overall monetization strategy.

In-app bidding means more competition for ad inventory

In-app biding is a sophisticated way to auction a publisher’s ad inventory. The basic principle is to have advertisers bid simultaneously against each other for that inventory. In just 12 months — over 2019 and 2020 — the number of apps using bidding with Facebook Audience Network grew seven times larger. According to DigiDay, in-app bidding results in between 13 and 27 percent uplift in average revenue per daily active user (ARPDAU). This is pushing mobile games developers such as Game Insight to auction more of their inventory via in-app bidding: the company now runs 95 percent of its inventory on in-app bidding. As this becomes more commonplace, in-app bidding will give every demand source an opportunity to win the impression – allowing publishers to get the best price for their inventory.

The rise of augmented reality

During Apple's first-quarter earnings call for 2020, Apple CEO Tim Cook said, “You rarely have a new technology where business and consumer both see it as key to them. That's the reason I think [augmented reality] is going to pervade your life.” As augmented reality (AR) becomes more commonplace in the mobile app industry, marketers will be looking for ways to monetize apps that utilize AR technology. Niantic’s Pokemon GO is a great example of how augmented reality apps can monetize with in-app purchases: the app’s in-game shop allows users to purchase in-game items using “PokéCoins,” which you can also earn by playing the game.

Another example of successfully generating revenue with AR is IKEA Place. This is a free app from IKEA that allows users to superimpose IKEA products into their household. This gives users a strong indication as to how each item will look, giving users more confidence in their purchases before arrival. IKEA Place was built using Apple’s augmented reality framework ARKit and swiftly became the second-most popular free app built using that framework. For more information about augmented reality for mobile marketing, read our guide here.

For more insights into industry trends and what to expect in the future, read our latest app trends report. You’ll find critical insights such as growth trends from the last year, and performance benchmarks per vertical.

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