Apps like Instagram and TikTok captured the lion’s share of advertising spend in 2022, driving nearly $220 billion in ad expenditures.
According to data.ai’s new State of App Revenue report, mobile advertising reached a staggering $336 billion last year, with apps like Instagram and TikTok accounting for around 65% of that tally.
Games accounted for the remaining 35% of ad spending, which marks a stark contrast to the in-app purchases, where games represent the majority of the app store consumer spend at 66% while apps take up a smaller portion at 34%.
All in all, the report highlighted advertising as a core pillar of the mobile industry.
It estimated value of the app economy is $500 billion, with approximately $336 billion, or 67%, of its total worth attributed to advertising and $167 billion, or 33%, to in-app purchases.
Mobile Advertising Emerges as a Leader in Europe
The report noted that Europe has emerged as a leader in mobile ad revenue, solidifying its position as the third-largest region for mobile ad revenue in 2022.
Despite competition from Asia and North America, Europe performed commendably, underscoring its significance in the global mobile advertising arena.
More specifically, North America was the top region attracting mobile ad dollars, accounting for nearly half of global mobile ad revenue last year. Asia ranked second at 23% (excluding China), followed by Europe at 19%.
The data provided by data.ai’s report also revealed that in the first quarter of 2023, subscriptions accounted for approximately 30% of in-app expenditure on iOS, marking an increase from the previous year’s 27.6%.
This shift towards long-term commitments and recurring payments underscores the evolving nature of app monetization strategies and consumer behavior.
Interestingly, the report indicates that among app users who pay for Bumble, they are more than 25 times as likely to invest in OkCupid, Hinge, and Match compared to the average mobile user.
This finding showcases the interconnectedness of user preferences within the dating app market, emphasizing Bumble users’ curiosity and engagement with other popular dating platforms.
Advertising Dominates the App Economy, Driving YouTube’s Revenue
The report revealed that approximately 90% of YouTube’s revenue is derived from advertising, cementing its role as the primary driving force behind its financial success.
However, the allure of an ad-free experience has influenced 10% of revenue, which is generated from app store purchases made to eliminate advertisements.
In fact, as a result of its ad-free subscription option, YouTube ranked as the #2 app by app store revenue in the US in 2022.
In summary, mobile advertising’s growth is impressive and robust, driven by Europe’s strong performance and YouTube’s ad-driven revenue streams.
Furthermore, there is a trend towards recurring payments, with subscriptions accounting for 30% of in-app expenditure on iOS, which highlights the evolving nature of app monetization.
Notably, apps with ties to mainland China have also been gaining ground in the US.
So far this year, 10 out of the 500 most downloaded apps are from Chinese companies. Furthermore, four of these Chinese apps are in the top five, which include popular apps like TikTok, CapCut, Temu, and Shein.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.