Coronavirus Impact on Mobile App Industry: Installs, Ad Spend, and Revenues
The app industry was one of the fastest-growing segments in the digital economy prior to the COVID-19 pandemic. In 2019, the app industry boasted 204 billion downloads and $120 billion in consumer spendings. Last year, users, on average, spent 3 hours and 40 minutes per day using apps, outperforming TV.
Users are quickly transitioning to apps for their daily tasks and services. On average, mobile users spend 87% of their time in apps, and only 13% on the web.
The global health crisis and subsequent lockdown profoundly changed consumer behavior and reshaped the digital economy. Apps experienced a massive spike in usage, while the budget for mobile advertising is shrinking, dropping CPM by 14.8%.
In-app advertising is getting more affordable and can provide a broad reach across the various audience in the lockdown. Recently, Admixer hosted a webinar on In-App Advertising During the Crisis. Yaroslav Kholod, Head of Programmatic at Admixer and Fernando Granata, Head of Programmatic Demand at Appodeal outlined the most effective strategies and formats for in-app in the times of uncertainty.
Let’s review which segments of the app industry advertiser should prioritize.
App downloads and consumer spendings during Coronavirus
As the coronavirus continues to march across the globe, billions of people are trapped indoor in some form of lockdown. With some much time at hand, people turn to their mobile devices and actively download new apps. In the first quarter of 2020, weekly time spent in apps grew by 20%.
According to AppsFlyer, among non-gaming apps, the biggest winners were News apps (+189%), Health & Fitness (+107%), Music (+93%), and Shopping (+30%). At the same time, previously popular categories lost traction, segments like Travel (-69% organic, -62% non-organic) and Maps & Navigation (-61% organic, -63% non-organic) have been hit hard.
The number of sessions was progressively increasing since the first week of March. While non-organic installs remained the same, organic installs grew by nearly 15% between February and March.
First-quarter of 2020 became record-breaking in the history of the Apple App Store, with consumers spending $23.4 billion. Since the start of the pandemic, App Store earned $15 billion, while Google Play reported $8.4 billion in revenue.
In the first quarter of 2020, consumers downloaded 31 billion new apps, 15% more than in Q4 of 2019. To give you a perspective, Q4 is usually the most successful quarter of the year, due to Christmas and Thanksgiving, when people spend a lot on presents.
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Mobile app usage increased substantially as people stay at home to spend more time on their phones. However, the question is if this uplift in traffic will result in ad spend and in-app purchases.
According to the report by Appsflyer, revenues from the in-app purchases have been rising since the end of March. Two-thirds of the app verticals increased their income in the last couple of weeks. Overall in the last week, app revenues grew by 10%.
However, the programmatic mobile app ad spendings in March decreased by 14%. Advertisers are shifting their priorities, switch off campaigns in the depressed categories, and reach out in rising segments:
- +178% ad spend to Shopping apps on iOS
- +122% ad spend to Parenting apps on Android
- +104% ad spend to Dating apps on Android
- +97% ad spend to Food and Drink apps on iOS
- +20% ad spend to News apps on iOS
- -99% ad spend to OTT apps on Android
- -97% ad spend to Medical apps on Android
- -95% ad spend to Sports apps
Countries that spend on apps the most
According to App Annie, China and the United States propelled the quarter over quarter download growth in App Store and became the largest markets by downloads. On Google Play, most downloads came from India and Brazil.
China was first to experience the effects of the coronavirus and had to enact drastic measures to curb its spread. As a result of strict self-isolation policies, in the first week of February, the Chinese downloaded 222 million mobile applications from App Store. The daily time on apps grew by 30% to 5 hours per day.
Italian households, first in Europe, undergo a strict quarantine, which resulted in a 34% jump in non-organic installs and a 39% hike in organic installs.
Currently, Italians are right behind Chinese in time spent using the apps. Since Italy is the first country outside of Asia to enter the full-scale lockdown, it is a litmus test for the outcomes that we can expect to see in developed markets like the UK, US, France, and Germany in the coming weeks.
