Mobile app advertising and app store spend is set to reach $166bn in 2017. That’s according to newly launched predictions by app intelligence firm App Annie.
Around $65bn of that amount will be gross consumer spending. Games in particular are likely to remain key drivers of revenue. However, subscription revenue from dating and entertainment streaming apps is also increasing fast.
Meanwhile, in-app advertising expenditure is set to reach a whopping $101bn with mobile video formats set to see the biggest jumps. Brand advertising is also likely to grow to 12.5% of total mobile in-app ad spending.
The report reveals that time in shopping apps was up 52% year-on-year in 22016. Brick and mortar retailers are likely to push that growth further by improving their in-store and mobile shopping experiences.
Short-form video platforms including YouTube, Facebook and soon Snapchat saw their user time grow in 2016. Indeed, YouTube lifted time spent by Android users in the US by almost 45%. These formats are likely to disrupt Netflix and other streaming services but also traditional TV.
Time spent in YouTube skyrockets
When it comes to the chat bot trend, App Annie predicts that Facebook will lead the eCommerce communications integration. The company has already integrated its Messenger app with brand and retailer pages to make it easier to communicate with customers. Artificial intelligence is also likely to play a fundamental role in sophisticating the consumer experience.
To the contrary, voice search is expected to grow, but remain under 2% of all smartphone sessions. That’s largely due to touch-based interactions already being integrated.
Among the top announcements this year was Google’s Instant App integration to be rolled out in 2017. Indeed, allowing customers to trial and use apps without downloading them will aid in app discovery, but also drive business revenue by increasing visits to websites and apps. Google Maps has already proven useful as a tool to discover apps and in addition, Google Nearby sends app prompts when users are close to a local store.
Given the success of its Pokémon GO and more importantly the technology behind the game, Niantic is expected to be the only game maker in 2017 to release new augmented reality games for mobile devices. App Annie adds that the rise of Pokémon GO was additive to the app economy and did not deter from other spending.
Pokémon GO was one of the most successful games of 2016
Another important trend in 2017 will be mobile virtual reality. Indeed, accessories such as Gear VR and Daydream Viewer by Google have already changed consumer behaviour in the field. Costs for devices are likely to continue to decline and mobile VR will gain some solid traction in 2017.
However, home voice agents such as Amazon Echo are likely to remain a fairly niche market for now. Whilst device adoption will increase, other connected home devices are likely to take its place.
Alexa Companion App has been downloaded around 3.5m times
Wearables have failed to excite consumers. That’s why App Annie predicts tech investment will shift to smart glasses instead. If the underlying technology can be improved, there’s likely to be a market for wearables in the future.
December 19, 2016