A market research study by AppsFlyer details the ever-growing mobile advertising world, as $38.9 billion was reportedly spent in 2018, with 34% growth expected by 2020, reaching $64.1 billion, globally.
In North America specifically, 2017 mobile ad spend accounted for $6.5 billion, however, by 2020 that figure is expected to reach about $13 billion. Because North America is “one of the world’s most predominant app markets”, it is estimated to see about a 20% YoY increase over the coming years.
Some interesting data from the report explains that while app installs will grow along with ad spend, install rates will not keep pace with increasing media costs, meaning advertisers will have to be increasingly efficient when marketing for an app download.
Although app install ad spend is predicted to experience the greatest amount of growth through 2020, it is still important to monitor non-organic install trends in order to have the most well-rounded understanding of marketing-driven LTV (lifetime value) potential.
For that reason, it should be noted that, while install growth is significant between 2017 and 2020, this rate will not match the expected rise of media costs. From our data, global installs will grow by 110% into 2020, while North American installs will increase by 73%. Bear in mind that, while both the ad spend and install growth rates maintain the same ratio through 2020, marketers will have to be increasingly efficient in their marketing efforts amid rising media costs
Total ad spend in dollars as compared to app installs thru ads in
The end of the report offers explanation as to why we’re seeing these growth trends besides the obvious answer of simply more smartphones. It describes gaming as a rapidly growing market ripe to continue thriving as more powerful devices reach the lower tiers of market.
It further divvies up online shopping as another reason for increased growth, as mobile commerce continues to grow YoY.
There are a number of emerging trends which lend themselves to the boom in mobile ad spend and installs. We’ve highlighted a few of the most prominent below heading into 2019:
- Gaming: The app economy is growing rapidly mainly due to, first, gaming and, second, shopping apps, which make up roughly 44% of all non-organic installs combined. Especially for gaming, which claims around 40% of the total app install pie, there is particularly staggering growth. Between 2016 and 2018, the share of gaming non-organic installs in the pie grew by 26%, jumping from 27% to 34%.
- As one example, take a look at the gaming phenomenon of Fortnite, which is completely dominating in app store rankings, downloads, and revenue. It’s almost a cultural phenomenon and goes to show how prolific gaming as an app vertical is becoming as a whole.
- Powerful devices: On the hardware side of things, newer devices are being released that remain powerful and supportive of more sophisticated and immersive gaming experiences, as well as much more affordable. These devices also offer greater storage space on average, which, especially in developing countries, means there will no longer be a de facto limit on the number of apps one can have on a given device.
- App commerce: For shopping apps, this app category is significant for the role it plays in connecting users between offline (in-store) and online (web, mobile web, and apps) channels, especially considering the growing use of mobile apps in making purchases. (Forrester predicted that 34% of all US retail sales, more than $1 trillion, would be impacted by mobile devices and estimates that share will jump to 42% by 2022.)
- Video and music streaming apps: This form of content consumption is rapidly growing rise, including giants such as Netflix, HBO, Hulu, and Spotify, among others. This is likely due to stronger devices, affordable data packages, and the emergence of stronger cellular infrastructures like 4G and 5G that is able to support it with greater flexibility and bandwidth.
AppsFlyer explains it generates their own data. In total, the data sampled 35 billion app installs, $10 billion in ad spend, and 70,000 different apps. They further explain they use external parameters such as 3rd party mobile attribution market share data, number of total apps in the app stores studied, and CPI prediction per region.
How often are you inspired by a mobile ad to download an app or purchase a product? Let us know in the comments!
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