AppsFlyer, a global leader in marketing measurement, attribution, and data analytics, is has shared its top data trends of 2023 and outlook for 2024, which is said may be a stronger year, albeit with challenges.
2023 update and 2024 outlook
The SaaS mobile marketing analytics and attribution platform, said that over the last three years, mobile app marketers have been on a “wild roller coaster ride”.
It cited major global events such as the covid pandemic and post-covid situation, iOS 14.5 privacy-driven data restrictions, the rise of AI, and a global economic downturn whose effects were felt in 2022 and 2023.
AppsFlyer said that all these scenarios meant the ability to drive consistent growth through constant change has been, and will continue to be, a major challenge as the world heads into 2024 with more significant changes on the horizon.
Here’s what the adtech’s data from a “tumultuous 2023” indicated:
1) App install ad spend declined 6% in 2023 to $82 billion, impacted by the economic downturn.
From a vertical perspective, a 10% YoY drop from 2022 was seen in UA apps budgets of non-gaming apps, driven by cuts in the top three categories: shopping, finance, and entertainment, while travel and lifestyle apps saw spending rise significantly.
With significant changes continuing to shape the ecosystem, there is still plenty of uncertainty heading into 2024 on multiple fronts: from a:
1) macro perspective and potential economic recovery,
2) the digital marketing industry which continues to grapple with privacy-driven signal loss since iOS 14.5, and ahead of the release of Android’s Privacy Sandbox and Chrome’s planned cookie deprecation, and
3) AI which is of course a positive disruptive change but has the potential to radically change how businesses operate. These factors, particularly the state of the economy, will play a key role in budget allocation in 2024.
The good news is that many economic parameters like GDP growth, inflation, and market performance are in a far better place than they were in 2022, giving AppsFlyer room for cautious optimism that can very well lead to an increase in app install ad spend budgets in 2024.
2) iOS non-organic installs rebounded with a 9% YoY increase, recovering after a 15% drop in 2022 compared to 2021 – when shockwaves of iOS 14.5 were still being felt. The rise is three times higher than the 3% increase recorded in Android.
The economic downturn will heavily impact mobile app marketers’ ability to drive scale in 2024. As mentioned above, there’s some room for optimism.
Beyond that, significant changes in the ecosystem make forecasting even harder. With iOS, it’s likely we’ll see continued growth, especially with the major enhancements in SKAN 4.
However, at present (end of November), its adoption has only reached 21% (share of postbacks), but AppsFlyer expect it to reach critical mass in Q1 after the leading media sources complete their implementation.
But while SKAN 4.0 represents a positive step forward, it still grapples with many issues particularly when dealing with incomplete or unavailable data from SKAN.
The use of a single source of truth (SSOT) to de-duplicate multiple iOS data sources will drive higher NOI figures and more efficient budget allocation with more installs attributed to marketing, lower effective costs, and near real-time insights (instead of waiting for days for input).
On the Android front, 2024 is the year of Privacy Sandbox. A complete overhaul to measurement on Android will have a profound impact on NOIs.
Therefore, marketers need to educate themselves about Sandbox and prepare their systems. As seen with the rollout of iOS 14.5, such massive changes can take at least a year to prepare for, figure out, and ultimately drive positive business outcomes. It’s therefore absolutely vital to get ahead of the curve now and in early 2024.
AppsFlyer outlined the roadmap to Privacy Sandbox success here.
3) Total app downloads increased only 2% in 2023 after a 10% rise in 2022, largely due to a 4% decline among non-gaming Android apps, which is the largest among other category/platform combinations.
With Android Privacy Sandbox, there may be a period of adjustment that will reduce the volume of overall Android installs, which make up the vast majority of global app downloads.
Additionally, Apple announced it “expects to make” App Store policy changes to comply with EU’s Digital Markets Act (DMA) in the form of allowing new iOS 3rd party app stores.
This change can generate massive impact in Europe since reduced store commissions can provide more viable business for app developers.
4) In-app purchase revenue in non-gaming and gaming went up 19% and 11% respectively, driven by gains in casino and casual games — both of which saw their iOS numbers rise significantly.
App monetisation remained robust this year across IAP, IAA, and subscription revenue streams, showing consumers are continuing to spend money in apps despite ongoing economic and advertising industry uncertainty.
As economic signs are improving, this trend is therefore likely to continue in 2024. It should also offer confidence for marketers who are holding back on spend.
Furthermore, AppsFlyer expects more apps to adopt hybrid monetisation with gaming combining mainly IAA and IAP and non-gaming mainly IAP and subscription revenue.
5) Android re-marketing conversions fell 9% YoY, in line with the budget decreases in app install ad spend (see trend #1 above) due to the economic downturn.
The drop was largely driven by declines in the two largest markets by volume of re-marketing conversions: India and Brazil, with India seeing losses in shopping and entertainment apps, despite gains in finance and food and drink apps.
As we move from advertising-ID-based re-marketing under Privacy Sandbox to re-marketing using the new Protected Audiences API, AppsFlyer said it is confident that re-marketing will have successful continuity thanks to this robust solution.
Having said that, it is a disruptive change so marketers will have to form different strategies and ensure they are well educated about what’s needed for a successful transition.
On the iOS front there’s also the expectation of a proper solution for re-marketing without IDFA under SKAN 5, which may be released early next year.
It appears that it will only support re-engagement with users who have an app installed, not those who have deleted it. It’s not currently clear how this will work, but it appears that Apple will develop a framework that’s similar to the Protected Audiences API.
It will be interesting to see if the Protected Audiences API and SKAN 5 will lead to increased confidence among marketers as to the prospects of re-marketing in the age of privacy-led data restrictions.
All in all, it appears that re-marketing is set for a strong(er) 2024, said Appsflyer.
“We anticipate continued growth of iOS, especially with the major enhancements in SKAN 4.0. On the Android front, 2024 is the year of Privacy Sandbox and it’s crucial that marketers get ahead of the curve early in the New Year.
“There may be an adjustment period that reduces overall Android installs, which make up the vast majority of global app downloads, but the good news is that most marketers seem optimistic about Google’s privacy initiative.
“Certainly, they should be bolstered by the fact that consumers are continuing to spend money in apps despite ongoing economic and advertising industry flux and, as conditions ease, this trend is likely to continue in 2024.”