App Annie: Mobile ad spending will rise 20% as at-home becomes new normal

Brief:

Mobile ad spending will grow 20% to $290 billion worldwide next year as consumers spend more time using apps for at-home activities, per a report by app analytics firm App Annie. Much of the growth will come from mobile commerce, while increased viewership of over-the-top (OTT) video is more likely to negatively affect spending on linear TV rather than mobile platforms, according to the forecast.
Consumer spending on mobile games will surpass $120 billion next year as app downloads continue a growth trend that included a 15% gain in Q3 from a year earlier. "Hybrid" mobile games that combine genres such as hypercasual and multiplayer gameplay will become more popular, as seen with the surge in popularity among a wide audience for games like "Among Us!," App Annie predicted.
As consumers continue to adjust to the "new normal" of the pandemic, their time spent on at-home mobile activities will rise 43% next year. Consumers will increase their time spent with apps for education, business, streaming, finance, shopping, food delivery and fitness next year, per App Annie.

Insight:

The predicted growth in mobile advertising reflects the increased amount of time people are spending on their smartphones, using apps to handle a broader range of tasks. The overall time spent in apps rose 25% worldwide in Q3 from a year earlier, giving mobile marketers a greater chance to engage consumers or to reach them through in-app advertising. The promotional activity is important to almost every kind of business with an app, including retailers, game developers, social media companies and streaming platforms.

At-home activities will continue to take up a bigger part of the day for many mobile users. The average time spent on mobile devices rose 20% from a year earlier to a high of 4 hours and 20 minutes a day during the pandemic, or about 25% of the average user's waking hours, according to App Annie. While it's possible that the time will decline if the pandemic subsides, there are plenty of reasons for consumers to use their mobile devices among a wider range of tasks.

Those tasks vary by user, with teens and younger adults driving a 62% compound annual growth rate (CAGR) in time spent with education apps from 2017 through next year, as App Annie predicts. The growth rate for business apps will be 57% as people work from home and use videoconferencing apps like Zoom. The app last month started testing tools to sell digital tickets to online classes and virtual concerts in a move to expand usage outside of business videoconferencing, as App Annie notes.

The growth rate for streaming apps will be 43% as consumers shift their viewing to the growing number of subscription video-on-demand (SVOD) services like Netflix and Disney+ and to advertising video-on-demand (AVOD) platforms like Tubi, Peacock and Pluto TV that are free to stream. App Annie predicts that video streaming on mobile will exceed 1 trillion hours on Android phones worldwide next year.