Earlier this year I did a series on YouTube about buying profitable iOS and Android mobile apps. In the series, I bought two apps from Flippa – one on Android and one on IOS. The intention was to showcase the failures and the wins of investing in apps with different monetization strategies. Prior to this series on YouTube I had only invested in a few mobile apps so investing in mobile games was an authentic learning experience to share with beginners. There were a few key takeaways I learned from my iOS and Android investing strategy that are important for beginners to keep in mind before diving in.

Developer Accounts

It may seem obvious to many that you will need developer accounts set up before buying a mobile app. In my experience, you will need to set up both an Apple developer account as well as a Google developer account. Regardless of if you’re only focused on Android apps there is a good probability that the game or app you acquire on Flippa will be available for both platforms. 

When buying an app on @Flippa, be sure you have your developer accounts on both Apple and Google set up first! Click To Tweet

The costs are $99 per year for an Apple developer account and $25 one-time registration free for a Google Developer account. As you can tell from the pricing of each developer account, Google has prioritized keeping developers around with a low one-time fee compared to a recurring annual fee from Apple. Many mobile game and mobile app investors will recommend diversifying between both IOS and Android platforms so I suggest getting both accounts setup first.

Mobile Ads

There are a lot of unique ways to monetize a mobile application, but hands down the most profitable is by displaying in-app ads and I always look for this opportunity when browsing Flippa for apps to buy.

The benefit of Android based applications is that you have the entire Google ecosystem. The reach Google has to advertise to users is unmatched given their monopoly over global search. Setting up ads using Google AdMob to display targeted ads within your mobile app and running Google Ads to direct traffic to those ads is an incredibly profitable approach. Using Google’s products provides them with enough data to optimize your ads, making them more effective. If you have the skillset for running ads, you can do a lot with monetization in general, but with the high CPM payouts for ads within mobile apps and games, you can make 3x or 5x ROI relatively quickly.

Hands down, the most profitable way to monetize an app is through in-app advertising. Click To Tweet

One of the most effective strategies that will not ruin the user experience of your mobile app portfolio is implementing full screen ads at the beginning of the user’s signup. Having dozens of ads play throughout the experience for the user can dramatically hurt the retention of your users and therefore, your revenue.

The goal is to keep users on the app for as long as possible with in-app purchases being vital to saving them time. In the YouTube series, my strategy was to have interstitial ads and one main full screen ad right after the first title screen. This allowed ads to seamlessly play between levels of the games and didn’t hurt the overall user experience. Advertisers get what they want with high quality impressions and high click through rates while not hurting the users overall experience.  

On iOS applications, you can also run either Facebook ads or Google Ads to direct targeted traffic to the mobile ads within your application. With that said, the returns on in-app purchases is higher in my experience with iOS based applications which leads to the next important component to buying apps.

In-App Purchases

There is widely available research about the benefits to having in-app purchases within your application. The freemium model has been extremely well thought through in many popular apps and games and in my experience, in-app purchases produce more revenue than display ads.

There is a large debate in the mobile app industry about the more profitable approach to building apps – upfront pay-to-download apps vs free with in-app purchases. As mentioned, in my experience, freemium is far and away the best approach to building a portfolio of mobile apps. Charging people upfront to download without a solid brand is extremely complicated to pull off and as a beginner you should focus on free downloads with in-app purchases.

Alternative Monetization Strategy 

In addition to in-app purchases with free-to-download apps and upfront pay-to-download apps, there are other models you can implement to monetize an application on iOS or Android. I have only heard of larger businesses undertaking this strategy, but you can offer the app for free with no ads and no in-app purchase. These apps will let their customers populate content and eventually sell user’s data in some form to other businesses. As mentioned, this is a tactic that larger businesses often take and I don’t recommend beginners take that route unless you have a substantial audience to use an application. 

What To Look For When Buying Apps on Flippa

Now that we’ve gone over different types of mobile app business models, and ads, it’s important to discuss what to look for in profitable apps on Flippa.

Based on my experience with mobile gaming apps on both iOS and Android, the most important first step is to be added to the Google Ads account and a in-app advertising account like AdMob. Relying on screenshots from sellers is not 100% reliable and its best to confirm directly from the source.

Once you’ve been added to the accounts and can verify monthly spend and monthly revenue, its very important to have a skilled developer look at the application. In my YouTube series, one of the games I acquired for the portfolio was outdated by close to 2 years. The developer I hired to help with the series identified the issue quickly and we pushed an update immediately. This is a perfect example of making sure your developer looks through the application before you purchase it. You don’t need the source code in its entirety for a developer to see what changes need to be made. I recommend finding a skilled mobile app developer on Upwork who can help you with your investments transfers as well as the diligence. 

Conclusion

In summary, when looking to buy your first app on Flippa, you will want to have your developer accounts with a developer ready to help you go through the application.

Once you’ve verified the listing information is legit by gaining access to the ad accounts, make sure you’re able to safely push updates.

The last and final step is to setup your advertising and make amazing creatives to promote on Google and Facebook to drive downloads.

As long as you’re able to acquire a stable mobile app with a freemium model, ads are correctly implemented, in-app purchases are attractive, and you are able to pay $1 on ads to generate $2 in ad revenue, investing in mobile apps will be profitable long-term. Perfecting ads that are profitable consistently is both difficult and extremely scalable if done properly.

If you haven’t tried investing in mobile apps and games yet, I highly recommend trying to build a small portfolio to test it out.

Here are a few of the apps currently available on Flippa that might be worth looking into.

Steve McGarry

Steve McGarry

Steve McGarry is an entrepreneur, content creator, and investor based in sunny Tampa, Florida. In 2015, while living in San Francisco, Steve sold his first fintech startup LendLayer to Max Levchin’s (founder of PayPal) consumer finance company Affirm. In the last 5 years, Steve has both built an online community that reaches 1.4 million people every month on social media and a portfolio of over a dozen web properties. Currently, he’s the co-founder of a next-generation fintech startup called GrowYourBase while managing his portfolio of online businesses.