How To Calcuate How Much Your App Will Make From Advertisements

The app market is vast, with millions of apps available on Apple and Android marketplaces.

In the first quarter of 2020, these combined marketplaces saw a combined download of 33.6 billion apps. What is more attractive to businesses is the potential for an app to deliver a return on investment several times over.

But how much money do they really make? What else can apps deliver for a business besides a welcome revenue stream?

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Many have them – but does every app make money?
When an app works, and works well for users, the potential to make money every day is presented to a business.
What is an app?
Initially, apps were seen as productivity tools.
Not just about the money
Apps are used to reach and connect with their audience.
How much does it cost to design and launch an app?
The cost depends on how complex the app is.
Should every business have an app?
For an app to be useful for your business, it needs to meet the demands and needs of your customers.
So how do you know if an app is worth investing in or not?
Will your app solve a problem for your customers?
Successful apps are those that deliver tangible benefits
Users need to feel that they are getting something from an app, whether that is exclusive content or offers that they find useful.

Many have them – but does every app make money?

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Everywhere you turn these days, every brand, business or organisation seems to have an app. These small but sophisticated programs are downloaded by users across the globe, delivering everything from daily updates to their phones to providing a smooth buying channel.

When an app works, and works well for users with few bugs, and is also useful and practical, the potential to make money every day is presented to a business.

But are apps really heavily monetised?
It certainly seems so. The mobile app store revenue generated in 2015 was a relatively impressive $29 billion, but in recent years this figure has exploded, reaching more than $71.3 billion worldwide in 2019.

Take a look at the apps of 2019 with the highest returns and you'll be encouraged by the numbers.

Ebate, an American-based app that offers discounts to users by connecting them with their favourite retailers, returned over a billion dollars in savings to users and for the owners, this brings in big bucks too.

The apps in the top 200 on app stores grossed $82,500 a day and those in the top 800 brought in $3,5000 a day, not a bad return by any measure.

Consumers and followers have fallen in love with apps with some suggestion that the majority of time people spend on their mobiles is spent on apps. In-app purchases, as well as paid-for apps, present an enticing prospect for brands and companies.

But what's really involved and would an app be worth the time and investment?

What is an app?

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The number of people who own and regularly use a mobile or other handheld smart device such as a tablet is growing. Increasingly, users are using these devices to access websites, including buying online as well as communicating and other activities.

Apps are the software tools that companies are increasingly investing in so that their fans and consumers can remain in touch with what they have to offer.

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What about other types of device?
Wearable tech e.g. watches have also increased in popularity, another reason behind the rapid expansion of the app market.

Initially, these apps were seen as productivity tools. Email programs were often compacted into these small nuggets of downloadable programs that allow users to quickly access their accounts. They could not only see new emails as they came in, but they could also reply to messages.

Essentially, the app provided a platform that looked the same, acted the same and felt the same. Information was seamlessly synced across the devices the user chose to connect.

Their popularity seemed to know no bounds and as such, users demanded more and more options when it came to the types of apps that they wanted. Everything from gaming to shopping, including their favourite brands led to a steep rise in the apps on offer to users.

Depending on the sophistication of the app, users can also opt for a personalised response from it. Large brands took the plunge, opting to invest in an app that allowed them to connect and promote their products and services to consumers in a way that they wanted.

Signing up to a brand by a leading high street pharmacy and beauty brand, for example, allows a user to check their loyalty programme, to buy online seamlessly but to receive regular 'reminders' of offers that they may find useful.

Get it right and an app for your brand could bring in big rewards, including financial ones.

What about in-app purchases?
In-app advertising is big business, and 70% of millennials say that they have made more than one in-app purchase, with statistics indicating that $380 billion is being spent worldwide in this manner, with popular game Candy Crush raking in a rather tasty $1,641,355 daily in November 2019.

However, despite there being money to be made in this way, giving too many options to purchase can annoy and irritate the user, one reason why some users may choose to uninstall an app.

There is also growing evidence that millennials especially are willing to pay for apps. Many apps offer a free or 'lite' app version that provides the user with a taste of what the app offers, whereas the paid-for version provides a lot more in terms of features, accessibility and offers.

The figures are encouraging, and projections for this year's revenue statistics are staggering.

In fact, it has been predicted that $188.9 billion will be generated by in-app advertising and app stores in 2020.

Not just about the money

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Apps are used by brands and companies, as well as other organisations and groups, to reach and connect with their audience. Whilst they can be a good source of income, there are other reasons why investing in an app is a great idea for your business.

1. Join a growing trend

In 2017, 178 billion apps were downloaded globally, a trend that is continuing to rise. By 2022, the prediction is that this will rise to well over 200 billion downloads. The potential, therefore, to join in with this movement is clear to most businesses.

And it could be that your customers will also expect this of you. In 2016, Americans were spending 3 or more hours on their mobile, another trend that is expected to rise with the number of users using PCs declining slightly. And that means apps on people phones will be their go-to tool to connect with their favourite brands.

2. Promote even more customer recognition

Every brand knows the importance of being recognised by customers, making huge efforts to boost familiarity. Apps contribute to customers, fans and followers recognising your brand but also associating it with the attributes you want them to.

Understanding why people use apps is important when investing in the design and build of your app. For example, game-based apps are incredibly popular, with nearly 25% of users downloading game apps. Close behind are business-based apps. The fact that many of the apps in the top 200 are business-based is an indication that they are a popular choice for many consumers, a fact that informs the next benefit of investing in an app for your business.

