2013 Year in review: recapping the social and mobile news that mattered
After huge market growth for both the Facebook and mobile app ecosystems in 2012, LifeStreet Media shared the industry’s excitement as we gazed into the promising future of 2013. Now, as we look back at the year in review, it’s becoming clear just how much promise 2013 held. The app ecosystem is not only growing at an unstoppable rate, but it is developing in some very meaningful ways. With that in mind, we’ve reviewed some of 2013’s major themes and have stopped to highlight those that represent not only growth, but also substantial advancement for the industry.
1. Programmatic buying is growing even faster than expected. Earlier this year, Magna Global projected that programmatic buying would reach $3.4 billion by the end of 2013. But now, as programmatic buying consumes 53% of all online display ad buys in the U.S., Magna Global says we are on course to reach $7.4 billion, more than double their original estimate. At this trajectory, Magna projects that programmatic buying will rise to $17 billion by 2017, with programmatic buying representing 87% of display, 69% of video, and 88% of all mobile advertising buys. Looking beyond the numbers, this growth indicates that the industry is truly embracing programmatic technology. What’s more, we see that buying via auction-based real-time bidding (RTB) represents a little more than half of the programmatic total; this very well may indicate that exchange-based technology is ultimately leading to more “direct” buying among publishers, advertisers, and agencies. This sort of integration of various buying modes reveals how technology can bring unique forms of balance to the still-developing ecosystem.
2. Performance-based display marketing has proved vital in a space where almost half of display ads go unseen. It’s hard to forget the shock many advertisers felt when comScore reported that 46% of web display ads are never seen by consumers. The increased adoption of programmatic buying, as discussed above, is one sign that advertisers are getting smarter and expecting more when it comes to ad buying – but are automated buying and selective targeting enough? At LifeStreet Media we see true performance marketing as the best way to invest in reliable results. With performance marketing, advertisers need only pay for metrics that align with their business goals – such as installs, game levels, or in-app purchases. By paying only for conversion and engagement events, advertisers don’t have to worry that half of their ad spend might be going towards unseen ads or accidental clicks. In other words, advertisers pay for what matters — and nothing else.
3. Online advertising is becoming more liquid. Part of industry growth comes from creating an industry that allows any potentially competitive player to buy in to the market. Back in May, LifeStreet Media CEO Mitchell Weisman presented at the AppNation New York conference to deliver the message that online advertising is evolving into a liquid marketplace – and why that is a great thing for the industry. Comparing online advertising to online travel bookings, Weisman pointed out that technological advances expanded travel booking from an exclusive system used only by travel agents, to one used by ninety million Americans per year (usatravel.org, 2011). Similarly, Weisman projects that the increase in marketplace liquidity will increase the size of our already considerable and rapidly growing digital advertising space. To take his vision further, Weisman suggests that advancements in product, transaction, and settlement process standardization; clearer rules and enforcements; and improvements in workflow and automation, are all necessary to help us complete this powerful industry transformation. Watch Mitchell Weisman discuss this trend and more at the recent AppNation V Conference in San Francisco.
4. The app ecosystem is on an unstoppable growth path. After seeing the success of the Facebook App Center in 2012, many eyes turned to watch as Apple and Google duked it out, both trying to out-pace the other in expanding their app store offerings. Looking past the high-profile rivalry, all that’s left to be seen is major advancement for the app market as a whole. With both stores reaching over 1 million apps in their respective app stores, together generating over 110 billion downloads, it’s clear that the app ecosystem is a flourishing one. Of course, the true success of these markets goes beyond downloads; we also know that Apple has paid out $13 Billion to app developers, and Google’s Average Revenue Per User (ARPU) is at least 2.5 times what it was last year. To top it off, Facebook has remained on a strong path with Q3 bringing expansion in almost every important metric. In particular, overall users went up 18% to 1.19 billion, seeing monthly active users (MAUs) increase by 40 million year over year, including a 45% increase in mobile MAUs. Finally, Facebook’s Q3 2013 financial report boasted $2.02 billion in revenue, shooting past estimates of $1.91 billion into their first $2 billion quarter.
In parting, the key take-away for 2013 goes beyond the rapid growth of the already-giant online advertising and app ecosystems. Some very meaningful and innovative developments show promise that these markets will continue to deeply embed themselves as established and sophisticated markets in the years to come. 2014 is looking exceptionally bright for app developers, advertisers, publishers and the broader app ecosystem as a whole.