May 19th 2022
How to Monetize Apps for iPhone
Everything you need to know to maximize revenue from your iPhone apps portfolio.
Countless questions need to be answered on the way to publishing an app, but perhaps none as fundamental as how to make money from it. In 2019, consumers spent $120 billion on apps, a number that’s only expected to keep climbing. Nearly 90% of mobile internet time is spent in-app. People love their phones, and they’re comfortable spending money there.
A monetization strategy isn’t something to be tacked on at the last moment if it’s going to be successful enough to sustain the life of the app. There are many possible ways to monetize an app for iPhone, but some strategies are better suited to certain kinds of apps than others. This guide will break down the different kinds of monetization available to iPhone app publishers so you can make the best choice for your app.
How to monetize apps for iPhone
There’s a great deal of crossover between monetization on iPhone and Android, but there are some key differences due to Apple’s restrictions on revenue models. To start with, changes to the way data is collected about users as of iOS 14.5 makes monetizing from targeted ads much more difficult than it once was. Apple also prohibits incentivized installs. That still leaves plenty of options for driving revenue from your app, however, so let’s get into them.
In-app ads on iPhone and iOS
In-app ads are one of the most flexible and testable ways to monetize your iPhone apps. As the name suggests, these are ads that appear while a user has your app open. Here’s a quick rundown of the different kinds of in-app ads:
Interstitial ads: These ads appear during the app experience and take up the entire device screen. It’s important to place these at natural pauses in your app, such as at the end of a level in a game, or you risk alienating your user.
Banner ads: Banner ads go back nearly as far as the internet itself. Like their desktop cousins, they only occupy a small portion of the device screen, allowing the user to continue engaging with the app. The eCPM rates are typically lower than interstitial ads, but banners are much easier to integrate into an app experience and provide an unobtrusive way to monetize a high volume of users.
Video ads: A video ad is a short (usually 15 seconds or so) video that encourages users to perform a specific action, such as downloading a recommended app. Video ads are particularly effective because they’re eye-catching and easy to understand. They often don’t even need any text to convey their message.
Rewarded video ads: These are player-initiated ads that offer a specific in-app reward such as virtual currency in exchange for watching a full-screen video. They tend to have high engagement from users because they’re opt-in and demonstrate a clear value.
Native ads: These are ads that mimic the look and feel of the app in which they appear, creating a less obtrusive experience for the user. Native ads bypass the “ad blindness” that allows users to ignore banner ads or other ad formats as they become desensitized. There are many different approaches to native ads, including paid search and in-feed commerce.
It’s worth noting that if your app works on an iPad, you should consider how ads will work with your UI. Unlike Android tablets, iPads come in a limited number of sizes, which should make it easier to control how your ads will appear.
App bidding (or “in-app header bidding” as it’s sometimes known) was devised as an alternative to the inherent inefficiencies and inequalities of the waterfalling mechanism in a meditation platform. Ad inventory is auctioned in real time to multiple demand sources, allowing demand sources with different models (e.g. programmatic ad networks, ad networks with mock-bidders, and DSPs) to compete for inventory fairly and equitably.
App bidding can be a key component of how to monetize your app for iPhone. Claims vary across the industry, but publishers typically see ARPDAU increase by 10 to 30% after implementing app bidding. To learn more about the advantages of app bidding, download our free ebook.
More than 90% of the apps on the App Store are free to download, which means they monetize with in-app purchases. In the Apple ecosystem, users can make in-app purchases via iOS, macOS, iPadOS, watchOS, and tvOS. The cost of acquiring a user who makes IAPs is relatively high — recent statistics put it around $78 — but those users generate much higher returns in the long run. The conversion rate for users making IAPs in gaming apps is about 2%, but that covers the entire spectrum of purchases, from those making a single purchase to the “whales” paying for multiple IAPs every day.
There are two main kinds of IAPs:
Consumable: A consumable is depleted after use, so the consumer needs to repurchase. Typical consumable IAPs are game currency or extra lives.
Non-consumable: These purchases persist throughout the life of the app. These sorts of IAPs are usually premium features within the app, such as additional content or increased storage.
Apps as a service is a thriving tactic, especially on Apple devices. The top 100 subscription-based apps (not including games) pulled in $18.3 billion in 2021, $13.5 billion of which came from iPad and iPhone users. There are two approaches to monetizing via a subscription model:
Auto-renewable subscriptions: Users pay a regular fee for access to content or services that are updated periodically. Video streaming services are a prime example of this strategy, offering different tiers of subscription for improved viewing experiences like no commercials.
Non-renewing subscriptions: Users pay for access to a limited amount of content released during a specific time frame. Typical examples of this kind of subscription are season passes for games or purchasing an entire season of TV episodes.
Licensing can be a highly lucrative monetization path for your app and the intellectual property attached to it. In the case of iPhone app licensing, a company pays you for the right to reskin or otherwise adapt your app for their purposes. For an extreme example, look no further than gaming app Angry Birds, which has licensees for everything from movies to clothing to plush toys. A slightly more mundane, but also more relatable, example would be licensing a geolocation app outside its country of origin. A license doesn’t necessarily need to apply to an app in its entirety. A company like Polaroid might license the part of a photo app that makes images appear when someone shakes the phone.
One thing to keep in mind about licensing is that you are in full control of the terms. You can limit the terms of the license based on features, time, or a mixture of both.
The best way to monetize apps on iPhone
There’s no one-size-fits-all approach to monetizing apps on iOS, and it can be hard to know what the right choice is for your specific app. That’s why it helps to have an experienced partner like Vungle, a Liftoff company, guiding you through the process. Our monetization and advertising products are tailored to complement your user experience and get you the highest possible ROI. Ready to get started? Sign up today.