In 2021, global consumer expenditure on mobile apps reached 170 billion U.S. dollars, up by 19 percent compared to the previous year. The global growth trend in app spending between 2019 and 2020 was driven by the 2020’s increase in usage: during the first year of the coronavirus pandemic, people relied on their mobile devices to pass the time while sheltering at home, bringing usage levels to surge in every part of the globe. In the first years of the pandemic, consumers became more open to paying for apps in the first place and started seeing mobile apps as long-term commodities, especially when it comes to entertainment apps and mobile streaming. In particular, apps offering subscriptions benefitted from having a model that helped retain users: between 2019 and 2021, subscription apps reported a constant increase in consumer spending, reaching 13.5 billion U.S. dollars on iOS and 4.8 billion U.S. dollars on Android during the last measured year.
As usage trends are expected to normalize and the global economy turns towards a slowing market cycle, mobile app spending will also experience a slower growth: in 2022, iOS apps are expected to experienced eight percent year-over-year increase in consumer spending, while spending for apps in the Google Play Store is set to decrease by approximately three billion U.S. dollars compared to 2021.
User acquisition, retention, and conversion
Mobile app install rates experienced a positive trend throughout 2021, reaching a peak of over five percent August 2021. Android, which regularly surpasses iOS in terms of app downloads, reported slighter lower app retention rates in 2021 than its main competitor: after seven days from first install, iOS apps had a 9.19 percent retention rate, while Android apps reported a 6.66 percent retention rate after the same amount of time.According to a 2021 survey of app developers, increasing the budget for advertising was the first move to increase user acquisition rates. However, more than half of the respondents reported planning to focus more on Android, which might prove to be an effective strategy since the introduction of the Apple App Store App Tracking Transparency protocols (ATT), which allow iOS users to opt-out of in-app and cross-pass tracking. In this scenario, correct attribution of app conversions might become more difficult due do data loss and untracked impressions. In the United States, one of Apple strongest consumers’ markets, average conversion rates in 2021 were at over 30 percent, with photo and video apps conversion rates above 76 percent.
Mobile monetization best practices in a slowing market
While subscriptions are increasingly becoming an option for app publishers, in-app ads are still the preferred monetization practice worldwide as well as in the U.S. market specifically. As of July 2022, 37 percent of global app publishers decided to include ads in their products, while in-app billing only interested four percent of the app developers worldwide. In 2021, advertising made up the largest share of the app market revenues, with over 208 billion U.S. dollars generated with this monetization method, while in-app purchases generated around 185 billion U.S. dollars.In-app advertising helps with keeping the product at a low price or free, but repetitive or ill-positioned ads have the power to ruin users’ experience with the app altogether. According to a survey of global users conducted in the first quarter of 2021, rewarded videos were considered the most acceptable in-app advertising format by 36 percent of respondents, while almost three in 10 respondents felt the same about playable ads. In the case of U.S. consumers, banner ads, as well as video ads were reported to be the in-app advertising format they preferred to encounter.
