Just a short while ago, computers weren’t computers but people. They were actual people who did calculations we take for granted today. When computers as Tools appeared, their ability to quickly do calculations was a bit of a problem: what do you do with calculations?
For example, how do you go from “two plus two” to reading a text about monetization from a big screen? So programs, or computer applications, created an economy, and whoever figured it out first was Bill Gates.
Smartphones made Star Trek into Tuesdays but created more questions. How do you use a super-powerful pocket calculator with a big screen? The problem was not just about the screen size but internet connectivity at any moment and on time. What can you do with it?
So Mark Zuckerberg or whoever is behind any language-learning apps was the first to figure it out. Today, we’re on the verge of Web3, but it’s doubtful you’ll make purchases by poking your eye.
Smartphones are here to stay, and we’ll need apps to use them. There is an app economy, so we need to think about money. At this point, anyone would ask if you would put ads on your app or go to in-app purchases.
Ads: The Obvious Choice between User Churn and Focus
YouTube, Facebook, Google, Apple, and even Netflix use ads as part of their primary monetization strategy. However, something about them makes their approach not transferable to any ordinary startup. And that is, they are all monopolies.
They sometimes give you the choice of skipping ads, but you’ll sit through them if they don’t. A start-up is never a monopolist. Worse, putting ads can be perceived as somewhere between desperate and a scam. Worse still, ads take the attention away from the app, which leads to the scourge of all apps, user churn.
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The moment users lose focus on your app, they’ll go away. And not just that, they’ll take the one-tenth of a cent your app could have earned by showing them another ten ads. So what are the actual choices?
The Actual Choice: Entice Your User
The Internet found the answer to start-up app monetization by discovering in-app purchases. The general idea is to have a freemium monetization strategy where the app is free to use but can become better after an in-app purchase of additional access, a perk, or a service.
However, it’s not a one-size-fits-all solution. Everything depends on the specific way the freemium strategy is implemented. Here are a few tips that app moguls of today suggest:
- It’s about the relationships: personalize and follow up, but don’t make it creepy
- Use the timeless push and in-app notifications, but never do it at the wrong time
- Be creative about monetization: make surprise promotions
- Involve your entire team because Business is a team game
- The most important point: make it easy to spend money
It’s worth repeating that spending money inside the app should be easy, while the entire experience should be engaging but not demanding. Some would ignore it and devise strategies to bombard users with notifications, options, and choices.
This generates a lot of activity within the team and makes it feel like something’s been done about app performance. But is a momentary satisfaction of a finished list of chores worth your users’ attention? No, because, after all, it’s not about you.
It’s Always about the Customer
It’s an easy one: free Apps have more users. If your app is not free, you need to know what you’re doing. For example, a paid-only monetization strategy makes sense for B2B apps, but then you can’t possibly expect to have many users.
Moreover, engaging new users would most likely happen personally, making it more like an old classical business. B2C apps only make sense as either free or freemium. Free apps can work as part of a bigger marketing funnel, and a standalone app needs a freemium monetization strategy – otherwise, the business wouldn’t make money.
Therefore, it’s all about a user who can only be understood from the data left from interactions. This creates both an opportunity and a responsibility: a customer can stay and spend money for a good suggestion but would instantly leave when their personal space is violated. So at the end of the day, it’s about relationships.
An Afterthought
So it’s settled: apps are not going anywhere. Still, monetizing them is not a clear-cut choice. For example, ads can generate revenue, but they don’t make sense for a start-up since they cause user churn.
The freemium model with perks makes much more sense than running ads. But then again, it shouldn’t be about 100 choices with 1000 color options. After all, who would have enough time to finish choosing?
The last option is to have a paid-only app, which only makes sense in a particular B2B niche and is not an option for a B2C app. Finally, the common denominator all successful apps have is that they’re all about the customer.
