Besides getting businesses to advertise on the mobile app, how do these free mobile apps actually generate revenue? Why would any business pay to be advertised on a mobile app that just started out and has no traction as of yet? In addition, how much revenue does such a mobile app usually generate in a month? App category that I'm referring to: - gaming - travel - social
It depends on their business model. I have experienced some apps
a) just add on user base so that they can monetize the app as an asset . So they do not charge anything for the app or within the app
b) Some use advertisements within the app
Answering as follows -
1. Apps that do not charge upfront usually draw their revenues from the advertisements.
2. The advertisement process is not something that you manage (unless you've your own ad engine), but you use third party Ad SDKs like Google admob or revmob etc as an integrated service on your app. They don't need your app to be famous before they show their ads, but they start rendering ads as soon as you've 1st user and ads are either based on location or context or user-type or a combination of all of these parameters. So you need not to sell your advertisement space to anyone manually at all, these Ad SDKs (software development kits) do take care of that and ofcourse take their cut.
3. You can, however, think of selling your ad space manually by contacting businesses via various methods once you are actually famous and have meaningful number of active users. You can do so simultaneously with the ongoing Ad SDks. People also use more than one Ad SDKs depending upon their app type and spaces available.
4. The categories you mentioned like gaming, travel and social are actually good in terms of rendering ads. The gaming being on the top.
In gaming, you can not only do contextual or locational ads but also tie up with other games to do cross-app ads, like they advertise your app on their game and when user installs your app they pay them game credits and vice versa. There are several services who facilitate such cross app promotions also smoothly.
The earning depends upon several factors again, starting from number of active users to their time spent on the app daily, then location, then frequency of adds (how many times you show your ads to one single user per session) and so on. But bottom line is the more number of " Active users" (not just the ones who've downloaded) you've the better earnings you'll receive. It can be as low as $ 100 per month or may go beyond 10 K per month.
There are various studies about the ad revenue, and many people say if you show 50 K banner ads per day (to any number of users, 10 K users or less or more) then you'll easily earn $ 75 to 100 per day. Video ads get more click through and therefore more revenue.
Hope the answer helps. Just in case you want to calculate the cost of your app idea development, then feel free to try our App cost calculator here - https://www.agicent.com/app-development-cost-calculator
100s of ways.
Start by reading the book "Free" by Chris Anderson for a history of old style + new style approaches.
Then hire a bunch of smart people for an hour each to tell you how they'd monetize free for your project.
In fact searching for - how to monetize free apps - returns 25M results for me, so likely this search might be a good starting point for you.
Also study Podcast Monetization + Radio Show Monetization, both of which have been monetizing audience free content for years.
These type of apps make money through:
1. In app purchases
3. Selling data
Ads are paid per clicks.