So – you have an amazing idea for an app, and you are ready to jump in and find a developer. Awesome! For the first time, smartphones have overtaken feature phones in the overall mobile market, so it is clear that the trend of app usage is only increasing. Now is a great time to begin developing a great app idea.

But – have you thought about how to make money on the app? Have you thought about whether or not that is even a goal? If not, you should take a moment and do a little prep on what you think you can expect realistically for revenue. If revenue isn’t your goal, what other ROI are you expecting from the app? More traffic to your site? Increased brand engagement? Whatever it is, you should prepare clear business goals. We wrote a blog about this, so check it out for more info.

Show me the money!

OK, so you have decided that you want to make money on this app idea of yours. Well – even though there are more than a million apps on the apps stores these days, there are still ways to make money on yours!

Today, we will talk about Mobile Ads.

There are two big places to go through for mobile ads – iAD and AdMob. Depending on your strategy – you can use these mediums to either a) monetize your app by displaying ads on your app that users click on, or b) promote your app on other apps with an ad. One of these you pay for, the other you get paid for. If you are looking to build a revenue stream, you would choose option a).

It is actually relatively simple to get ads on your app. Basically you install the SDK, choose where the apps go and which ones, and voila! But, are you wondering how much money you can expect? Fortunately there are a few ways to figure that out.

How much money can I make?

Let’s take some data that we got from Flurry Analytics.

As you can see from the chart, some types of apps retain users better than others. Why does this matter? Well – the more your users are engaged, the more they will click on ads and the more you get paid.

How well do you know your audience? This is another important thing to know before you can really measure potential revenue. Take a look at the graph above: it shows average eCPM (cost per impression) by demographics. Basically, if your audience is mostly males from the age 25-34 you can expect to earn $12.92 per impression net. IMPORTANT NOTE: this is the amount before the media agency takes their cut.

So, once you know all the variables, you can make some pretty good assumptions on how much revenue you might expect to earn monthly.

 

Assumptions

Description

Calculations

20000

# App Users

20000

5

# avg. sessions per user per month

5

  # avg. sessions per month (5×20000)

100000

4

# ads per session (4×80)

20

  # sessions x ads per # possible impressions (20×10000)

2000000

# possible impressions / 1K = CPM Units

2000

$12.92

$ per CPM Unit (Avg. CPM for Males Ages 25-34)

$12.92

Net Ad Publisher Earnings

$25,840.00

10%

5-15 % commission to agency ($25840×10%)

$2,584.00

Revenue

$23,256.00

  Revenue Per User

$1.16

 

It isn’t a perfect science, but the below chart says that your app will probably earn $1.16 per user in ad revenue. This is great information for you to know, so you know how much you need to make in order to recoup the costs of making the app in the first place!

This can be confusing stuff, and we can help. Contact us if you want us to conduct an app feasibility study, or if you have already done so and are looking for a great mobile developer, we can help with that too!