In 2010, building an app’s user base was easy. First, the app was developed, then uploaded to the App Store, and finally, traffic began flowing in. Fast forward 10 years and now the world of apps is highly sophisticated, driven by data to inform decision-making and powered by robust tech solutions. The app space is also extremely competitive, with millions of apps vying for users’ attention.
Given the lightning fast evolution of the app space and how apps are marketed, let’s take a step back and explore what made app marketing the massive industry it is today.
Monetization: Premium > Freemium > IAA > Subscription
In the early days of the App Store, installing apps cost money, but after Apple released in-app purchases (IAP) in 2010, developers were able to focus on widespread exposure by offering a free, lighter version. Users could then decide whether or not to pay for full or extra features. This was a fundamental and rapid shift because it allowed users to adopt a more exploratory approach to diverse app discovery. Clearly, Freemium and IAPs dominated throughout the decade:
But in-app ads (IAA), especially display banners, were always there, even while additional ad units like interstitials, rewarded videos and offerwalls emerged. Burst campaigns and incentivized advertising were common and were used, for better or for worse, in various UA strategies.
In 2018, ‘Hyper Casual’ games — simple, highly addictive games with a very short shelf life — introduced IAA at scale, which first spread across Gaming genres (e.g. 34% increase in Core games, according to AppsFlyer data), and later to other verticals. Hyper Casual games ignored the common monetization model completely, monetizing solely on ads. Suddenly, non-paying users (the vast majority) could generate incremental revenue without harming the user experience.
In recent years, there has been an increasing adoption of subscription models (7x increase in the share of apps measuring subscription, according to our data), historically associated with verticals such as Entertainment and Music (think Netflix and Spotify). Unlike Gaming’s individual role in the shift to in-app advertising, subscription models are becoming more common across a variety of verticals, such as Gaming, Lifestyle, and Dating.
The Decade’s Growth Engine
Apps provide value to users, who, in return, generate income for app developers. To maintain this ideal flow, apps need to attract and engage a significant volume of users for as long as possible. While the beginning of the decade saw increased reliance on the Apple App Store (and Google Play after 2012), the boom in the sheer number of apps made doing so nearly impossible. By mid 2010, the App Store had 200K apps; in 2020, there will be nearly 7M, according to Statista.com.
As organic discovery became largely broken, apps were no longer able to rely on organic installs at scale. Additionally, marketers started running more cost-per-install (CPI) campaigns. Despite higher media costs, this guaranteed an install at the end of the funnel.
Today, apps focus on buying users and leveraging deep data insights to drive growth, rather than using paid traffic as a means to drive organic lift. In reality, getting organic users became so difficult that marketers had no choice but to focus on improving their UA methods and scaling their budgets. By putting their faith in data, they had the confidence to ensure their financial investment generated returns.
While marketers previously had to rely on relatively superficial app-level data (e.g. platform, geo), today, the sheer richness of data points can make your head spin: from LTV and ROAS to building predictive models to connect preliminary behavioral signals to lifetime value.
In the past couple of years, we’ve seen AI and automation take over, digesting data at scale and making crucial decisions behind the scenes in real-time.
Needless to say, ‘shooting in the dark’ is a thing of the past. The playing field is illuminated, allowing marketers to set and prioritize their goals, find the optimal price for every campaign and every user, divide budgets between sources, test multiple scenarios simultaneously and more.
The Duopoly and the Rest
While Facebook and Google were around first, inevitably, rapid growth attracted other ad networks to seek a piece of the remaining pie. Advertisers who couldn’t optimize via Facebook and Google due to budget or qualification reasons, or wanted to drive reach and diversify their portfolio, became a perfect match for numerous ad networks offering high reach at a lower price.
However, unlike the duopoly, most ad networks served as mediators between advertisers and publishers. This complexity limited transparency, making it nearly impossible to validate the authenticity of each side.
The growing interest in mobile apps and the inflation among ad networks, attracted fraudsters who have been active on the web for years. Now, they had an opportunity to attack a relatively vulnerable industry, polluting the entire funnel from an advertiser’s wasted budget to a publisher’s irrelevant ads, via the ad network.
App install fraud became a huge pain point for app marketers, creating a crisis of trust between marketers and ad networks. Billions were lost, and this forced the industry to heavily invest in developing protection solutions, which have seen success. However, as fraudsters evolve, new threats like in-app fraud are emerging in an increasingly high stakes game of cat and mouse.
The mobile app industry today has zero-tolerance to fraud, with marketers minimizing the number of media sources, and following strict protection guidelines.
The Evolution of Attribution
10 years ago, mobile app attribution did not even exist. Mobile was a fragmented collection of multi-platform pieces, making measurement extremely difficult. But as the industry exploded, and the range of sources increased, marketers were in need of systematic campaign evaluation and optimized budget distribution.
The evolution of attribution technologies which made mobile apps the most measurable ecosystem ever created was a significant milestone in this decade. It is unlikely now that an app marketer can imagine his day-to-day work without attribution data.
Today, mobile app attribution solutions are extending beyond mobile as the quest towards holistic or people-based attribution continues. Because mobile is the most frequently used device, its role in full circle connectivity across online and offline touchpoints is key to success.
What will the next decade bring? AR, VR, AI, 5G… But who knows what the future holds? One thing’s for sure, data will continue to push the industry forward!