Consumers are spending more time and money on mobile apps. That could mean big growth for the mobile advertising networks that specialize in this space.
Between 2014 and 2020, the time and money that U.S. consumers spent on mobile apps increased five-fold, and early data suggest that growth trend has continued. That’s good news for mobile advertising networks, which sell in-app ad space or help app developers acquire new customers by advertising within other apps.
“Emerging mobile ad networks are still three to five years behind the mobile game industry, with room to close the gap,” says Matthew Cost, an analyst covering the U.S. Internet industry.
In fact, consumer spending on and within apps still has significant runway, he says, and that’s driving demand for advertising. Together, higher ad rates and ongoing increases in volume could translate to 21% compounded annual growth, taking this emerging category to $130 billion by 2024.
U.S. Adults are spending increasingly more time on mobile apps.
While mobile ad networks stand to benefit from continued growth in apps, they also have a distinct advantage over their larger, broadly focused competitors—a more privacy-friendly approach.
While larger digital advertising networks rely on users’ browsing activity, mobile ad networks typically place ads based on aggregated data and app content. “Mobile privacy changes have benefitted these emerging ad networks, as their contextual targeting techniques do not rely on users' personal information,” says Cost.
Bottom line: Not only do these networks stand to benefit from continued growth, privacy concerns should drive incremental dollars to ad networks, on the margin, and away from larger, more broadly focused competitors. “Ad networks are on their way to reaching an inflection point,” says Cost. “The market is mispricing the mobile ad networks, relative to their potential to grow and gain share in the online advertising market.”