Due to the harsh quarantine measures implemented by governments globally, we will likely see a further increase in time spent on apps.
Gaming apps were among the first to benefit from the surge in app usage. In the first quarter of 2020, mobile game downloads exceeded numbers of the same period last year by 20%. In Q1, the app market witnessed 13 billion new downloads. Gaming now accounts for the biggest share in the online marketplaces, 45% on Google Play, and 35% on App Store.
Role-playing and Strategy games become the most popular genres by consumer spendings in 2020 on Google Play. These segments of games provide sophisticated social interactions, with customizable characters, engaging competitive scenarios, and the close-knit gaming community. These features facilitate game loyalty and in-app purchases that drive consumer spent. In most cases, the App Store repeats the trends of Google Play, but it is not big on Puzzles, while Action games comprise a substantial share.
Many new groups and demographics are adopting games to relieve stress and feel part of the community. In-game ads are opening opportunities for targeting a highly engaged and diverse audience that gravitate towards various game genres. Advertisers should use the chance of decreased mobile ad spend budgets and get in-game impressions, where CPMs are low, and retargeting is relatively uncommon.
Locked indoors, people are using social apps to combat isolation and loneliness. Social Media apps dominate the largest app marketplaces. As of March, Tik Tok is the most downloaded non-gaming app worldwide, with 115.2 million installs.
ZOOM, Facebook, and Messenger are also in TOP 5 of the most popular apps. Despite to the spike in social media use, the social network becomes flooded with fake news and poor content. Your ad may appear next to some hoax or fear-mongering click-bait and compromise the reputation of your brand. Thus, it is wise to allocate your budget on more trustworthy ad inventory.
Zoom is another upstart, which swiftly expanded its audience. At the end of 2019, it was barely known, but in Q1, it is already named a top business app by iPhone daily downloads in 141 countries.
Another phenomenon in the app marketplace is the explosive growth of Houseparty. It is another tool for conference calls, but unlike ZOOM, it focuses on informal socializing.
Other popular categories of apps on Google Play are Entertainment and Business tools. The most significant share of non-gaming apps, besides social, in the App Store constitutes photo/video editing apps and various leisure apps.
On Google Play, Social and Entertainment demonstrate the biggest consumer spend and year-over-year growth. In large part, this growth is propelled by Disney+ and Twitch. Disney+ recently launched in several markets in Europe and already hit 50 million subscribers.
Tinder and Pandora are positioned to become leaders in the in-app purchases. In March 2020, they received the biggest revenues from their apps, $15.87 and $13.75 million, respectively.
Since gyms and public parks are closed, consumers prioritize apps that help them to remain fit and healthy while staying at home. The robust growth is noticeable in Health & Fitness, Education, and Business apps. The quarter-to-quarter increase in downloads constitutes 40%, 35%, and 30%, respectively.
Among professional apps, the biggest is collaboration and communication programs. Besides Zoom, the most popular conferencing tools are Google Hangouts Meet and Microsoft Teams.
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In 2020, the app industry not only continued its expansion but gained additional momentum, picked up the pace in downloads, new subscribers, and in-app revenues.
The daily time on apps increased to 3 hours 40 minutes globally, while in China, where the population entered lockdown at the beginning of the year, the time spent reached 5 hours.
Lockdown pushed people to find new tools to collaborate, communicate, and have fun. The mobile gaming industry is booming, stimulating the growth of supplemental services, such as video streaming Twitch and messenger Discord. Social media apps witness a new wave of growth, with Tik Tok getting ahead, almost doubling its audience since the same period in 2019.
The growth of the app industry is excellent news for advertisers and marketers. The number of ad impressions served on the apps is quickly increasing since the beginning of the lockdown. In-app and in-game ads are now reaching wider audiences and can provide better reach and engagement than traditional channels.
If you’re considering reallocating your budgets to programmatic in-app advertising, contact Yaroslav Kholod, Director of Programmatic at Admixer: firstname.lastname@example.org