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Mobile apps have become the cornerstone of our daily routine, reshaping the way we communicate, work, learn, have fun and access information. Many companies, especially those in social media, gaming and payment services, derive a significant portion of their revenue from their apps alone. To optimize monetization, mobile apps have embraced a hybrid approach, using both advertising and in-app purchases (IAPs). According to the latest report from data.ai (formerly known as App Annie), Global mobile app spending to surpass $500 billion in 2022. Interestingly, of this staggering sum, a whopping 66.8% or $336 billion came from advertising, while the remaining 33.2% or $167 billion came from in-app purchases.

As the popularity and use of mobile apps continues to grow, it’s clear that advertising will remain a dominant force, further shaping the mobile industry and our digital experiences.

Here are some key insights into how advertising is driving the growth of the global mobile app industry and the key players/companies dominating the landscape:

Key Findings: Mobile Ad Spend 2022

  1. Non-gaming apps have been driving ad revenue within the mobile app landscape for years. In particular, they accounted for 65% of the total mobile ad spending market in 2022. That’s roughly $220 billion of the $336 billion spent on mobile advertising. On the other side, Gaming apps accounted for the remaining 35% of overall mobile app ad spend.
  2. Social media applications such as Facebook, Twitter, LinkedIn, Instagram, TikTok, YouTube, Snapchat and Pinterest have significant influence and market dominance in the advertising landscape. This can be seen from the fact that these owned and operated ad platforms alone accounted for 50% of overall mobile ad spend in 2022.
  3. Among social media apps that operate on third-party ad networks such as AdMob and AppLovin, communication apps emerged as leaders in generating ad revenue.
  4. In the gaming app sector, hyper-casual games accounted for the largest share of total mobile ad revenue in 2022. This is followed by other casual genres such as Puzzle and Simulation, which played a significant role in revenue generation from advertisements. These genres appeal to players who enjoy strategic thinking, problem solving, and immersive experiences.
  5. In the United States, Zynga Words with Friends 2 has established itself as the market leader for word games, especially in terms of average ad revenue per user. The game generated an average of $1.80 per monthly active user in Q1 2023 across AdMob, Vungle, AppLovin, UnityAds and ironSource ad networks.
  6. North America accounted for nearly 46% of global mobile ad revenue in 2022 across select ad networks (AdColony, AdMob, AppLovin, ironSource, UnityAds, Vungle). Within North America, the United States stood out as the top country for ad revenue, holding a prominent position on both the iOS and Android platforms.
  7. Despite Asia’s rapidly growing mobile market and significant number of smartphone users, it is surprising that the region (excluding China) only accounts for 23% of global mobile ad spending. This shows that there is still untapped potential for advertisers to explore the Asian market.
  8. Europe boasts a mature advertising market, with countries such as the UK, Germany and France showing high rates of smartphone penetration and digital connectivity. Despite this, Europe accounted for approximately 19% of global mobile advertising revenue in 2022.
Source: data.ai Advertising revenue | Note: iOS and Google Play combined. Excludes China.
*Ad revenue includes a subset of ad networks and excludes social media and OTT. Networks included are: AdColony, AdMob, AppLovin, ironSource, UnityAds, Vungle

In short

Ads provide a way to generate revenue from a wider user base, including those who may not make in-app purchases or who prefer to engage with the game without spending money.

Advertisers and businesses continued to invest in mobile advertising, recognizing its effectiveness in reaching and engaging with a mobile-centric audience. Despite facing significant challenges like the General Data Protection Regulation (GDPR) in Europe and Apple’s App Tracking Transparency, mobile ad spend not only represents a larger share of total app revenue, but also experienced an impressive 14% growth in 2022.

It’s no wonder that social media companies like Facebook, Snapchat, etc., rely heavily on advertising as their main source of revenue. In 2022, Facebook, for example, generated 97.5% of its global revenue from advertising alone, reaching $113.6 billion. Meanwhile, Snapchat also generated about $4.6 billion in revenue during the same period by offering various advertising products on Snapchat, which include Snap Ads and AR Ads.

In a significant move, Netflix, the global leader in over-the-top (OTT) streaming, also introduced a cheaper subscription plan called ‘Basic with ads’ in October 2022. This decision was prompted by the fact that Netflix is ​​facing with strong competition in the broadcast landscape and aims to differentiate itself in a crowded market. While Netflix has relied primarily on subscription fees as a source of revenue, the inclusion of advertising in this new plan demonstrates the company’s willingness to explore alternative monetization strategies.

The biggest challenge for these companies is the constant need to innovate their advertising offerings in order to meet the evolving needs of advertisers and provide a valuable user experience.

Twitter, on the other hand, has lost its game in the advertising business. After being bought by Elon Musk, Twitter’s ad revenue has fallen sharply. The decline in advertising revenue, however, is in line with the CEO’s strategic vision, which aims to reduce reliance on advertising and move to a more secure subscription-based model.

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