2018 is just around the corner and it will be a promising year in many different ways. The first predictions have been made and all of them underline the same thing: apps have transformed people’s lives, and they will continue to do so for the next five years. World is shifting mobile and this will lead to a noteworthy growth in app downloads and app revenues as well as a considerable increase in the amount of time spent by people on their mobile devices.
Downloads and app usage
2018 will mark the 10-year anniversary for both Apple App Store and Android Google Play. Nowadays apps are part of the everyday people’s lives in so many ways and the data related to installs volumes and app usage behaviors confirm this. As a matter of fact, the iOS App Store and Google Play count, respectively, more than 2 million and more than 3.5 million apps available. During the last year, downloads for Apple Store and Google Play reached, combined, 197 billion worldwide, growing at an annual growth rate of about 8%. The trend is forecasted to stay positive in the upcoming years: the worldwide downloads will reach 325 billion in 2021.
This underlines how finding and downloading new apps is an essential part of people’s daily lives. According to the latest research, carried out by eMarketer, Flurry and Business.com, people spend 5 hours a day using their mobile devices. During 2017, so far, apps account for more than 90% of people’s non-voice smartphone time, while mobile web accounts just for less than 10%. We can expect that this clear trends will last for the next years as well. Total time spent in apps is expected to exceed 3 trillion hours worldwide by 2021, growing at a compound annual growth rate of about 18% and doubling the 2016 amount.
App monetization and app revenues
Gross consumer spend shows positive trends too. In fact, the evolution of markets across the globe led app monetization to ongoing and exponential growth. In 2017 the global gross consumer spend reached $82 billion, growing at an annual growth rate of 33%. This trend will persist over the next five years. In particular, the gross consumer spend will exceed $110 billion in 2018 and it will reach $139 billion in 2021, growing nearly 30% year over year and at a compound annual growth rate of about 18%.
Games will continue to generate the majority of revenues. Nevertheless, subscriptions will help other apps to grow and they will determine an increase in the share of spend for these apps. By the end of 2021, revenues from games will reach $105 billion, while revenues coming from other apps will settle out at $33 billion.
China and the role of emerging markets
China will continue to play a key role for the app economy. Its growth rate is expected to be the highest globally, for both downloads and gross consumer spend. China’s app downloads will grow at a yearly rate of 19%. On the revenues side, China has notable advantages. Its purchasing power is not at the same level of the mature markets’ one, as US, but it is still markedly higher than in other emerging markets. Moreover, Chinese app users seem to be particularly willing to spend time and money on entertainment and gaming apps.
Emerging markets will have a central role as well, driving downloads growth. In particular, India is predicted to be one of the main actors of this process. In spite of this prediction, the country will not contribute significantly to the future app store revenues, its share of global spend will remain under 2%, even if its ad spending is expected to grow at a rate of 75% year over year, hitting $2.1 billion in 2021. One of the possible explanation lies in the country’s purchasing power that is significantly lower than those of mature markets. As opposed to China’s inclination towards spending on entertainment, Indian culture leans towards saving, rather than spending.
App stores curation and in-app purchases
As previously indicated, there are more than 5 million apps available in iOS App Store and Google Play and new apps are introduced everyday. Finding the app that suits users’ needs is never easy and this situation makes app discovery even more difficult. In order to solve this problem, both Apple and Google announced app store curation, which included also editorial curation. As these improvements keep going on, in 2018 it is expected they will have a significant impact on entertainment-centric apps, meaning all those apps that help people engage with their leisure time.
On the other hand, needs-based apps are more likely to be installed based on word of mouth. Since entertainment-centric apps monetize mostly on an in-app purchases (IAP) basis, a sharp increase in IAP revenue is expected during 2018.
The fight against mobile ad fraud
As explained in our anti-fraud guide, mobile ad fraud represents one of the most challenging issues in the mobile marketing environment. New types of Artificial Intelligence and the lack of a unified fraud detection system allow fraud to run rampant. A core challenge remains in how to identify and counter fraud promptly and effectively.
Solutions are out there, but they require the full cooperation between marketers and partners. Absolute transparency and the sharing of data is considered one of the many preventive measures. Being able to identify sources of traffic that have breached or violated terms and sharing them on a public basis can also be helpful too. Looking at one element alone isn’t enough – but gauging the overall picture and considering all of the above is a good start.
Over the last decade the app economy has evolved in many ways, and it is expected to mature even more in the next five years. World is shifting mobile and mobile apps represent a powerful tool to make people’s lives easier. Data about downloads growth, entertainment-centric apps, in-app purchases levels and app usage underline how apps have transformed users’ lives. But this data also implies a significant increase in expectations people have for apps. Over the upcoming five years, consumers, publishers, advertisers and brands are going to see remarkable changes in the app marketing landscape that will create huge business opportunities for companies around the globe.