App ads – particularly gaming app ads - are expected to make a huge splash over the next few years.
App Ad Competition Intensifies
Mobile data analytics company AppsFlyer recently released a new mobile gaming report that forecasts some pretty profound details on what the future has in store for app install ads. In summary, the global market is expected to grow by a whopping 65%, from $38.9 billion last year to $64.1 billion by 2020, equating to a 34% climb on an annual basis over the next two years.
Image Source: AppsFlyer
If you’re more interested in the North American app advertising market specifically, the growth signs are looking quite positive on that front too. The average annual growth is expected to hover at around 21%, reaching $11 billion by the end of 2019 and close to $13 billion by 2020.
Image Source: AppsFlyer
Driving Demand
In terms of driving more app installations, paid support is becoming a vital factor when it comes to competing with other mobile apps for downloads. AppFlyer predicts that there will an 110% increase in non-organic global installations from 2017 to 2020, with the number of app installs surging from 17.7 billion to 37.3 billion. North America specifically is likely to climb from 3.3 billion in 2017 to 5.7 billion over the next two years.
Breaking down other geographic locations, the report deeply analyzed paid app campaigns that were being run across the world in Q3 2018. Of those findings, Brazil had the largest amount of ‘Hyper Casual’ installations that were a direct result of paid campaigns. The Hyper Casual format is described as games that are lightweight and instantly playable, different than the Causal format which is a lengthy, slower-paced format. One key thing advertisers will want to make note of with the Hyper Casual format is that 70% of the revenue generated for those apps are driven by ads.
Moving to a different format - Midcore and Strategy games are incredibly popular in South Korea, Russia, and Indonesia right now, with those three countries generating the most amount of paid app installations.
Image Source: AppsFlyer
More Competition = Higher Costs
From a budgeting perspective, advertisers should expect cost-per-installs to dramatically increase as the competition continues to intensify. In fact, it’s expected that media costs will outpace the rate in which app installs are currently at, meaning marketers will want to dive a little deeper into the insights to get the most bang for their buck.
iOS app spend is running much higher than Android right now – over 50%, with Casino and Hyper Casual apps currently showing the most significant of a gap between the two device types.
Image Source: AppsFlyer
Image Source: AppsFlyer
While the Hyper Casual format is currently one of the lowest prices, it’s worth noting how much this format has been growing in recent quarters. With advertisements being the primary revenue source for this model and the increasing demand on the consumer side for snackable, addictive games that can be fully enjoyed quickly, this could have a very significant impact on both the mobile app advertising market, and the mobile gaming market as a whole.
Taking a Strategic Approach
There are a lot of different ways to approach these insights from a marketing perspective. For those running app install campaigns, device targeting is going to become extremely critical as times goes by. Measure where your conversions are coming from and assess if the costlier iOS CPI is worth the conversion rate coming from those devices.
Additionally, if the Hyper Casual hasn’t quite hit your radar yet, now would be a good time to start paying attention to it and testing the waters driving traffic to those apps. There is a lot of opportunity – especially if you go beyond the North American market – to capitalize on the rising demand of this format. As mentioned above, certain geos perform much differently than others when it comes to genre and paid installations, so use this knowledge to better optimize your campaigns and allocate your budget.
If app install campaigns are a big part of your revenue, the AppsFlyer report is definitely worth reading in full. There are a lot of additional breakdowns by genre, device, and geo that we’ve only skimmed the surface of, so give it a thorough read to help guide your strategy.
In the meantime, if you have any questions about some of our app offers, don’t hesitate to reach out to our affiliate management team. We’ll be happy to show you where our highest converters are!