What is Mobile App Monetization (MAM)?

What is Mobile App Monetization?

Mobile app monetization refers to the process of generating revenue from a mobile application. In the context of gaming, it involves implementing various strategies to convert user engagement into financial gain. As the mobile gaming market becomes increasingly competitive, developers must find innovative ways to monetize their apps while maintaining a positive user experience.

💡 Read More: What are Massively Multiplayer Online (MMO) & Mobile Measurement Partner (MMP)?

Popular Mobile App Monetization Strategies

1. In-App Purchases (IAPs)

In-app purchases have become one of the most lucrative monetization strategies for mobile games. This model allows users to download and play the game for free, but offers optional purchases for virtual goods, currency, or premium features within the app.

According to data from Business of Apps, 79% of mobile games monetize through in-app purchases. This strategy has proven particularly effective for games like Candy Crush Saga and Clash of Clans, which offer players the option to buy extra lives, power-ups, or in-game currency to enhance their gaming experience.

2. In-App Advertising

Another popular monetization method is incorporating advertisements within the game. This can include banner ads, interstitial ads, rewarded video ads, and native ads. 

A survey cited by Chartboost found that many mobile gamers are receptive to in-app advertising, with 53% of respondents having played free-to-download mobile games with ads over a 12-month period.

Rewarded video ads have gained particular traction in recent years. These ads offer players in-game rewards in exchange for watching a short video advertisement, creating a win-win situation for both developers and users.

3. Freemium Model

The freemium model combines aspects of both free-to-play and premium games. It allows users to download and play the basic version of the game for free, while offering additional features, levels, or content for a fee. This strategy can be highly effective in attracting a large user base while still generating revenue from dedicated players who are willing to pay for enhanced experiences.

4. Subscription-Based Model

Some mobile games have adopted a subscription-based monetization strategy, where players pay a recurring fee for access to premium content or features. This model can provide a steady stream of revenue and encourage long-term player engagement. According to data from Sensor Tower, sales of the top 100 subscription-based apps in the US increased by 21% in 2019, reaching over $4.6 billion3.

Calculating Mobile App Monetization

To measure the success of a mobile app's monetization strategy, developers often use key performance indicators (KPIs) such as Average Revenue Per User (ARPU) and Lifetime Value (LTV).

• The formula for ARPU is:
  • ARPU = Total Revenue / Number of Users
  • For example, if a game generates $10,000 in revenue from 5,000 users in a month, the ARPU would be $2.
• LTV, on the other hand, calculates the total value a user brings to the app over their entire relationship with it. The basic formula for LTV is:
  • LTV = ARPU x Average User Lifespan
  • For instance, if the ARPU is $2 and the average user continues to play the game for 6 months, the LTV would be $12.

By implementing a combination of these strategies and continuously analyzing performance metrics, developers can create sustainable and profitable mobile gaming experiences.

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