Big data is the key to the app market reaching $100 billion in 2020
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The app market has the potential to grow to over $100 billion by 2020, but most publishers need to adopt better data analytics to capture a piece of that spending, according to app analytics startup, Pyze.
That’s because while global app revenue is expected to double by 2020 from an estimated $51 billion in 2016, a majority of this revenue is expected to go to only a small number of publishers.
The key to better analytics is through leveraging data and data intelligence to help make better quality products. “Those companies that can build big data and analytics pipelines to learn about how their apps are being used and who uses them are in the best position to build a community of ‘sticky users’ who will continually use their apps,” said Singh during an interview with Tech Republic.
In fact, a study of 12 app companies using big-data to optimize customer insights, showed that leveraging their data helped the generate a 35% increase in app engagement. This in turn drove revenue up 20%, according to Pyze. That is the kind of lift smaller players, including independent designers, need to level the playing field between larger companies. Analytics and big data can also improve rates of engagement for large enterprises that are not primarily in the app business but want to improve relationships with customers over mobile.
Third-party app analytics companies, such as Pyze, are becoming an integral part of app discoverability and engagement for smaller companies. These platforms cluster users into segments based on how they interact within an app. Using machine learning and analytics algorithms they then trawl through data stacks to identify different patterns of use. This allows marketers to develop more personalized messages for users based on their usage patterns.
The app market is currently stacked against the little man. For example, in Q1 2016, 94% of US iOS App Store revenue went to the top 1% of publishers whose apps support paid or in-app purchasing, according to recent data from Sensor Tower.
Cutting through the noise of an overcrowded app market is critical for any app developer looking to build a viable user base. There are now well over 3 million apps available across the world’s five largest app stores. Delivering the right product to the right audience at the right time in this environment is imperative to the success of any app.
The challenge of marketing an app effectively has made app-install ads — an ad unit that directs users to download a mobile app — an essential tool for developers seeking to stand out in the Google Play and Apple app stores. This is why it’s not surprising that more marketers are using paid channels to drive downloads than ever before. In fact, over 80% of respondents in a survey of the top 100 grossing mobile app developers noted they plan on increasing their spend on app-install ads in 2015.
Will McKitterick, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on mobile app-install ads that looks at the revenues from app-install ads and how they’re expected to grow over the next five years. It also looks at the performance of app-install ads and how these metrics are expected to change over time.
Furthermore, the report examines the top app-install ad products and pricing models offered by the leading advertising platforms, including Facebook, Twitter, Yahoo, and Google, as well as newer app-install formats from Instagram and Snapchat. Looking to the future, the report examines how companies are shifting their app-install ad spend to new formats, as well as the new tools they’re using to improve optimization and ad effectiveness.
Here are some key takeaways from the report:
Mobile app-install ads — ad units that direct users to download a mobile app — are an essential tool for developers, and they account for a major share of mobile ad spend. We estimate 25% of total US mobile ad revenue was generated by app-install ads in 2015.
A combination of new developers entering the space and rising ad budgets will drive increased spending in years to come. US app-install ad revenue will grow to over $7 billion by year-end 2020, according to BI Intelligence estimates. Mobile app install advertisers have traditionally invested heavily in display and interstitial ads, but are moving to mobile video and native install formats. 86% of developers currently use in-feed video app-install ads, and video ads are seen as the most effective app-install format.
As formats like video rise in popularity, older formats are losing their appeal for install campaigns. Static nonnative ads are widely used but are not seen as effective. Free app networks and offer walls have also fallen out of favor.
Ad platforms are now developing innovative new install formats to earn even more revenue from these lucrative ad units. New approaches, including deep linking and app streaming, are more contextualized and interactive than older ad formats.
In full, the report:
Forecasts app-install ad spending in the US through 2020.
Explores which app-install ad formats developers believe are most effective.
Discusses what the most popular platforms and ad networks are doing to attract ad spending.
Investigates new tools for marketing apps, including deep linking and app streaming. To read the rest of the article, see attribution.