Recently, Apple has been pushing a lot of app developers to rely more and more on in-app purchases, especially subscriptions. Since free apps have been long-time favorites over paid apps, Apple (& app developers as well) has been trying to develop different sources of monetization. Advertising works up to a certain point, especially for smaller apps, while in-app purchases have proven to be an effective way to generate revenues and pay the development costs. Obviously, relying on the app store payment system is a tremendous enabler for this kind of monetization. This trend will evolve as we move on into the future, as Apple is only starting their journey into payment and credit services. More than 10 billion dollars has been spent by iOs users in 2017 and the projection for 2022 is estimated to be over 75 billion $. That’s a lot of money!
A big part of this amount is spent inside Gaming apps, however other categories are growing very rapidly. Among these are Utility apps, the fastest growing category (at the same time it’s worth noting that some tech giants, such as Netflix, have stopped offering App Store based subscription, to avoid paying Apple’s cut).
How does the subscription model work? The answer to this question is fairly easy to answer. Once users download a certain app, they are often asked to start a free trial (for three days or one week) in order to try the entirety of the features offered by the app. After this trial period is over, the user will pay a weekly fee (or a yearly fee for a discounted price). Apple’s app store offers a range of possibilities for app developers, allowing them to charge users with a lot of flexibility. Different subscription levels are supported, offering each one a set of features with their one price.
Is Android offering something similar to app developers? Yes! Google Play has a similar API offering billing and management services to app developers. In general, it’s more challenging to generate paid transactions (i.e. in-app purchases) on the Play Store compared to Apple’s app store. That’s why revenues generated by Android apps are still lagging behind their iOs counterpart. However, Google’s app store is catching up and is offering more than twice the user base compared to Apple’s.
Considering that subscriptions are a good approach to earn money for app developers, is it possible to run advertising activities to boost the revenues generated by an app?
Obviously, it is, but running these kinds of advertising campaigns require a certain amount of attention: the settings of the campaign itself and the analysis of costs and revenue that the activity generates.
Let’s take a glimpse at the anatomy of this kind of campaign. A subscription/free trial campaign is composed of:
- An app install campaign: to generate targeted new installs for an app.
- A set of subscriptions: that is managed through an API operating system, tailored towards the most converting and ROI optimized subscription prices (because usually, users that arrive through an ad campaign will require a lower weekly price compared to organic users). This can be configured on the app source code using Apple’s or Play Store’s API.
- An analytic system: to gather data from Apple’s reporting API and the app itself, in order to optimize the ROI of the campaign. Without this kind of analysis, it’d be very difficult to generate positive ROI campaigns.
- Multi-staged marketing campaigns: can be added to this set of activities. For example, remarketing campaigns, targeting users who already have the app (but not a subscription service); or segmenting email marketing campaigns. Basically, focusing on reactivating users who canceled their previous subscriptions.
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Naturally, before launching this kind of campaign, an app must support an attribution technology, such as Branch, or Appsflyer. The attribution technology must be able to detect app installs and every event in the monetization funnel, from the onboarding process to billing, to the renewal and the eventual cancelation of the subscription.
Once everything is ready, one can start running the subscription campaigns.
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