AppsFlyer has released its Top 5 Data Trends of 2022. Here are the key trends:
Total app installs grew 10 per cent in 2022 despite post-covid digital cooldown, privacy changes, and economic downturn
15 years after the first iPhone was released, it seems smartphones have been embedded in our lives for years now. In other words, the mobile app space is showing signs of maturation, which is why it’s no surprise to see mobile growth naturally declining over time.
Despite a relative slowdown, 2022 still delivered a 10 per cent year-over-year rise in overall installs despite headwinds from Apple’s privacy changes, somewhat unexpected user behaviours post-covid, and looming economic recessions affecting marketing budgets (more on that later).
- Covid digital surge did not stick: Clearly, the 2020 Covid-driven digital surge (35 per cent YoY growth in 2020) was an anomaly and did not become the new normal post-Covid, as many have expected or at least hoped for. We see this “Covid bump” prominently in Android gaming, notching 52 per cent growth in 2020.
- Android installs grew 9 per cent YoY: This was driven primarily by the geographic dimension, with an impressive 18 per cent surge in the largest Android market — India. On the other hand, we see the effects of the war in Ukraine as Russia saw overall Android installs down 18 per cent from last year. The 9 per cent growth may have been higher, too, if not for reduced budgets in non-gaming apps amidst an economic downturn.
- iOS installs grew 16 per cent after last year’s ATT low: Apple’s release of its App Tracking Transparency (ATT) framework had a massive impact — mainly driven by non-gaming apps. First, many fully digital products and experiences exist only on iOS, such as health & fitness, photo editors, kids apps and lifestyle apps.
Second, non-gaming is not as marketing-driven as gaming so when it comes to overall installs, ATT’s impact was not as pronounced as in gaming. Although games recovered from the ATT shock of 2021, they still showed some growth in 2022 (from -10 per cent to +4 per cent). Clearly, the post-ATT data reality still challenges gaming apps on iOS.
Ad spends down 5 per cent YoY but the downturn fell towards the end of the year with a 20 per cent YoY drop
Overall, we see a 5 per cent drop YoY in UA spend for the entire year, but when looking at the last three months, when the economic slowdown really hit, there is a significant difference between 2021 which saw an 8 per cent budget rise between start and end of the year, and 2022 which saw a 20% decline.
- Sharp differences between platforms and verticals:
|Cost YoY||NOI YoY||CPI YoY|
- Android Gaming showcased their efficiency, with 8 per cent reduced CPIs and yet 12 per cent higher NOIs driving a small 3 per cent increase in overall UA ad spend. Marketers acquired more users for the same budget and re-invested their efficiency to scale further.
- iOS gaming apps “accepted” the 33 per cent rise in CPI by raising budgets by 23 per cent. Unfortunately, this still drove 9 per cent fewer NOIs.
- Android non-gaming saw a much larger drop in CPI at 20 per cent, which led to a 22 per cent decrease in budgets. Android marketers prioritised efficiency again and used savings to mitigate a small 2 per cent drop in NOIs.
- iOS non-gaming saw a 23 per cent reduced spend despite a small 2 per cent drop in the cost of installs as marketers moved away from paid user acquisition into other forms of activation and engagement.
- Gaming is more recession-proof than non-gaming: This seems to have allowed the former to raise budgets compared to non-gaming, which cut budgets. Most gaming IAPs are micropayments (which are easier to make when there’s an economic downturn), while non-gaming’s normal and larger IAPs may have consumers thinking twice about (eCommerce, travel, transportation etc).
- Non-gaming drop in finance and food delivery: Non-gaming budget reductions were largely driven by fintech in general and crypto in particular — finance has the highest CPI in non-gaming so if they drop budgets, it has a big impact. Also, food delivery had so much money to spend in 2020/21 but they could no longer spend this year like before.
- SSOT can turn things around: Using a Single Source of Truth (SSOT) to de-duplicate non-organic installs on iOS can dramatically affect budgets and ROAS. A recent AppsFlyer study observed an average of 29% uplift in attributions and a 40 per cent reduction in eCPI.
