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Which mobile app vertical (of only e-commerce, fin-tech, fashion and Tools ) provides the best revenue opportunity for an advertising automation solution provider ?
Hello, and thank you for your request for insights about which mobile app vertical (including e-commerce, financial/tech, fashion, and tools) provides the best revenue opportunity for an advertising automation solution provider. The short version is that our findings indicate that e-commerce and financial/tech (fin-tech) are the most lucrative mobile app verticals, and we have provided insights into revenue opportunities, advertising spend, market share and/or size, and trends, when available. Unfortunately, we could not find publicly available information on mobile app advertising spend for the fin-tech industry, but we did provide some additional insights that may be useful for your project. Below you will find a deep dive of our findings.
METHODOLOGY
In order to gain a broad overview of the market for mobile app advertising spend, my colleagues and I reviewed industry reports, trusted media sites, academic databases, corporate websites, and trusted media sites. There are two issues that we noted in our preliminary research. First, as you did not specify a geographical market of specific interest to you, we obtained data from both the international and United States markets, when available. If you would like additional information on a specific geographical market, further information could be provided in a subsequent request. Second, our findings revealed that mobile app verticals are often rated differently for iOS and Android users, so findings of revenue opportunities may vary, depending on the platform. If one platform or the other is more important for your project, we could tailor our results in a subsequent request. Currency is denoted in United States dollars (USD).
We first examined overall trends in the global mobile app advertising market, limiting our research to online advertising channels, as you specified that the previously submitted information on television channels was not useful for your project. We then refined our research to focus on e-commerce and fin-tech, as our findings revealed these are the top two most lucrative verticals for mobile apps. Finally, when available, we identified the market size and share for each vertical, to provide you with information about overall revenue opportunities. Unfortunately, many reports detailing advertising expenditure on mobile apps by fin-tech companies were only available as paid content, but we were able to identify some publicly available information. You will find more detailed information below.
OVERVIEW OF ONLINE ADVERTISING TRENDS
Our findings revealed that the total revenue opportunity for global online advertising will increase from $153.46 billion in 2015 to $260.36 billion by 2020, which correlates to a growth rate of 35%. Online advertising spend is expanding internationally at a rate of approximately $23 billion annually, and in 2016, internet advertising revenue exceeded television advertising revenue. These trends are influenced by changes in the overall digital landscape; it is estimated that mobile users now spend 52% of their time on digital media utilizing mobile apps, and in 2016, mobile app advertising revenue increased by 23%. Similarly, mobile app advertising revenue now exceeds desktop advertising revenue, and 85% of digital users prefer native mobile apps to mobile websites.
Marketers are becoming increasingly more creative in engaging consumers digitally. Digital advertising offerings include internet videos, native advertising, interactive search engine ads, and social media marketing. In fact, In-app video advertising is the fastest-growing segment of the overall online advertising market, and this sector is "growing faster than mobile web as a share of digital ad dollars." In the second quarter of 2017, online video advertising spend increased by 142%, and in-app advertising spend accounted for 94% of total mobile advertising spend.
IMPACT OF FACEBOOK AND GOOGLE ON MOBILE AD SPEND
There are two additional overall trends of relevance to mobile app advertisers. First, research indicates the mobile app-install ad offers the greatest return on investment of all major ad formats. In the United States, mobile app-install ad revenue is projected to reach $6.8 billion by 2019. These ads are particularly prevalent among the major mobile app platforms, such as Facebook, Twitter, Yahoo, and Google. Second, and related to the first trend, it is estimated that 90% of all digital media time is spent in a given user's top five apps. Our findings revealed that even more significantly, half of all digital media time per user is spent within the user's top app. Once the user exits his/her top-rated app, digital media spend time drops to 18% for the second most popular mobile app. The user spends barely 4% of overall digital media time in his/her fifth-rated app. Statistically speaking, these findings indicate that apps owned by Facebook and/or Google are likely to dominate both digital advertising revenue and user digital media time in the United States, as Facebook and Google combined currently own eight of the ten most popular mobile apps. In fact, approximately 26% of mobile users who click on a Facebook ad eventually buy a product. In 2017, Facebook is expected to increase its advertising revenue by 62%, while Google expects 20% growth in revenue.
REVENUE OPPORTUNITIES FOR MOBILE APP VERTICALS
It is estimated that 42% of all mobile sales from the world's top 500 merchants were generated from mobile apps. Below we have identified some key statistics and trends among the e-commerce and fin-tech mobile app verticals, which are findings revealed to be the most lucrative revenue opportunities of the four verticals of interest to you.
E-Commerce
Although the term "e-commerce" has traditionally been used to describe revenue generated from online formats, there is a growing trend towards designating e-commerce revenue generated from mobile devices as "m-commerce," which may be a consideration of future interest to you for your project. In 2014, m-commerce constituted 11.6% of the overall $303 billion total e-commerce market in the United States, but this figure is expected to increase to 45% by 2020, for a total m-commerce market size of $284 billion. In 2016, the total mobile advertising spend for m-commerce apps was approximately $40.2 billion; of that total, $29.3 billion was spent on in-app advertising, while $10.9 billion was utilized for website spend on mobile devices. From 2016 to 2017, the highest-ranked ten e-commerce mobile apps among Android users were as follows:
1. Amazon
2. Amazon Shopping
3. ebay
4. OfferUp
5. Wish
6. Walmart
7. letgo
8. Groupon
9. RetailMeNot
10. 5miles
Fin-Tech
It is noted that finance mobile apps are rated as one of the top two mobile apps potentially facing momentous growth, as there were approximately 200 billion finance app sessions on Android and iOS globally in 2016. In addition to mobile apps launched by traditional financial institutions, such as Bank of America, JP Morgan Chase, and Wells Fargo, the fin-tech category has expanded to include peer-to-peer exchanges, such as Paypal and Venmo. There are also increased offerings specific to iOS and Android, such as Apple Pay and Android Pay. Chase Mobile is currently rated the most popular fin-tech mobile app in the United States by total downloads.
In the United States, digital advertising spend by the financial services sector topped $8.37 billion in 2016, which represented approximately 12.2% of all digital advertising expenditure. Unfortunately, these figures do not provide specific information about mobile app advertising spend. Although we could not locate publicly available data on fin-tech mobile app advertising spend, we learned that digital ad spend for the financial services category was approximately $541 million for all desktop, mobile, and video channels in the third quarter of 2016. As 5% of overall ad spend was devoted to mobile advertising, we triangulated a rough estimate that the fin-tech sector's mobile ad spend was $27.05 million in the third quarter of 2016.
Unfortunately, we were unable to compile a list of the "top" or "highest-rated" fin-tech mobile apps, as the companies in this category offer a broad variety of services that make comparisons of offerings impossible. For example, while the mobile banking app, Chase Mobile, is currently the most frequently downloaded fin-tech app, users do not utilize this app for the same purposes as a personal finance app, savings app, or peer-to-peer transaction app, which are all situated in the "fin-tech" category.
CONCLUSION
In summary, e-commerce and fin-tech are the mobile app verticals most likely to provide significant revenue opportunities for an advertising automation solution provider. Total digital advertising spend for "m-commerce" apps was approximately $40.2 billion in 2016; of that total, $29.3 billion was spent on in-app advertising, while $10.9 billion was utilized for website spend on mobile devices. There were approximately 200 billion finance app sessions on Android and iOS mobile apps globally in 2016, and prominent apps in the fin-tech category include those launched by major banks, personal finance organizations, and peer-to-peer transaction companies.
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