An overview of the current state of the app economy, with three thoughts for mobile marketers on navigating 2019

1. The State of the
App Economy
Eric Benjamin Seufert
MGS San Francisco
February 2019

2. Who I am
N3TWORK Mobile Dev
Memo
Freemium
Economics

3. Who I am
Previously:

4. Presentation Structure

5. Presentation Structure
1) State of the App Economy

6. Presentation Structure
1) State of the App Economy
2) What’s Now and What’s Next?

7. Presentation Structure
1) State of the App Economy
2) What’s Now and What’s Next?
3) 3 Thoughts on Navigating 2019

8. Presentation Structure
1) State of the App Economy
2) What’s Now and What’s Next?
3) 3 Thoughts on Navigating 2019

9. The State of the App Economy

10. The State of the App Economy
Macro factors that have changed mobile content
consumption:

11. The State of the App Economy
Macro factors that have changed mobile content
consumption:
● Cheaper access to quality hardware /
increased smartphone penetration;

12. The State of the App Economy
● Apple’s device install base reached 1.3BN in early 2018 (30% growth in
two years);
● Much of this is driven by second-hand resales as high-end price points
grow (eg. upcoming iPhone XS Max at >$1400). Source: BI Intelligence

13. The State of the App Economy
● Resale market is also robust for high-end Android smartphones;
● Programs like Android Go are designed to give low-end devices access to
computationally-intensive activities (eg. streaming);
Source: Android Authority, Flurry

14. The State of the App Economy
● Chinese demand for smartphones is evaporating;
● Smartphone penetration is reaching its natural limit globally.
Source: GSMA, Canalys, Chase

15. The State of the App Economy
Macro factors that have changed mobile content
consumption:
● Cheaper access to quality hardware /
increased smartphone penetration;
● Cheaper mobile data;

16. The State of the App Economy
● The price of mobile data worldwide, but especially in the US and India, is
plummeting.
Source: Mary Meeker / KPCB, The Motley Fool

17. The State of the App Economy
Macro factors that have changed mobile content
consumption:
● Cheaper access to quality hardware /
increased smartphone penetration;
● Cheaper mobile data;
● Changing platform incentives / new revenue
models;

18. The State of the App Economy
● The success of streaming video and music services forced Apple and
Google to change the economics of subscriptions on their platforms.
Source: Variety, Re/Code, Apple

19. Presentation Structure
1) State of the App Economy
2) What’s Now and What’s Next?
3) 3 Thoughts on Navigating 2019

20. What’s Now and What’s Next?

21. What’s Now and What’s Next?
● The adoption of high-fidelity mobile advertising
formats has created new business models;

22. What’s Now and What’s Next?
● Advertising-reliant businesses (eg. hypercasual games) are viable as a
result of the availability of rich media advertising formats.
Source: Bloomberg, VentureBeat, Re/Code

23. What’s Now and What’s Next?
● The adoption of high-fidelity mobile
advertising formats has created new business
models;
● The Top Grossing charts are “thawing” and
are no longer the exclusive domain of games;

24. What’s Now and What’s Next?
https://mobiledevmemo.com/the-mobile-app-economys-second-act/

25. What’s Now and What’s Next?
https://mobiledevmemo.com/the-mobile-app-economys-second-act/

26. What’s Now and What’s Next?
https://mobiledevmemo.com/the-mobile-app-economys-second-act/

27. What’s Now and What’s Next?
● Pressure is being applied to platform owners as
subscription revenues increase and mobile
gaming participation spans multiple platforms;

28. What’s Now and What’s Next?
● As mobile gaming goes mainstream, streaming revenues on mobile explode, and
mobile apps become genuine platforms, the Platforms’ grip on distribution and
transaction oversight fractures. Source: BGR, Techcrunch, The Verge, Business Insider, ArsTechnica, Facebook.com

29. What’s Now and What’s Next?
https://mobiledevmemo.com/fortnite-skipping-google-play-wont-disrupt-the-status-quo-on-mobile/
But can you
really afford to
bypass the App
Store / Google
Play?

30. What’s Now and What’s Next?
● As credible targeting data becomes ever more
valuable on mobile, consolidation intensifies
and the Duopoly entrenches / reinforces its
walled gardens.

31. What’s Now and What’s Next?
● Consolidation is accelerating in the mobile AdTech / MarTech space as smaller
companies struggle to compete with the Duopoly and larger providers seek vertical
integration. Source: Branch, VentureBeat, AdExchanger, InMobi

32. What’s Now and What’s Next?
● The Duopoly is cordoning off advertiser data and insights with its focus on
algorithmic bidding strategies, creating a virtuous cycle of budget concentration and
data segregation. Source: eConsultancy, Tech Crunch, Mobile Dev Memo

33. Presentation Structure
1) State of the App Economy
2) What’s Now and What’s Next?
3) 3 Thoughts on Navigating 2019

34. 3 Thoughts on Navigating 2019

35. 3 Thoughts on Navigating 2019
1) Lean into algorithmic campaign management;

36. 2013 - 2015
LTV
UA Team
Users
“UA”
What was mobile user acquisition?

37. 2016 - Now
Duopoly
Product
Mobile
Networks
UA Team
ROASIncent +
Affiliate
Users
Events
Traffic
Targeting
Traffic
What is mobile user acquisition?

38. 2013 - 2015
LTV
UA Team
Users
“UA”
Purchase signals /
Conversion
optimization
ROAS
milestones
What is mobile user acquisition?

39. 3 Thoughts on Navigating 2019
1) Lean into algorithmic campaign management;
○ Team structure / composition;

40. 3 Thoughts on Navigating 2019
1) Lean into algorithmic campaign management;
○ Team structure / composition;
○ Creative experimentation;

41. 3 Thoughts on Navigating 2019
1) Lean into algorithmic campaign management;
○ Team structure / composition;
○ Creative experimentation;
○ Monetization signaling;

42. 3 Thoughts on Navigating 2019
2) Be creative with monetization;

43. 3 Thoughts on Navigating 2019
Source: TechCrunch, Variety, New York Times, CNBC, Variety
● Exclusively focusing on IAPs forces an unnecessary monetization constraint and
doesn’t exploit the new business models that have been unlocked on mobile over the
past 12-24 months.

44. 3 Thoughts on Navigating 2019
3) Be prepared to face a changing regulatory
landscape.

45. 3 Thoughts on Navigating 2019
Source: AdExchanger, Reuters, The Verge, CNBC
● Increased regulatory scrutiny of social networks and other companies operating
data-intensive applications feels inevitable. Be prepared to operate in a more
restrictive environment.

46. Thank you!
@eric_seufert
eric@mobiledevmemo.com
mobiledevmemo.com