US Gaming App User Acquisition

Part
01
of one
Part
01

US Gaming Apps User Acquisition Spend

The total market spend of U.S.-based gaming apps to acquire U.S. users, including install advertisements and in-app advertisements was about $44.64 billion. Install advertisement spend for U.S.-based gaming apps was about $6.64 billion for both mobile and PC gaming apps, while in-app advertising spent on registrations, in-app purchases, other purchases, and subscriptions for both mobile and PC gaming apps was $38 billion. Below is a breakdown of our findings.

Total market spend of US-based Gaming apps to acquire US users

  • U.S. companies spent about $5.5 billion on mobile gaming app install advertisements in 2017.
  • U.S. companies spent $1.14 billion on non-mobile gaming app install advertisements in 2017.
  • The total market spend of U.S.-based gaming apps to acquire initial U.S. users is about $6.64 billion.
  • The in-app market spend of U.S. mobile gaming apps used to acquire U.S. users, not just for initial installs, but for registrations, in-app purchases, other purchases, and subscriptions is about $33.2 billion.
  • The in-app market spend of U.S. PC gaming apps to acquire U.S. users for registrations, in-app purchases, other purchases, and subscriptions is about $4.8 billion.
  • The total in-app market spend for all U.S.-based gaming apps to acquire U.S. users across platforms (mobile and PC) is about $38 billion.
  • Added together, the total market spend of U.S. based gaming apps to acquire U.S. users from initial install to in-app user actions is about $44.64 billion.

Total mobile gaming app install advertisement spend

  • U.S. companies spent $7.57 billion on mobile app install advertisements in 2017.
  • In 2017, 73.2% of all mobile ad spend was dedicated to gaming apps.
  • This means that $5,541,240,000 or about $5.5 billion was spent on mobile gaming app install advertisements in 2017.

Total PC app install advertisement spend

  • In the United States, mobile represents 70% of all digital install advertising spend.
  • If the U.S. spent $7.57 billion on mobile app install advertisements and this represents 70% of the total spend, then the total digital install advertising spend was $10.81 billion.
  • In 2016, the U.S. PC games market represented 12% of the total digital gaming industry revenue.
  • In 2017, the mobile gaming apps market represented 82% of all mobile app revenue and 73.2% of mobile advertising spend.
  • Therefore, advertising spend for mobile gaming apps is about 88% of its revenue.
  • If we assume that PC gaming apps have a similar proportion of ad spend to revenue and we assume the 12% PC games market share remained the same in 2017, we can calculate that in 2017, PC gaming apps represented about 10.56% of app install advertisement spend, which would be $1.14 billion.

Total in-app advertising spend of U.S. based-gaming apps

  • The total in-app advertising spend for all U.S.-based apps, including mobile and PC was $45.3 billion in 2017.
  • In 2017, 73.2% of all mobile ad spend was dedicated to gaming apps.
  • This means that $33,159,600,000 or about $33.2 billion was spent on mobile in-app advertisements by U.S.-based gaming apps in 2017.
  • In 2017, 10.56% of PC app ad spend was dedicated to gaming apps.
  • This means that $4,783,680,000 or about $4.8 billion was spent on PC in-app advertisements by U.S.-based gaming apps in 2017.
  • In total, U.S.-based gaming apps spent about $38 billion on in-app advertisements in an effort to acquire U.S. users for various user actions including registration, in-app purchases, other purchases, and subscriptions.

Research strategy

To begin the search for the total market spend of U.S.-based gaming apps to acquire U.S. users, we went directly to gaming app reports, of which there are many. We looked through reports published by eMarketer, SensorTower, WePC, AppAnnie, AppsFlyer, and others. While we hoped to find a direct answer to how much money companies spend on advertising to acquire U.S. users specifically for gaming apps, we were only able to locate global cost-per-install numbers and the total amount spent by U.S.-based companies on install advertising for all apps (not just gaming apps). We held onto this information, though, for possible triangulation use later, if necessary.

During this initial search, we also discovered there are distinct stages during which app companies attempt to acquire users. The first stage is the installation phase. The spend for this stage is referred to as install advertising. This is the amount we found readily available for all U.S.-based apps during our first approach. The other stages occur in-app, meaning that once the companies have acquired install users, they switch their attention to acquiring them for other actions, including registration, reservation, in-app purchase, other purchase, and subscription.

Reservation is typically only used for travel, ride share, transportation, and restaurant apps, but the other actions all apply to gaming. Registration is when users sign up for an account, in-app purchase is when users purchase game content while using the app, other purchase is when users make a purchase that excludes in-app content, and subscription is when users sign up for a paid service. Each stage has a different cost per acquisition. Since we assumed that getting people to install the game is the primary focus of app companies, we decided to first focus our attention the cost to acquire initial installs.

We thus continued our search for a direct answer by looking for industry articles that provided analyses of the above-mentioned reports with the hope that the industry experts writing those articles offered insights into how much money was spent on advertising to acquire U.S. users. This was moderately successful, since we found articles from MediaKix, AListDaily, BusinessOfApps, and AdAge, among others that provided more pieces of the puzzle, including the total amount spent on in-app advertising, the percentage of mobile advertising spend that is dedicated to mobile gaming apps, and the cost-per-install formula that we thought we might need for triangulation. However, no direct answer as to the amount of money spent by U.S.-based gaming apps to acquire U.S. users.

