Jan 31st 2022
How to Monetize Apps for Android
Everything you need to know about generating revenue from your Android app portfolio.
When deciding how to monetize apps for Android, developers are presented with a unique set of challenges and opportunities.
On the one hand, the potential audience is immense. Android claims the overwhelming majority of the worldwide OS market share, a whopping 70%, so your app only needs to capture a small portion of the market to achieve a huge volume of installs. There are currently 3.4 million apps on the Google Play Store, with another 100,000 debuting every month. While that sounds daunting, it’s significantly fewer than on the App Store, so the competition isn’t quite as fierce.
If you can acquire a user base, it could all be for naught if you don’t monetize your app correctly. Not every strategy works for every kind of app, so you can’t rely on what’s proven profitable for others. Read on to learn more about how to monetize apps for Android and determine which method makes the most sense for you.
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How to monetize apps for Android
The majority of Android apps are monetized using one or more of the following methods, each of which we’ll explore in greater detail:
- In-app advertising: Users are shown ads for brands, products, services, and/or other apps via display, interstitial, or rewarded ad placements.
- In-app purchases: Users pay to acquire consumable or non-consumable digital commodities, link in-app currency, or upgrades that unlock additional features.
- In-app subscriptions: Users pay a (typically) recurring fee to access features within an app, like a monthly membership to an online learning platform.
Android has two distinct advantages when it comes to monetization. The first is its global reach. For example, 74% of the mobile market in South Korea uses Android — a number that becomes more significant when combined with the fact that South Korea saw the highest worldwide ARPU on mobile games in 2019.
The second advantage is that Android has fewer restrictions than Apple. Though it also has a feature similar to Apple’s LAT that allows users to opt out of ad tracking.
The opportunity for financial success is there. Here are your options:
More than 97% of the apps in the Google Play store are free. That doesn’t mean you can’t charge an upfront fee for your app, but it does mean it will be harder to convince the audience of your app’s value proposition. The upside of so many free apps is users are conditioned to expect the option to make in-app purchases. There are two main kinds of IAPs:
- Consumable: Consumables disappear after use, driving repeat purchases. In-game currency is a typical example of a consumable IAP.
- Non-consumable: Non-consumables are one-time purchases that remain for the duration of the app but aren’t required for functionality. A filter for a photo app or increased storage are examples of non-consumable IAPs.
In-app advertisements are perhaps the most recognizable and familiar form of app monetization, and there are a variety of options to choose from, including traditional mobile formats like banners, interstitials, and videos.
With their origins in desktop web advertising, banner ads are a tried-and-true format. Thanks to their small size, banner ads perform well in subtle, non-disruptive placements, where publishers can earn consistent revenue through a volume of impressions. Publishers that embrace this format also unlock a wealth of programmatic demand, which can be the key to achieving consistent fill rates.
Beyond banners, Android publishers can also access cutting-edge formats like rewarded video. If your app has a virtual economy, rewarded ads are a natural fit. Users prefer rewarded video to traditional video, and when matched with a comprehensive IAP strategy, the format has demonstrably reinforced IAP revenue. Another novel ad format is the playable ad, which emulates game/app functionality to provide users with a sneak peek of what to expect. Over the years, it’s proven profitable for publishers as well.
Rewarded ads are not without restrictions. Apple prohibits ad placements that incentivize installs. This is where Android’s more open platform becomes advantageous. Android has no such restrictions, making such formats viable — and highly profitable — options for app monetization.
One important consideration for publishers is that Android devices come in all shapes and sizes, making it crucial that you’re mindful of how ads will be rendered. One way to achieve consistency is through Vungle’s Adaptive Creative. Adaptive creative works by analyzing creative elements and automatically reconfiguring them to suit the placement UX. Vungle publishers have seen a 7-12% uplift in global performance and higher CPMs through this strategy.
Subscriptions are a thriving app monetization model across all genres. 91% of non-gaming consumer spend on the Google Play store in 2019 was driven by apps with subscriptions. Music apps like Spotify are launched daily more than any other kind of app. You have two options when it comes to subscriptions:
- Auto-renewable subscriptions: The Netflix monetization model is a prime example of an auto-renew subscription. The consumer pays a monthly fee for access to the app. This kind of subscription might also have pricing tiers that offer different benefits, such as access to ad-free viewing.
- Non-renewing subscriptions: The user pays a one-time fee for a set amount of content that’s released over some time, such as a season of TV programming or planned game expansions. A new set of content would require a new subscription. Clash of Clans’ Gold Pass, for example, gives subscribers better rewards for Season Challenges during that season but must be renewed for subsequent seasons.
The best way to monetize apps on Android
Launching your Android app with the wrong monetization strategy can cost you valuable time and, of course, revenue. Vungle has more than a decade of experience in the mobile space and understands the nuances of its economic infrastructure. We customize monetization and advertising solutions so they complement your user experience and earn you the highest possible ROI. Ready to learn more? Get in touch with us today.