How do free apps make money? This is a question that pops up in every business owner’s mind when considering mobile app development. While researching it on the internet, you probably have gone through two of the most viable options for monetizing a free app: In-app advertising and In-app purchases. The internet is overwhelmed with guides and blogs providing insights into these strategies. But no one will tell you the real secrets to success. Undoubtedly, there are no as effective ways of monetizing an app as In-App Advertising and In-App Purchases. But that’s just not the end of the story; there are some other alternative app monetization strategies that have worked wonders for businesses in 2023, and they are set to continue their success in 2024 and beyond.

The role of alternative mobile app monetization strategies, such as sponsorships, partnerships, white labeling, data licensing, and affiliate marketing, is equally effective as others, but they aren’t endorsed as much as In-app advertising and In-app purchases. However, these strategies have proven their effectivenness in the app market over time. 

So, if you’re looking for alternative ways to monetize your mobile app other than In-app Ads or In-app purchases, this blog will serve the purpose. We will discuss the top 5 secret monetization strategies that would lead your mobile app to success, ultimately generating revenues for your business. In case you want to learn more about In-app advertising or In-app purchases, you can head to our previous blogs. So, come on, let’s get started! 

Key Statistics Showing Prevalence of Mobile App Monetization Strategies

• By 2024, the global app industry is projected to generate a staggering $935 billion in revenue, underscoring the immense monetization opportunities within this sector. (Source: Venatus)
• Gaming apps account for 79% of all consumer spending in app stores worldwide. This figure highlights the significant role of gaming in-app revenue generation. (Source: Venatus)
• The global affiliate marketing industry boasts a value exceeding $17 billion. (Source: Kinsta)
• 81.2% of affiliate marketers earn upwards of $20,000 annually. (Source: Kinsta)
• According to a study by Partnerize, partnerships are a key revenue driver for many organizations. In fact, 54% of companies attribute more than 20% of their total revenue to partnerships. (Source: Amity)

The above stats are enough to make you understand the importance of monetization for your mobile app. This strategy not only helps you generate revenue but also ensures a better user experience for your audience. So, now that you understand the importance of app monetization, let’s take a look at some alternative (proven) mobile app monetization strategies in 2024. 

 Sponsorships and Partnerships

Sponsorship can be understood as a partnership between app owners and advertisers. It is much like in-app advertising, where advertisers pay app owners to showcase their sponsored ads on the app, tailored for a specific group of users. This approach allows advertisers to engage with the users effectively. 

These apps are usually free to download but may have way more ads. However, it's vital to strike a balance in the number of ads displayed. Overloading users with ads can lead to annoyance and potentially hamper the application's usage.

What is Sponsorship?

Sponsorship, as an app monetization strategy, is a unique approach where an app owner collaborates with a sponsor brand that provides users with rewards when they complete certain in-app actions. This strategy is beneficial for all parties involved. 

Users get rewarded for their engagement, which enhances their app experience. The sponsor brand gets exposure and access to the app's user base, which can lead to increased brand awareness and customer acquisition. 

Meanwhile, the app developers generate revenue from the sponsor brand. This strategy is particularly effective for apps with a large and active user base, as it provides sponsors with a sizable audience. 

How Does Sponsorship Work in App Monetization?

As said above, sponsorship works by paying app owners a decent compensation to showcase sponsored ads. That’s not all; it also allows app users to get a reward for every completed in-app action. 

As the app developers receive financial support, it reduces the reliance on traditional monetization methods like ads or in-app purchases. On the other hand, sponsors gain exposure to the app's user base, enhancing their brand recognition and reach. 

For instance, a sports brand could sponsor a fitness app that could offer exclusive discounts to the app's users. This creates a win-win situation, with users getting value-added services and sponsors getting targeted advertising. However, ensuring that the sponsorship aligns with the app's purpose and user expectations is crucial to maintaining a positive user experience. 

How to Get Sponsorship for Your App?

While the idea of earning through sponsorships seems lucrative, finding potential sponsors stands as a challenge. But with the right approach, you can get sponsorship for your app easily. Here’s how you can do it the right way:

• Start by identifying potential sponsors who share a similar target audience. 
• Create a compelling proposal highlighting the benefits they'll receive, such as brand visibility and user engagement. 
• Demonstrate your app's value with solid metrics like user base, retention rate, and potential growth. Offer sponsors different sponsorship tiers, providing options for various budgets. 
• Be creative in integrating their brand into your app, ensuring it enhances the user experience rather than disrupting it. 
• Maintain open communication with sponsors, providing regular updates and seeking feedback. 

