Some apps make money from a handful of power users. Others make money from every tap, view, or impression. The difference? Their monetization strategy.
It’s not just about adding a payment button or an ad slot: it’s about designing your revenue streams so they fit your audience, your content, and your growth goals.
This is the fifth installment in Gamelight’s Growth Guides, a practical content series for mobile teams that want not just more users, but more profitable ones.
In this guide, we’ll break down the four main monetization models in mobile and how to choose the one (or combination) that makes more sense for your app. We will cover:
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In-app purchases (IAP)
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Ad revenue
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Hybrid monetization
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Mediation layers
IN-APP PURCHASES (IAP)
What it is
Users pay real money for virtual goods, features, or content. This can include:
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Extra lives or in-game currency
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Premium features or subscriptions
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Cosmetic items or skins
The strength of an IAP strategy isn’t in the number of items, but in how naturally they fit into the player’s progression. Players should buy because they see the value, not because they’re pushed. When the full capacity of the project’s economy is reflected in those purchases, even the filler elements contribute to a sense of progress — and that makes the act of spending more satisfying.
Maksim Amosov, Head of Monetization at Nekki, explains what separates successful IAP systems from shallow monetization:
Why it works
When your app creates enough value or desire, users are happy to pay for a better experience. Many top-grossing games run almost entirely on IAP revenue.
High revenue potential from engaged “whales”
Doesn’t interrupt gameplay with ads
Works well with deep engagement loops
Relies on a small percentage of paying users
Careful design to avoid “pay-to-win” backlash
Monetization can take time to ramp up
AD REVENUE
What it is
You earn money by showing ads inside your app, like banners, interstitials, rewarded videos, or native ads.
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Why it works
Even if users never pay directly, their attention can still generate revenue through advertisers.
Monetizes all users, not just payers
Predictable revenue from consistent traffic
Rewarded ads can actually boost engagement
Too many ads can hurt
retention
Requires decent daily active users (DAU) to make a real impact
Lower revenue per user compared to strong IAP spenders
Maksim Amosov, adds that effective ad monetization starts with respecting player experience:
It starts with being honest with the player. Ads should reward, not punish. We place rewarded videos at natural pause points rather than interrupting gameplay. When ads help players move forward without breaking the rhythm, they work — for both the player and the business.
In web gaming, frictionless access and player trust are everything. Models that respect user experience while delivering value to developers, like well-placed rewarded ads or hybrid monetization, are proving to be the most sustainable path forward. Monetization models are evolving fast, but the principle stays the same: align the player’s joy with the developer’s success. The future belongs to models that make players feel rewarded, not interrupted. That’s what we do on CrazyGames.
Rafael Morgan, VP of Partnerships at CrazyGames, highlights how web gaming is setting a standard for balanced, player-friendly monetization:
HYBRID MONETIZATION
What it is
Combines IAP and ad revenue, since users can pay for premium items or engage with ads to earn in-game rewards.
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Why it works
It allows you to monetize both spenders and non-spenders, making your revenue grow while not relying on just one stream.
Diversifies income sources
Ads can introduce users to IAP items
More resilient if one revenue stream doesn’t work
Balancing both models without harming UX is complicated
Requires more design and testing to get right
Dieter Rappold, Co-Founder & CEO at ContextSDK, describes how technology can take that optimization further:
Long-term profitability isn’t about picking one model; it’s about matching moments of user intent to the right form of value. We run small, on-device models that infer session context — engagement, connection quality, churn risk — and choose between paywall, rewarded break, or ‘no ask’ in real time. That lets us maximize margin per minute without eroding retention, and it stays privacy-safe because the decision never leaves the device.
MEDIATION LAYERS
What it is
A mediation platform is an intermediary between your app and multiple ad networks; it automatically serves the highest-paying ad available. For example, Google AdMob.
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Why it works
Instead of relying on a single network, mediation lets you run a bidding war in real-time; more competition means better fill rates and eCPMs.
Maximizes ad revenue automatically
Simplifies working with multiple ad networks
Gives better analytics and control
Needs proper setup and integration
May require ongoing optimization to keep performance high
As Dieter Rappold adds, precision is what lets IAP and ad monetization complement each other instead of competing:
IAP doesn’t scale by adding more SKUs — it scales by precision. We tailor offers to session intent: dynamic bundles, localized pricing, and paywalls triggered at naturally high-value beats. To avoid cannibalization with ads, we use on-device propensity to suppress ads around high-purchase moments and lean into rewarded formats when purchase likelihood is low, so ads and IAP grow together instead of competing.
WHICH MONETIZATION MODEL FITS YOUR APP?
Finding the right mix of models is as much about design as it is about data. It’s not just a financial choice, but about how your monetization feels to players. As Günay Azer, Founder of Gamelight, explains:
Monetization design should always start with the player experience. If ads or in-app purchases disrupt the flow, you lose both engagement and long-term value. The strongest results come when monetization feels like a seamless part of the game, one that supports player motivation instead of breaking it.
Deep engagement, competitive gameplay (RPGs, strategy games)
Casual games with broad audiences
Apps with mixed audience behavior
You want to maximize ad revenue
New app in soft launch
Market expansion push
IAP-first
Ad-first
Hybrid
Mediation layer (paired with ads)
Hybrid (light ads + intro IAP)
Hybrid + rewarded ads
High LTV potential from whales, monetizes deep progression
Monetizes all users, not just payers
Captures value from both payers and non-payers
Optimizes eCPM and fill rate by bidding multiple networks
Tests both revenue streams before scaling
Boosts DAU, monetizes new users while building IAP funnel
BRINGING IT ALL TOGETHER
Monetization isn’t just about making money; it’s about making the right money. That means matching your revenue model to how your users behave.
At Gamelight, we’ve seen the most consistent results come from hybrid monetization paired with rewarded UA. Why?
Ads monetize every user from day one
IAP captures high-value spenders without alienating non-spenders
Rewarded UA drives high-intent traffic, turning engagement into measurable post-install value.
And with the right mediation layer, you’re running a real-time auction for every impression, getting the most value from every ad view.
Ultimately, the most successful apps treat monetization as part of the user experience, not an interruption to it. When value, timing, and trust align, revenue grows naturally. That’s when monetization stops being a strategy and becomes a system for long-term growth.