Advertisers, Developers

What 2017 taught us about the future of the mobile industry

by Mark Rosner on Dec 15, 2017

Early in 2017, Facebook gave the whole mobile industry reason for optimism when it reported $8.81 billion in quarterly revenue, with mobile ads making up the lion’s share of earnings. Facebook’s mobile noisemaking was just the opening stanza in what was a year of major developments in the mobile ad tech industry.

Telcos dove into the space head first, determined to get a piece of the pie. As more global markets scaled, the app economy spiked, with signs of quintupling by 2021. Merger and acquisition activity in ad tech has spiked after five long years of decline, and Apple and Google opened creative new doors for advertisers and developers with the introduction of ARKit and ARCore, respectively.

All of this has happened just as the technical convergence of AI, chatbots, messaging commerce, mobile wallets, AR-based ads, and more open data markets seem poised to keep the promise of omnichannel personalization. We know that Black Friday through Cyber Monday was the greatest mobile shopping weekend in history, but is that growth sustainable? Not just in the West, but in developing markets, such as India, Brazil, and Latin America?

To figure out where the mobile industry is going, let’s break down some of the key storylines of 2017 and ask ourselves what these developments mean for the future of the mobile industry.

The West gets the message

WeChat feature integrations - AppLovin

The future of messaging commerce in the West became clear as Asia-Pacific’s WeChat reached a staggering 963 million monthly active users, up 19.5% from the previous year. To service North American consumers’ love for chatting, Western brands continue to expand chatbots to create interactive, relatable engagements as seen with Facebook’s chatbot push in Messenger. Apple’s unheralded expansion of Business Chat was one early domino to fall in commercializing messaging in the West, but it wasn’t the only important development.

Chatbots, despite their early lack of impact, will continue to grow in prominence as more brands figure out how to use AI to deliver important customer service functions via non-human means, which will lead to new commercial opportunities and business efficiencies. This is not an “if,” but a “when.”

AR moves beyond Pokémon

Once a distant second to the promise of virtual reality in the minds of advertisers and developers, Augmented Reality (AR) has vaulted to the forefront of the mobile world on the back of Apple’s release of ARKit and Google’s introduction of ARCore. Glispa COO Phillip Neuberger summed up the opportunity of mobile apps and AR, saying, “It is location-based, active, interactive, and social in one. Whether it’s PokéStops or coupons on offer when you walk past a store in-game ads with a local twist have the potential to bring users back into ‘real’ shops.”

In the very near future, AR will shake things up by bringing mobile users into direct contact with their influencers (or at least their avatars)—celebrity endorsers won’t just stand behind brands in the media, they’ll stand right beside them in-store.

AR phone animated gif

Markets get bigger as marketers’ targets get smaller

A study from App Annie revealed the global app economy will be worth $6.3 trillion by 2021 (up from $1.3 trillion in 2016), with significant credit due to the rise of alternate forms of monetization, including in-app ads and mobile commerce. On a parallel path, massive global markets, including India and Brazil, are rapidly scaling as market challenges around technical infrastructure melt away.

The lingering question: Will marketers, advertisers, and ad tech solutions providers be able to scale omnichannel personalization capabilities in time to keep up with the opportunity, or will a failure to assimilate tactics to a plethora of individual user preferences among different regions and cultures stymie near-term commercialization efforts?

Of consolidation and free-market mechanics

One positive trend in 2017 is that merger and acquisition activity in ad tech is back on the uptick. Major deals from the first half of 2017 included Oracle’s $850 million acquisition of Moat, Snap Inc.’s $200 million purchase of Placed, and Amobee buying Turn for $310 million. That development has some worried, while others see an opportunity to level the playing field for smaller companies and independent publishers through the introduction of new funding and monetization mechanisms. The consolidation trend will likely continue for the foreseeable future but opportunities for independent developers and nascent providers remain strong.

What to expect in 2018

2017 was an extraordinary year for the mobile industry with ballooning revenues, exciting new technologies such as AR and machine learning that will allow advertisers to create new engagements, and massive developments in international markets that are key to global brands’ objectives of scale in an ever-more connected mobile world.

As we push forward and mobile markets continue to mature, those of us in the industry can easily envision an experience-rich world providing us with new opportunities to engage, delight, and service mobile users.

Asian companies, such as Nintendo and Netease, will either build on Western mobile markets or enter into them in a big way. More messaging apps will integrate WeChat-like features, AR-based experiences will explode (with mobile gaming and eSports leading the way), market consolidation in mobile ad tech will continue, and developers and brands will transcend barriers to engage a generation of global consumers for whom mobile will be the only digital experience they’ll ever know.

Mark Rosner is AppLovin’s Chief Revenue Officer.