Where will global app market go in the following years, after it already surpassed traditional media like television? Data tells us that it will only continue to grow. With our mobile phones becoming “smarter” with every new release, there is less need to use our desktops – we can order a ride with our phone, pay the bills or even chat with Google Assistant. In fact, a recent study by eMarketer noted that almost 70% of the total digital advertising space in 2018 is mobile – surpassing traditional media like television.
Mobile holds first place of total ad spends share in the United States with 33,9%, TV comes second with 31.9%. By the end of 2022 mobile share of total ad spends will grow to 47.9%!
App Annie’s forecast predicts the further growth of global consumer spend in app stores reaching $156.5 billion in 2022. This is up 92% from $81.7 billion in 2017. Global app installs will grow 45.0% from 178.1 billion in 2017 to reach 258.2 in 2022. Install base of mobile devices (smartphones, tablets, wearable tech) is predicted to expand from 3.9 billion at the end of 2017 to 6.1 billion in 2022.
The growth of app installs will be driven by a significant increase in smartphone install base from 3.9 billion in 2017 to 6.1 billion in 2022. New smartphone owners in emerging markets will lead this device growth. Consumer spend growth will come as a result of a growing install base and from increasing spend per device in more mature markets.
Ad Spend for App Installs
Ad spend for app installs is predicted to grow to $51.6 billion in 2019 from $38.9 billion in 2018. And the number is expected to grow to $64.1 billion by 2020. That’s 65% growth in two years. There are different challenges in the mobile app market world – fierce competition for organic discovery in app stores and ability to discover high-value users at a scale that won’t stop using your app after a day or two.
North America holds almost the fifth of that market. Growth of ad spend for app installs will be pronounced, doubling by 2020 to $12.9 billion. Significant growth is expected in longer periods of time, even though year-over-year growth is decreasing.
Another interesting market, Europe, with expected growth of 127% in overall ad spend for app installs in 2020. That is $10.9 billion compared to $4.8 billion in 2017. If we analyze this further, there is 163% growth of attributed ad spend for app installs, but only 56% growth of non-attributed ad spend for app installs. Attribution is taking more market share each year at 39% average growth, while the number of non-attributed installs grows only 16% on average. More marketers are measuring and tracking user journey to their app or within their app, and they are taking advantage of this opportunity. With the rise of mobile advertising, there is a need to track and attribute user habits.
Still second to ad spend for app installs, non-organic installs will experience the biggest growth through 2020. Install growth is significant, but media cost will not match the expected rise. Mobile app market is becoming more and more competitive, and marketers will have to increase their efficiency against rising media costs.
Non-Organic installs hold a steady pace of growth in North America market, growing from 3.3 billion in 2017 to expected 5.7. billion in 2020. More users will be acquired through targeted ads.
In 2017, two-thirds of all non-organic app installs in Europe were attributed to a media source, and it is predicted to grow to 3 out of 4 non-organic app installs. So, it’s more and more valuable to know and follow user traffic for your app, but it’s also essential to effectively execute mobile ads campaigns for highly demanding mobile app market.
Numbers of attributed installs will grow by 130% between 2017 and 2020, non-attributed installs will increase by 70% in the same period. By that time, non-attributed installs will represent less than half of predicted new installs. By every day, it’s more and more important to know where are your users coming from. In total, number of non-organic app installs will jump to over 6 billion from 3 billion in only 3 years.
Trends in mobile app market that will drive the growth
Overall the biggest category off all app installs are gaming apps, second to that are shopping games which together make around 44% of all non-organic installs combined. Gaming makes around 40% of total app install and is experiencing significant growth. There is no gender-gap here: men and women use gaming apps equally, and they spend more than hour a day playing them!
In the United States, 71% of total digital minutes users are spending on mobile devices, and from that, 87% is spent in-apps versus mobile web. US adults spend an average of 2 hours and 25 minutes per day using mobile apps, and they engage with 7 apps daily! And 70% of mobile users play mobile games. That number is expected to grow to 81% by 2020. Currently, 18% of overall internet traffic is coming from mobile devices, and it expects to grow to 44% in 2022.
Mobile gaming is industry bigger than box offices and McDonalds’s – with annual revenue of $60 billion. 45% of players open a game 5-10+ times each day, 55% will play for over an hour. The United States is one of the biggest mobile gaming markets in the world with almost 193 million players, and globally there are almost 2.1 billion mobile gamers, spread evenly across all demographics. Gaming is the category on which people tend to spend the most time, even more than on social apps.
Today’s mobile phones have more RAM, better processors and more storage than computers had 10 years ago. That kind of devices offer better and immersive gaming experience, as much as more affordable. You can use your phone for VR gaming, connect it to a bigger screen, all when playing a game on your phone!
There is a growing use of mobile apps in making purchases – connecting users between offline (in-store) and online (web, mobile web and apps) channels. Users are making more and more purchases using mobile apps in comparison to desktop check-out.
Streaming services like Netflix, HBO, Spotify or newly announced Disney+, are rapidly growing. Millennials are spending less time consuming the traditional media and more time online and on their phones. Better internet infrastructures like 4G or 5G can support higher bandwidth needed for streaming in full HD or 4K.
Mobile app market is more and more adopted by the marketers and ad spend for app installs will double by 2020. This market is becoming increasingly competitive –it is essential to be more data-reliant. From this data, increased ad spend resulted from higher cost, more paid campaigns, more apps on the market and overall more users. Major marketing opportunities are to be expected going into 2020. Better infrastructure (5G) will offer more opportunites for creative marketing.
About AppsFlyer data model
AppsFlyer used 5 different statistical models in order to calculate the above future trends. These models included Support Vector Machine (SVM) and K-Nearest Neighbor. Their results came from AppsFlyer’s data, which included 35 billion installs, $10 billion in ad spend, and 70,000 apps in the sample. They also used other parameters, such as 3rd party mobile attribution market share data, CPI prediction per region, number of apps in the app stores, and the number of installs.
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