The best things in life are free, as the saying goes. Applying this principle to the world of app development and marketing, it only makes sense that users have embraced the rise of the “freemium” payment model. The premise is simple: Users can download the app for free, but must pay to access additional content or features later—either through in-app purchases or a recurring subscription fee. As Harvard Business Review points out, this model tends to provide a sustainable revenue source for creators and brands, while also incentivizing users.
But freemium is only a win-win with the right app marketing strategy. Why? When revenue depends so heavily on users taking extra steps beyond downloading an app, it’s important to prioritize pulling in users with a high likelihood of engaging. Having one million free users—while impressive on paper—makes no concrete impact on your bottom line if none of them choose to subscribe or pay to unlock premium features.
The Basics of Freemium Applications
The success of your free app depends first and foremost on the payment structure you put in place for users to encounter down the line. You want users to have enough access to get hooked but not so much they can comfortably remain free users forever. There are a few ways to approach monetizing apps after download.
For example, utilizing a value-based strategy means that people gain incremental value from continually using your product. As switching costs rise over time, the aim is that eventually users have invested enough time and energy into your app to start paying because the alternative would be starting over from scratch. Pursuing a time-based strategy, on the other hand, means offering users a temporary free trial and requiring payment to continue once the trial ends. The key here is determining how many days, weeks or months will instill urgency in users and convince them to convert.
In the gaming world, freemium is often called “free-to-play.” Essentially, users get the most basic version of a gaming app for free. They can choose to pay for additional perks: disabling disruptive ads, earning extra items (like tokens or gems), unlocking more challenging levels of gameplay and more.
Effective Marketing in a Freemium Landscape
Although you can’t control user behavior, you can predict it. Question: How can you attract those people most likely to convert after downloading your free app? Answer: By acquiring new users based on shared characteristics with your existing, paying user base. If you know which types of users are already willing to shell out for premium features and access, you know which lookalike audiences to target in the hopes they’ll do the same.
Pursuing an app marketing strategy that serves personalized, dynamic ads to lookalike audiences helps your app attract high-quality users from the get go. To do this, you’ll need access to a database of mobile profiles and a way to programmatically design dynamic ads based upon this demographic information.
Liftoff has both. Want to optimize your revenue in our current freemium app landscape? Learn more about our advanced mobile user acquisition platform today.