In 2022, global consumer expenditure on mobile apps fell back to 167 billion U.S. dollars, down by almost two percent compared to the previous year. The global growth trend in app spending between 2019 and 2021 was fueled by users increased digital engagement, a consequence of the COVID-19 pandemic. In 2020, 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. Additionally, consumers became more open to paying for apps in the first place and started seeing mobile apps as long-term commodities, especially when it came to entertainment apps and mobile streaming. In particular, apps offering subscriptions benefitted from having a monetization model that helped retain users.
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 were estimated to be on course to experience eight percent year-over-year increase in consumer spending, while spending for apps in the Google Play Store was set to decrease by approximately three billion U.S. dollars compared to 2021.
User acquisition, retention, and conversionAndroid, which regularly surpasses iOS in terms of app downloads, reported slighter lower app retention rates in the third quarter of 2022 than its main competitor: after seven days from first install, iOS apps had a 9.4 percent retention rate, while Android apps reported a 6.5 percent retention rate after the same amount of time.
According to a 2022 survey of app developers, increasing the budget for advertising was the first move to increase user acquisition rates. Additionally, more than half of the respondents reported planning to focus more on video as a possible advertising format. According to the same survey, over 51 percent of marketers, app developers, and publishers reported finding full-screen video ads the most effective format for user acquisition.
Mobile monetization best practices in a slowing marketWhile 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 March 2023, 36 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 2022, advertising made up the largest share of the app market revenues, with almost 268 billion U.S. dollars generated with this monetization method, while in-app purchases generated around 205 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. Additionally, advertisers and brands are constantly subjected to loss of income and wasted advertising spending. During the fourth quarter of 2022, advertisers spent approximately 4.6 million U.S. dollars on abandoned apps. While this represents a decrease from the 10 million U.S. dollars spent during the first quarter of 2022. Mobile ad frauds had an estimated two billion U.S. dollars value in Europe alone, while app frauds such as cost per install (CPI) frauds and bot frauds costed almost 1.5 billion U.S. dollars in the Asia-Pacific region during the same period.