 Affiliate Marketing

As an app owner, it's crucial to consider the potential of affiliate marketing. By partnering with various businesses and platforms, you can significantly expand your app's user base and subsequently increase your revenue.

Affiliate marketing is particularly effective when your app caters to a specific audience with distinct interests. If your users are likely genuinely interested in the products you promote, this monetization model could be a perfect fit.

What Is Affiliate Marketing?

Affiliate Marketing is one of the most effective app monetization strategies where app developers partner with businesses to promote their products or services. In this model, the app serves as a platform connecting users with these third-party businesses. 

When a user completes a transaction, such as making a purchase or signing up for a service through the app, the app developer earns a commission. This strategy is particularly effective for apps with a large and engaged user base, providing a seamless way to generate revenue without disrupting the user experience. 

This approach allows businesses to gain exposure and potential customers and developers to monetize their apps effectively. However, to maintain user trust and engagement, it's crucial to ensure that the promoted products or services align with the app's purpose and user interests.

How Does Affiliate Marketing Work?

Wondering how affiliate marketing works in app monetization? Let’s see the process:

Once you’ve selected an affiliate marketing program, you’ll be given a distinctive link or code. This serves as a tracking tool for businesses to identify the users you’ve directed to them. If a customer buys a product using your link, you’re rewarded with a commission.

This model is performance-based, meaning the app only earns when the affiliate link leads to a transaction. This strategy can be particularly effective if the affiliate products are relevant to the app's user base. For instance, a fitness app might partner with sports equipment retailers. It's a seamless way to monetize an app while adding value for users.

How to Make Money through Affiliate Marketing?

By following the steps below, you will learn how you can make money through affiliate marketing: 

• Identify a Niche: Start by choosing a niche that aligns with your interests and has potential for profit. This will make it easier to create content and attract a targeted audience.
• Choose Products: Research and select products or services within your niche that you can promote as an affiliate. These should be products you believe in and can genuinely recommend.
• Sign Up for Affiliate Programs: Join affiliate programs that offer these products. You'll receive a unique affiliate link for each product.
• Create Quality Content: Develop engaging content around these products on your website or social media platforms. This could be blog posts, reviews, or tutorials.
• Promote Your Affiliate Links: Include your affiliate links in your content. When your audience makes a purchase using your link, you'll earn a commission.
• Track Your Success: Use analytics to track the success of your affiliate marketing efforts. Adjust your strategy as needed to maximize your earnings. 

 White Labeling

If you think your app has a distinctive feature or addresses a specific problem, it can be a source of revenue. You can achieve this by customizing it for other companies or granting them a license to use your code. 

This monetization model is known as White Labeling and is ideal for applications that are built on innovative concepts that can be leveraged by multiple brands. Moreover, it's an excellent strategy to generate extra income from applications that have completed their lifecycle and are no longer independently profitable.

What Is White Labeling?

White labeling is a powerful strategy for app monetization. It involves developing an application by a company (the producer) and then selling it to another company (the marketer) rebranding it as their own. The marketer can then sell or distribute the app under their brand name without investing in technology or infrastructure. 

The developer gains a steady client, and the purchaser saves on production costs. White labeling is common in many industries, including software, food and beverage, and cosmetics. It's an effective way to expand product lines and enter new markets without the need for extensive research and development. 

How Does White Labeling Work?

The White Labeling app monetization model benefits both parties. The producer generates revenue from selling the app, while the marketer saves on development costs and time. The marketer can also customize the app to meet their customers' needs, adding value to their brand. 

However, it's important to note that the marketer is responsible for customer service and any issues that arise post-sale. Despite this, white labeling remains an attractive option for companies looking to expand their offerings without significant upfront investment. 

How to Make Money with White Label Apps?

White-label apps offer multiple avenues for businesses to earn income. Here are some of the most common ways to make money with White Label apps:  

Direct Sales of the App to Customers

If you have a white-label app that you believe has widespread appeal, you can market it directly to customers as a complete solution. To do this, you'll need to create an online platform or website where customers can buy it. You might also list your app on app marketplaces such as Google Play or the Apple App Store.

Customizing and Reselling the App to Clients

Another mobile app monetization strategy with white-label apps involves customizing them with client-specific branding and then reselling them. To tailor the app for each client, you'll need to incorporate their branding elements, like their logo, color palette, and any specific design features they want.

Charging a Regular Fee for App Maintenance and Updates

Another way to earn money with white-label apps is to charge a regular fee for app maintenance and updates. This strategy can be particularly effective if you have a large client base using your app and want to ensure it remains current and bugs-free.

