And they are set to spend $290 billion in 2021
In its look ahead to the next 12 months in digital advertising, the Interactive Advertising Bureau calls 2021 The Great Reset. It's a fitting title for two reasons. First, industry stakeholders are waiting to see how the (hoped for) return to a post-COVID normal will impact the allocation of global advertising budgets.
Second is another, more industry-specific, issue for digital marketers: what will be the impact of Apple's clampdown on IDFA tracking? How will the mobile market adapt to new forms of measurement and personalization?
Users are Spending More than 4 Hours a Day in Apps; Advertisers Are Following
Clearly, 2020 unleashed dramatic changes across the global advertising market. The long-term trend away from traditional platforms (TV, cinema, billboard, etc) and towards digital channels accelerated for the simple reason that consumers were ordered to stay at home for long periods.
In App Annie's State of Mobile 2021 report, we lay bare the scale of this shift. We estimate the average daily time spent per user in apps hit a new high of 4 hours and 20 minutes per day — that's up 20% from 2019. Americans alone spent 8% more time on mobile than watching live TV per day.
Put simply, the smartphone is where people are directing their attention. Brands know this, and are allocating their budgets accordingly.
According to media analyst's MAGNA’s latest report, linear advertising revenues (TV, radio, print, OOH) decreased by 18% in 2020, while digital advertising sales slowed but continued to grow (by 8%).
Within digital, mobile is the most dynamic space of all. We believe that marketers spent $240 billion on mobile ads in 2020 and that this figure will rise to $290 billion in 2021 – a two-year CAGR of 21%.
Interstitials Boom as Cost-Conscious Brands Keep One Eye on the Rate Card
It should also be stressed that the headline mobile ad numbers do not tell the whole story. Brands might have kept faith with mobile advertising in 2020, but they were still conscious of the need to spend wisely. Our data shows that mobile ad placements in the US grew 95% YoY in 2020. Yet the bulk of growth came from cheaper inventory – interstitials as opposed to video. This pattern was even more marked in other markets, such as India and Brazil.
The Impact of IDFA on the Advertising Industry
Meanwhile, to return to an earlier theme, 2021 will be the year that marketers start to fully comprehend the ramifications of Apple's new IDFA strategy. We expect 9 out of every 10 iOS users to decline the opt-in for user tracking. So marketers will have to find new ways to target users. This could be by 'old fashioned' context – or by new tech concepts such as Google's clustering of people by interest (Federated Learning of Cohorts, or FLOC). And they will have to find new ways to measure the effectiveness of their campaigns too.
Ultimately only time will tell how much impact the changes will have on spend. We believe that a useful strategy for brands is to 'go wide'. Aggregating campaign-level data from multiple data sources will help you counter the loss of going deep with user-level data. We launched the App Annie Ascend tool to help brands try this approach.
Celebrity Endorsements – the Marketer’s Secret Weapon for Driving Installs?
Of course, the health of the digital advertising market is especially important to app developers because of the sheer number of freemium products that monetize through ads. That said, there are other ways to drive initial installs besides banners and interstitials.
In the State of Mobile 2021 report, we highlight the extraordinary rise of the celebrity endorsement. Our headline finding is that these collaborations can spur up to a remarkable boost in downloads. Examples include singer Harry Styles and his partnership with the Calm app, which saw installs rise from 67,000 to 139,000 a day.
Even more dramatic was Travis Scott's collaboration with Epic Games. More than 12 million people fired up the Fortnite game to see the rapper debut his song ‘Astronomical’ in a real-time event. As a result, daily average downloads went from 108,000 to 538,000 on the days of the virtual concert. KartRider Rush+ partnered with Jisoo from K-Pop band Black Pink and downloads grew 25% the day after the release of branded products were released in the game compared to the day before the release.
This analysis of the advertising market and its impact on the app space is drawn from App Annie's State of Mobile 2021 report. For more insights on the industry as a whole and other app categories, sign up for the full report:
App Annie is a mobile market estimate service provider. App Annie is not registered in any investment advisory capacity in any jurisdiction globally, and does not offer any legal, financial, investment or business advice. Nothing contained in this communication, or in any App Annie products, services, communications, or other offerings, should be construed as an offer, recommendation, or solicitation to buy or sell any security or investment, or to make any investment decisions. Any reference to past or potential performance is not, and should not, be construed as a recommendation or as a guarantee of any specific outcome. You should always consult your own professional legal, financial, investment and business advisors.
Additionally, by providing the information herein, App Annie does not make any representations or warranties and does not undertake any legal or contractual obligations whatsoever. No liability may accrue to App Annie as a result of providing this information to you.
2021 M04 7Customer Stories