A New Forecast: App Developers to Spend $94.9 Billion on User Acquisition in 2025
A recent report by AppsFlyer has examined the state of global app install ad spend and predicts that app developers will invest a staggering $94.9 billion in their efforts to attract new users by 2025. This represents a significant 20% increase from 2023.
The Road to Recovery
One of the key factors contributing to this forecast is the recovery of the market following the easing of lockdown restrictions. As the world slowly returns to normalcy, consumers are spending less time on their phones compared to the period when new users sought entertainment on their mobile devices.
Additionally, the report highlights a recent increase in investment in iOS devices. After experiencing a decline during the release of iOS 14.5 and ATT, which posed challenges for user acquisition, apps and media sources have adapted to Apple’s SKAdNetwork. Despite its limitations, the high average quality of Apple’s user base has made this transition worthwhile. It is expected that the adoption of SKAdNetwork 4.0 will soon reach critical mass, leading to further upgrades and eventually the release of SKAN 5.0.
Privacy Comes First
Addressing privacy concerns, both Apple and Google are taking steps to prioritize user privacy. In 2024, Google plans to launch the Privacy Sandbox for Android, which is expected to have a smoother rollout compared to SKAdNetwork. This system will provide marketers with enhanced visibility into campaign performance for user acquisition and remarketing, allowing them to analyze their campaigns and make necessary adjustments.
Another notable development in the past year has been the increased use of data clean rooms (DCR) to process and manage sensitive data in a privacy-compliant manner. DCRs enable marketers to combine their first-party data with conversion data, regaining valuable visibility.
The rising prominence of artificial intelligence (AI) also plays a crucial role in providing measurement and campaign optimization solutions. Marketers can leverage AI effectively to navigate the evolving landscape of user acquisition.
The Rise of Mobile in Developing Nations
Aside from privacy-related changes, the forecasted growth is also attributed to the increasing prevalence of mobile devices in developing nations. It is projected that the number of smartphones worldwide will increase by 13% from 2022 to 2025. As a result, marketers will face pressure to target these new users in their acquisition campaigns, leading to a rise in ad spending.
Earlier this year, AppsFlyer reported that consumers were exposed to $5.4 billion in app fraud in 2020, underscoring the importance of strategic user acquisition efforts.