 Data Licensing

Data Licensing is a profitable strategy for app monetization, particularly for apps with a large user base. It involves collecting data about user behavior within the app, anonymizing it to protect user privacy, and then selling this valuable information to interested parties, including advertisers and data analysis firms. 

What Is Data Licensing?

Data Licensing, also known as data monetization, is an app monetization strategy that includes selling data independently or through a broker, sharing data to secure advantageous business terms, and providing data-based services or products. 

The data can be sold as it is or after it has been analyzed to provide insights. A common example of direct data monetization is the sale of contact lists that can impact a buyer's business operations or industry.

How Does Data Licensing Work?

Data licensing is like renting a house; the owner (licensor) allows the tenant (licensee) to use the property under specific terms and conditions. In data licensing, the data remains the property of the licensor, but the licensee can use it for agreed-upon purposes. This could be for analysis, research, or to improve their services. 

The license agreement outlines the terms of use, including duration, cost, and restrictions. It's crucial for both parties to understand these terms to avoid misuse of data and potential legal issues. 

Data licensing is a key aspect of the data economy, enabling businesses to leverage data while respecting ownership rights. It promotes data sharing, collaboration, and innovation, driving value creation in the digital age.

How to Monetize App Data?

If you want to monetize your app using the data licensing, follow these below-mentioned steps: 

• Data Collection: Collect non-personal, aggregated user data from your app. This could be usage patterns, preferences, or trends.
• Data Analysis: Analyze and organize this data into meaningful insights. This could involve statistical analysis or machine learning algorithms.
• Find Buyers: Identify potential buyers for your data. These could be market research firms, advertisers, or other businesses in your industry.
• Set Pricing: Determine a pricing model for your data. This could be a flat fee, a subscription model, or based on the volume of data.
• Data Anonymization: Ensure the data is anonymized and aggregated to protect user privacy.
• Legal Compliance: Comply with all relevant data protection and privacy laws. This includes obtaining necessary user consent.
• Sales and Delivery: Sell the data to the interested parties and deliver it in a secure, accessible format.

Hybrid Monetization

A few years ago, the term 'hybrid monetization' was merely a buzzword hinting at an emerging trend in mobile app monetization. Fast forward to the present, it has become a new normal in the field of mobile app development. What's more, its acceptance and use are expanding with each passing day. Hence, it's crucial for every business to have a thorough understanding of this mobile app monetization strategy. 

What Is Hybrid Monetization?

Hybrid monetization refers to a strategy of using multiple monetization models in one application. Instead of concentrating on one way to generate revenue, they merge two or even three different app monetization models. The following combinations are frequently used:

• In-app advertisements and in-app purchases
• In-app advertisements, in-app purchases, and subscriptions
• In-app advertisements and subscriptions

How Does Hybrid Monetization Work?

Hybrid monetization works by combining multiple revenue streams to optimize app earnings. It involves integrating various methods like in-app purchases, advertisements, sponsorships, and affiliate marketing. 

The key is to balance these elements to enhance user experience and revenue. For instance, in-app purchases can be offered for ad-free experiences, while non-intrusive ads can generate steady income. Sponsorships and affiliate marketing can provide additional revenue without disrupting the user experience. 

However, analyzing user behavior and preferences is crucial to customizing the monetization. Too many ads might deter users, while too few could limit earnings. Therefore, hybrid monetization requires careful planning and execution for effective results. 

Benefits of Hybrid Monetization Strategy

The primary advantage of hybrid monetization is its ability to generate revenue from a large user base. However, it offers several other benefits:

• It enhances user engagement by providing diverse ways to interact with the app.
• It aids in user retention by offering additional reasons for users to return to the app.
• It yields a better return on investment (ROI) than other monetization models, as reported by one in four developers.
• It optimizes each user's lifetime value (LTV), enabling developers to derive more value from each user throughout their app interaction.
• It guarantees a consistent revenue flow by reducing reliance on a single revenue source, leading to greater financial stability.

Conclusion

The landscape of app monetization is rapidly evolving, and 2024 promises to be a year of innovation and growth. In-app advertising and in-app purchases continue to be robust strategies, providing steady revenue streams. However, alternative strategies like sponsorship, affiliate marketing, data licensing, partnerships, and white labeling are gaining traction. 

These strategies offer unique advantages, such as creating additional value for users, enhancing user experience, and opening new revenue channels. However, they also come with their own challenges, such as privacy concerns and the need for strategic partnerships. 

Therefore, app developers need to carefully consider their target audience, app functionality, and market trends when choosing the right monetization strategy. By diversifying revenue streams and staying adaptable, developers can ensure their apps remain profitable and relevant in the dynamic digital marketplace of 2024.