AppsFlyer: Ad spending for app installs will jump 32% this year

Brief:

Media spending to drive mobile app installs will jump 32% to $76.2 billion worldwide this year, reaching $118.4 billion by 2022, per a forecast by AppsFlyer, a provider of mobile attribution and marketing analytics. The global growth rate gradually will decline as the market matures in the next few years.
Latin America will see the fastest growth at 39% to $4.3 billion, which will still be the smallest in real terms among global regions. Asia-Pacific (APAC) will continue to be the biggest region for ad spending at $39.4 billion, a 32% gain from 2019. The hypercompetitive North American market will grow 26% to $17.9 billion in ad spend, while Europe-Middle East-Africa (EMEA) will rise 37% to $14.5 billion this year, per AppsFlyer.
AppFlyer forecasts that the global rate will slip to 27% next year and to 23% in 2023, as the North American and APAC regions grow at slower rates than Latin America and EMEA.

Insight:

AppsFlyer's forecasts indicate that app developers will continue to pump billions of dollars into their advertising efforts as they try to stand out in an increasingly crowded field. In explaining the dynamics of the ad market for app installs, the report cites other studies that predict strong growth for app installs. The number of app downloads is set to lift from 204 billion last year to 258 billion in 2022, researcher App Annie forecasts.

The Google Play store has an estimated 2.57 million apps — a number that fell from a couple of years ago after the company started to remove low-quality apps — while Apple's App Store has about 1.84 million apps, per Statista data. Both stores publish rankings of their most downloaded apps, which does help with discovery, but app developers also need to spend heavily to get noticed.

North America is less populous than APAC, but greater spending power on apps translates into more expensive media. North America has a $3 cost-per-install on ads, but app developers can recover those costs through subscription fees, in-app advertising and other monetization methods. AppsFlyer said lower ad costs in regions like Russia, which have a cost-per-install rate of 60 to 70 cents, stymie overall ad spending.

Gaming is a key driver of ad spending among app developers, making up 40% of the total app install spend last year, a 30% jump since 2017, per AppsFlyer. Game subscriptions through Apple Arcade and Google Play Pass, which charge a flat fee for a broader menu of games, help to boost revenue for game developers on the platforms and translate into higher ad spending.