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How Free Apps Get Your Data — and Make Money off It
“This is the on-ramp and advertising is the engine". The most popular apps simply plug into ad networks (think Google’s AdMob, AppLovin, Unity Ads), auctioning off your attention in milliseconds and charging more if they can prove you’re the right user. But free apps don’t need to make money only from the app store any more than you need to make money only from Amazon: You can sell ad space in your apps, and that’s the meat of the app ads business model, and how free apps make money in bulk.
To demonstrate you’re valuable, the SDKs monitor device IDs, session length, rough and precise location and what you tap on in other apps and sites. Even utilities have crossed lines: Los Angeles filed a lawsuit against The Weather Channel’s app, claiming it deceptively monetized continuous location trails beyond the forecast, a reminder that “permission” can be buried in fine print.
At the same time a few of your users (whales) will pay a lot by the in-app purchase (IAP). Games and filters hawk celebrities’ newfound emotional resonance with a generation that likes to feel seen and paid for retail camouflage: boosts, lives, stickers, cosmetics, the ad-free tier, even VIP access. The trick, of course, is in segmentation: Ads for the masses, micro-transactions for the few, two income streams that feed each other and live under one roof of a single app monetization.
The money is very real. TikTok’s U.S. revenue clocked in at $16 billion in 2023, driven mostly by ads that can target granular engagement signals. Candy Crush Saga’s freemium model made more than $20 billion lifetime by coupling IAP bundles of extra moves and power-ups. And Pokémon Go continues to print money years on, garnering about $545 million in 2024 from optional items and passes layered on top of free play
