AppsFlyer observes a 5 per cent drop in user acquisition spend

AppsFlyer, an open platform that provides the measurement, analytics, engagement and fraud protection technologies, released a report on the top five data trends in 2022.

Here’s a summary.

  1. Total app installs grew by 10 per cent in 2022 despite post-Covid digital cooldown, privacy changes and economic downturn. Despite headwinds from Apple’s privacy changes, unexpected user behaviour post-Covid and a looming economic recession that affects marketing budgets, 2022 delivered a 10 per cent year-over-year rise in overall installs. While the 2020 Covid-driven digital surge – 35 per cent YoY growth in 2020 – did not become the new normal as many expected, Android installs grew 9 per cent YoY and iOS installs grew 16 per cent YoY. The surge in Android was driven by an impressive 18 per cent surge in the largest Android market — India. On the other hand, we see the effects of the war in Ukraine as Russia saw overall Android installs down 18 per cent from last year. iOS installs grew after last year’s Apple’s release of its App Tracking Transparency (ATT) framework, mainly driven by non-gaming apps.
  2. Ad spend went down five per cent YoY but the downturn was felt towards the end of the year with 20 per cent YoY drop. Overall, AppFlyer observes a 5 per cent drop YoY in User-Acquisition (UA) spend for the entire year. Over the last three months, the economic slowdown has shown its impact and resulted in a significant difference between 2021 – which saw an 8 per cent budget rise between start and end of year – and 2022 which saw a 20 per cent decline. Marketers however are catching on as 2022 has witnessed high demand for owned media remarketing campaigns that do not hurt tight budgets and are not affected by privacy shifts. Many companies are doubling down on building a strong brand image, and owned media allows a bespoke channel of communication to both loyal and new users.
  3. Apps spent $80 bn on user acquisition in 2022, a slight YoY drop after the 40 per cent surge in 2021. Global app-install acquisition budgets in 2022 reached an estimated $80 bn in total, including China. On the vertical front, gaming was the largest category with $27 bn, followed by finance at $8.5 bn, Casino real money at $5.2 bn and shopping at $3.4 bn, excluding China.
  4. The Identifier for Advertisers (IDFA) is not dead: 2022 saw a 10 per cent rise in ID matching rates which reached 26 per cent of all net operating incomes in 2022, including SKAN. It seems that apps are optimising their ATT prompt experience and more users are coming around to the idea of providing consent since it delivers a better ad experience. IDFA clearly experienced a massive drop since pre-ATT days when ID matching rates were above 80 per cent. Capturing the behaviour of consented users is highly beneficial for modelling, optimisation and benchmarking the entire user base. Apps that have not yet implemented an ATT prompt should highly consider changing their tune. Moreover, there are more ads now than before ATT and an average user is now served more ads that are irrelevant. Instagram, YouTube, TikTok and Apple have all introduced new ad units across inventory to counteract existing ad formats. We see an increased ad load that leads to more irrelevant ads per user, which creates a negative user experience. Displaying and optimising the prompt for consent is very important heading into 2023. At the same time, there is also pressure to deliver short term revenue amidst the economic slowdown with display of more ads for CPM revenue from the publisher. This yields easier short-term revenue at the expense of potential long-term damage such as churn and lack of effectiveness due to irrelevant ads and ad fatigue.
  5. Non-gaming apps enjoy a 20 per cent jump in in-app purchase (IAP) revenue while games suffer a 16 per cent drop. The study also states a significant difference in gaming IAP revenue between iOS and Android.