3. Apps are popular for shopping

Shopping online is a popular means of buying everything and anything from clothes to food. And whilst many of us still use the web, there is increasing evidence that many consumers turn to the app of a specific brand to buy.

Just as encouraging is that consumers also use apps as a communication tool. In fact, 42% of consumers say that they use apps for this very purpose. Research also shows that one of the apps people claim they can't live without is Amazon!

4. Extends customer engagement

Every brand will be at pains to connect and engage with their customers. In fact, customers themselves expect brands to take strides to connect with their loyal customers base. Apps don't have to be anonymous platforms.

However, some brands assume that apps are for those businesses who have a younger following – it's easy to see why, as a brand, you would think this. By ignoring who is using your app, you could be potentially ignoring your customer base and that means missing out on listening to what customers are saying about you, products and the industry.

App users in the US suggest that apps are popular with people aged 18 to 44 – and there is no reason to assume that it is very different in the UK. If your customer base falls within this age bracket, you could be taking significant steps to increase customer engagement.

5. Stand out from the crowd

There's no doubt about it, apps are popular. On the Apple store, for example, there are approximately 2 million apps to choose from. The range and scope of these apps are equally as impressive.

On Google Play, there are just short of 3 million apps, again with a scope and range that will see users have all kinds of apps at their fingertips for everything from motivation to exercise to recipes for gluten-free meals to gaming, music and communication apps. According to 2020 Q1 statistics, these stores generated between them $23.3 billion in sales.

They provide an immediate short link to one of their favourite places online and so it would be easy for a business to assume that because there are so many apps and options, that joining the crowd would mean being swamped by competitors.

But it could be that your competitors are not investing heavily in an app. Or if they have, if it is full of bugs, users are navigating away quickly and removing them from their phones or tablets.

As a business, you have the potential to use an app to stand out from the crowd whilst also building a platform that has the potential to boost your margins at the same time. A well-designed, easy-to-use app that people enjoy using will yield fantastic results. In fact, users spend more time on an app than on your website, another reason why opting to stand out from the crowd with your own app is an ideal move for your brand.

How much does it cost to design and launch an app?

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The figures behind the design and launch of an app can, on appearance, be eye-watering. Essentially, the cost depends on how complex the app is. That said, many app design agencies will quote anything from a few thousand pounds to £40,000. For larger brands, creating an app with the level of sophistication that their consumers would expect can be £100,000 or more.

Should every business have an app?

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The figures are tempting. The potential to bring an additional revenue stream for your business is surely always welcome but there are instances of apps seemingly developed in an attempt to solve a problem that isn't really there.

For an app to be useful for your business, it needs to meet the demands and needs of your customers, rather than being developed with the aim of bringing in thousands in revenue. Unless people find it useful and practical, they won't download or use it thus impacting negatively on the return of investment you had planned.

So how do you know if an app is worth investing in or not?

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How well optimised for mobile is your website? Opting for an app doesn't mean you should not optimise your site for mobile. If people are able to access the full range of products and service vis their phone or tablet, encouraging them to use this channel could yield the same returns as investing in an app.
Do your competitors have apps? And if they do, how successful are they? Check out their apps on the relevant app markets, taking note of how many downloads there are and what the feedback from users is.
Will your app solve a problem for your customers? Apps can be a brilliant means of solving an issue that customers may have but if your app doesn't offer more flexibility and convenience than your mobile-optimised website, you may find your app struggles to gain traction amongst users.
Could it offer a customer loyalty program? Many retailers have utilised apps to offer yet more personalised offers to their customers. Customising these offers means collecting and understanding customer data, as well as how they use the app and the purchases they make. When you get these personalised offers right, your customers are more likely to make a purchase, either via the app, online or in-store.

Successful apps are those that deliver tangible benefits

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Users need to feel that they are getting something from an app, whether that is exclusive content or offers that they find useful.

In other words, successful apps, especially retail ones, are those that offer tangible benefits. If the app offers what a user can get via your website and nothing more or different, they won't use it. And like other forms of online retailing, if your customers don't use your app, it is a waste of time, money and effort.

FAQ

How much money do apps make?

The apps in the top 200 apps on the App Store, to earn around $82,500 each day. But this drops off quite sharply and in the top 800 apps, the average income falls to around $3,500.

How much money do apps make per ad?

With in=app advertising, the average revenue per ad impression from banners is just $0.10, interstitial ads make a little more at, $1-$3, and the longer video ads make the most at $5-$10.

How much money do free apps make?

Around 70% of apps contain advertising that generate payments per display, per click or per install. As an example, the famous 'Flappy Bird' app made use of this model and earned on average $50k per day while it topped the App Store charts.

How much money do apps make per download?

The average revenue per app download varies significantly but the average is $0.60 to $1.20.

How much money do dating apps make?

As you might expect, Tinder makes the most, with an eye-watering $1,469 per minute, or $88,143 per hour. The female-friendly Bumble comes in 2nd place, raking in $172 per minute.

How much money do Android apps make?

Despite Android having the largest market share in the mobile industry with 75.82%, compared to just 22.9% iOS, it' actually iOS apps which make around two thirds of app revenue. Even so, Android apps are expected to make $45 billion in 2021.