mCommerce to drive global growth in app economy – in-app ad spend set to triple to $201 billion by 2021

The global economy has become increasingly mobile-first. Indeed, more and more activities are migrating to mobile devices. However, for some time now there have been predictions that the app economy would be left behind and the boom was over. Latest findings from App Annie show that this couldn’t be further from the truth.

In 2016, the app economy toppled $1.3 trillion across mobile app stores, in-app ads and mobile commerce. A whopping 3.4 billion people spent 1.6 trillion hours using their apps, equating to a spend of $370 per person or $0.80 per hour per person.

By 2021, the app economy will reach $6.3 trillion driven by a growing user base as well as engagement rates. Users are projected to almost double to 6.3 billion by 2021 and time spent in apps will border on 3.5 trillion hours by 2021.

Innovation and mobile transactions are boosting much of the rise in annual spend per app user (from $379 to $1008), according to the Global App Economy Forecast. However, Western nations may begin to lag behind APAC regions as they are constrained by legalities to develop larger app infrastructures.

App value is generally measured as a combination of things such as user engagement, effectiveness of ad formats as well as reach, mCommerce, but also the interaction between businesses and customers. It comes as little surprise then that there are wide discrepancies between countries when it comes to app monetisation.

Whilst the average spent of the Japanese user came to $13.98 per hour and a total 68 billion hours in apps last year, the US and China generated an average $2.36 and $2.01 per user per hour, respectively. But where is all that revenue coming from?

A major chunk of app store monetisation comes from gaming apps. The segment is forecast to grow from $50 billion in 2016 to $105 billion in 2021. Non-game app spending is to triple from $11.5 billion to $34 billion by 2021, driven by entertainment apps, dating and productivity apps.

At the same time, global in-app ad spend is likely to triple from $72 billion last year to a whopping $201 billion in 2021. Advertisers should keep their eyes on APAC as the region is going to grow at a CAGR of 25% to $77 billion. For now, the Americas are continuing their stronghold at a CAGR of 26% to $96 billion whilst EMEA is expected to grow at 15% CAGR.

Overall, the global average for ad spend is forecast to increase from $13 to $52 per user by 2021 as ad targeting and innovation enhance ad effectiveness and engagement.

However, the single largest growth sector in the mobile app business comes from mCommerce. It outpaces other forms of monetisation and will be growing at a 38% CAGR increasing from $344 to $946 per user during the forecast period. APAC is developing more quickly in this area and leading much of the shift to mobile. Much of this is led by the APAC region set to reach $3.2 trillion in mobile commerce revenue in just four years. EMEA is trailing behind but should pick up pace.

China will be the country to watch as it leads the mobile-first economy over the years to come. Over 800 million mobile users are spent a total 390 billion hours in apps in 2016. However, it will be mobile commerce where key metrics are likely to develop. The report concludes:

Given increasing investments in mobile and specifically in apps by companies across industries and in mobile’s ever-expanding centrality in our daily lives, we project the app economy will add more than $5 trillion in value over the next five years, resulting in a $6 trillion app economy by 2021. In context, that means users and developers will deliver growth equivalent in size to the economy of Japan by 2021 — creating enormous opportunity for companies across industries and around the globe.