As a final strategy before attempting triangulation, we searched major media outlets with the hope of finding an approximate amount spent on acquisition costs, at least for mobile games. Our idea here was that because our initial research showed that mobile gaming apps are dominating the industry, we could at least provide a direct answer for mobile acquisition costs, even if we had to triangulate PC app acquisition costs. Using sources such as Bloomberg, CNBC, Fast Company, Entrepreneur, and Forbes, among others, we found information on total digital ad spend, television spending, the fact that mobile ad spend is expected to increase, and other related topics. Unfortunately, there was again no direct answer to specific market of gaming apps.

At this point, we determined that we had enough information to triangulate an approximate acquisition cost for initial gaming app installations. We found that in 2017, U.S.-based companies spend $7.57 billion on mobile app install ads for all apps (not just gaming). We had also found that 73.2% of mobile ad spend is dedicated to mobile gaming apps. Using this percentage, we could calculate that the total amount spent by U.S.-based mobile gaming apps to acquire an initial user is about $5.5 billion ($7,570,000,000 x 0.732).

Unfortunately, this amount did not take into account PC gaming apps, so we continued to search for information that would allow us to calculate the amount spent on install ads for PC gaming apps. Using the industry publications we first used in an attempt to find a direct answer, we discovered that 70% of all digital ad spend is for mobile apps. This would mean that the $7.57 billion spent on mobile app install advertisements is about 70% of the total. We then calculated that the total market spend on all apps, both mobile and PC, would be about $10.81 billion ($7,570,000,000 / 0.70). This provided us with a basis for triangulation, if we could locate the PC gaming app market share. Unfortunately, while we found information on mobile versus PC in terms of time spent on each device and on the market shares for mobile devices versus computers, we did not find a breakdown of market shares for apps.

We did, however, learn that PC games represent 12% of all digital games revenue in the U.S. in 2016. So, to find out what mobile gaming apps' ratio of advertising spend to revenue is for comparison purposes, we retraced our initial research steps to find that mobile gaming apps represented 82% of all app revenue in 2017. Since we already know that gaming apps account for 73.2% of all mobile advertising spend, we were able to calculate that advertising spend is about 88% of revenue for gaming apps (73.2/82). Thus, if the ratio of advertising spend to revenue is equal for PC games, then the advertising spend for PC games would be 10.56% (12 x 0.88). Using this ratio, we could then calculate the approximate amount spent by U.S.-based PC gaming apps to acquire initial users to be $1.14 billion ($10,810,000,000 x 0.1056). Together, with the mobile app install ad spend, this would mean that U.S.-based gaming apps across mobile and PC spent $6.64 billion on initial install advertisements to acquire U.S. users ($5.5 billion + $1.14 billion).

Since the $6.64 billion amount only encompassed initial install user acquisition costs, we made an attempt to find the amount spent on the other user actions for gaming apps, including registration, in-app purchases, other purchases, and subscriptions. Retracing our research strategies, we found global average acquisition cost per user action numbers, which are the following:
  • The average acquisition cost per user action for registration is $8.21.
  • The average acquisition cost per user action for in-app purchases is $76.40.
  • The average acquisition cost per user action for other purchases is $64.96.
  • The average acquisition cost per user action for subscriptions is $162.22.
With the average acquisition cost per user action for initial install at $4.12, it became clear that the majority of ad spend for user acquisition comes after the initial install. Unfortunately, despite repeating all above-mentioned search strategies, we were only able to find that the average cost per iOS install for the U.S. is $2.37 and per Android install is $1.20. This did not include a breakdown by user action and we were unable to find any source that provided that data on a granular enough level for us to triangulate an approximate total spend.

As such, we switched gears and went searching for the total amount spent on in-app advertising, which produced instant results in an AdAge article. We found that U.S.-based gaming apps spent $45.3 billion on in-app advertising across all platforms (mobile and PC). Using this amount plus the already-obtained knowledge that 73.2% of all mobile ad spend was dedicated to gaming apps, we were able to calculate that U.S.-based mobile gaming apps spent about $33.2 billion ($45,300,000,000 x 0.732) on in-app ads, which would encompass all user actions except initial install. Then, we took the calculated percentage of 10.56% that we determined U.S.-based PC gaming apps spent on advertising and used it to calculate the amount spent on in-app advertisements, which would be about $4.8 billion ($45,300,000,000 x 0.1056). This would mean that U.S.-based gaming apps across both mobile and PC platforms spent about $38.0 billion ($33.2 billion + $4.8 billion) on in-app advertising.

To determine the total spent of U.S.-based gaming apps to acquire users from initial install to all in-app user actions, we added the triangulated amounts together:

  • The spend on mobile U.S.-based gaming apps for initial install is $5.5 billion.
  • The spend on PC U.S.-based gaming apps for initial install is $1.14 billion.
  • The spend on mobile U.S.-based gaming apps for in-app user acquisition is $33.2 billion.
  • The spend on PC U.S.-based gaming apps for in-app user acquisition is $4.8 billion.
  • $5.5 billion + $1.14 billion + $33.2 billion + $4.8 billion = $44.64 billion.
Sources
Sources