- Owned media continues to surge: With the challenges of remarketing in iOS, it’s no surprise that the use of owned media to re-engage existing users through push notifications, email, and in-app messages has jumped almost 45 per cent since April (compared to only 17 per cent lift in Android).
Marketers are catching on — 2022 has seen tremendous demand for owned media remarketing campaigns that don’t hurt tight budgets and are not affected by privacy shifts. Not to mention that owned media — whether acquisition or re-engagement — is practically free! Many companies are doubling down on building a strong brand image, and owned media allows a bespoke channel of communication to both loyal and new users.
Apps spent $80 billion on user acquisition in 2022, a slight YoY drop after the 40 per cent surge in 2021
We’ve seen the trends and reasons in trend #2 but as far as actual dollar figures go, global app install acquisition budgets in 2022 reached an estimated $80 billion in total — including China (see below for notes on how we reached this figure).
The figure represents a slight decrease from 2021 after a 40 per cent surge in 2021 compared to 2020. Remember, it’s a whole new post-Covid ball game out there, and we can see the economic slowdown hit even harder when looking at the last several months (see trend 2 for more).
On the vertical front, gaming was the largest category with $27 billion, followed by Finance at $8.5 billion, Casino real money at $5.2 billion and Shopping at $3.4 billion (excluding China).
ID matching rates up 10 per cent to reach 26 per cent of iOS NOIs as prompt optimisation can deliver real value and a better ad experience
- The IDFA is not dead: 2022 saw a 10 per cent rise in ID matching rates which reached 26 per cent of all NOIs in 2022 (including SKAN). It seems that apps are optimising their ATT prompt experience and more users are coming around to the idea of providing consent since it delivers a better ad experience. Clearly, the presence of IDFA is not negligible, and the IDFA is certainly not dead — although it has obviously experienced a massive drop since pre-ATT days when ID matching rates were above 80 per cent. Capturing the behaviour of consented users is highly beneficial for modelling, optimising, and benchmarking your entire user base. Apps that have not yet implemented an ATT prompt should highly consider changing their tune!
- Ad load increasing post-ATT: Another shocker is that there are more ads now than before ATT. So, the average user is now served more ads that are probably mostly irrelevant. Instagram, YouTube, TikTok and Apple have all introduced new ad units across more inventory to counteract existing ad formats that are worse off post-ATT. As a result, increased ad load leads to more irrelevant ads per user, creating a negative user experience. Indeed, that is why showing and optimising the prompt for consent is so important heading into 2023.
- Pressure to deliver short-term revenue: It is also possible that management pressure to deliver amidst the economic slowdown has forced the display of more ads for CPM revenue (from the publisher side). This yields easier short-term revenue at the expense of potential long-term damage such as churn, lack of effectiveness due to irrelevant ads and ad fatigue.
Non-gaming apps enjoy a 20 per cent jump in IAP revenue while games suffer a 16 per cent drop
We can clearly see the difference in gaming app IAP revenue between iOS and Android. Games are much more affected by ATT and the drop in data signals for optimisation, which is why they haven’t grown revenue as much as non-gaming since ATT.
Beyond privacy, it’s also important to note that the drop in gaming is a known phenomenon for this vertical. Some gaming apps have cash cow apps or franchises or are able to consistently create new hits, but many gaming companies don’t — sometimes they have one-hit wonders — so a negative trend in gaming IAP for the same companies in the entire measured time frame is logical.
It appears non-gaming apps can drive confidence from this IAP jump and they may not have to reduce ad spend budgets like we saw in trend #2 (although we need to remember that this is overall revenue from all consumers, not just marketing-driven users who are a minority in this vertical).
- In-app advertising revenue rising: Contrary to IAP, we see continuous ad revenue growth driven primarily by games across both platforms — probably because hybrid monetisation models are gaining traction and because of what we had mentioned earlier. Due to the economic slowdown, pressure to deliver led companies to display more ads for CPM revenue — easy short-term revenue.