Hi, my name is Desiree Motamedi.
I cover mobile app advertising at Google.
We're going to look at the various business models
you can use to make money on your apps.
A successful business model maximizes the lifetime value
of every user while delivering the best experience.
You'll want to evaluate all revenue stream options
and pick a strategy that includes some sort
of hybrid monetization model.
At a high level, mobile has three categories
of monetization, free, freemium, and premium.
Free is either purely ad supported
or directly connected to a larger brand, generally
for promotion of a product or service, such as Uber or Lyft.
Freemium offers users an app that's free to download,
but might include in-app billing, in-app ads,
subscriptions, or donations.
Premium apps require a payment before installing.
These types of apps include paid apps,
apps in which subscriptions are required,
or even a hybrid model, such as paid app
that has an in-app purchase.
Now, let's dive deeper into these three approaches.
We love anything that's free.
So it's no surprise that users are more likely to download
free apps and games.
But you've got to make money somehow.
If you have a separate business that's driven by your app,
like that of eBay or Netflix, you
don't need to generate income directly from your app itself.
But if your app is your business,
you could give it away for free and place ads
inside the app to make your money.
Every time someone sees the add or, in other cases,
clicks on it, you get paid.
Different ad networks have different ways
of integrating the ads.
For example, with AdMob, Google's mobile ad network,
you'll have control over the types of ads your app will show
and where they're placed in your app.
A purely ad supported model isn't
your only option for making money from free apps.
There's a freemium model.
One very popular freemium solution is in-app billing.
This allows you to sell digital goods that
are durable or consumable.
Durable, once purchased, the item, like an additional app
feature, for example, will always
be available to the user.
Consumable, these are items that might be used progressively
or expire after a period of time, such as currencies
or points.
Between the two, by far the most common
is consumable for in-app currency.
Most games allow you to buy currency that can then
be spent on in-game items.
Comparatively, few will sell you the items directly.
It's common to have two forms of currency in a game,
one that can easily be earned by advancing in a game,
and another that's very difficult to earn
and must be bought with real money.
In-app purchases are often impulse
buys and can be a big moneymaker, especially
in gaming.
Using Google Analytics and AdMob also allows you to segment
your users.
If a user's providing a revenue stream through in-app purchase,
you can choose not to show them ads.
We'll explain this in greater detail in a later video.
Another freemium strategy would be
to offer the app for free with limited features,
or with full features for a limited time.
Then, highlight that there are in-app purchase items available
that can unlock the full, unlimited app.
In addition to games, the freemium model
has successfully expanded into other categories,
such as dating, music, messaging, and news.
Premium apps.
Charging users to download your apps
is a simple, convenient monetization model.
You create a merchant account in the app
store you're using for distribution.
Then set your price.
While the premium model can be a great approach,
it may limit your app's monetization potential.
You may be able to achieve greater revenue using
a combination of ad supported, freemium,
or subscription models.
Increasingly, apps and games are finding success
with hybrid monetization models.
In fact, Google found that game developers who
are combining ads with in-app purchases
are getting more than double revenue per download
than the developers only focusing on in-app purchases.
Some other hybrid options would be show ads in your app
and remove them if a user buys a subscription.
In addition to selling your app outright,
you could also choose to include advertising or use
in-app billing to sell additional features or content.
This model could work well for any app or game,
but it's most appropriate for apps with extensive features
or those that address a narrow niche.
An example would be productivity tools,
like creating tasks, and paying a monthly fee for reminders.
You can also dynamically combine in-app billing with ads.
Since only about 50% of users make in-app purchases,
you can use Analytics to identify the other 85%,
and shift to showing them ads instead of offering them
in-app purchases.
You'll need to consider the function of your app
and your user base to choose the right monetization approach.
For our next session, we're going to focus specifically
on monetization with ads.
Thanks for watching.
Be sure to check out our other videos and visit
google.com/admob for more information.
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