Industry News

5 predictions for mobile in 2017

by Mark Rosner on Dec 19, 2016

It’s that time of year again, when we all get to review what happened this year and think about what next year is going to bring. The mobile industry moves fast (which is of course part of why it’s such a fun field to work in), and 2017 is going to bring still more innovation at a rapid pace. Here are my predictions for the next 12 months:

Performance video will continue to outpace other formats. Mobile video ad spend surpassed desktop last year, with it nearly tripling in 2015 according to our data (and this trend continued unabated in 2016). This year mobile video ad spend is expected to hit a total of $4.35 billion, and in 2017 it’s expected to be $6.72 billion. Meanwhile, more  brands are pulling from their TV marketing budgets to spend on mobile video. This trend will only continue because of one simple fact: mobile video is up to 40 percent more effective at user retention than non-video ad formats. Within the overall category of video, however, I think we’ll also see continued growth in rewarded video outside of the gaming category, and a host of creative approaches to deploying video ads in general.

In-app purchasing on Android will close the gap with iOS. Overall purchasing of Android devices has been creeping up for years now, and in Q3 of this year, 88% of all devices shipped were Android, an increase of about 4 percent over the same time last year. This is largely due to Android’s low-cost services and growth in the Asian, the Middle Eastern, and African markets. This level of growth naturally means still more IAPs on Android. While it’s true that Apple users spend 2.5 more than Android users on IAPs, with more Android devices out there, Android IAPs will increase and eventually both close the gap and surpass iOS in volume. For marketers, this means that performance on Android will improve as they find better pockets of high quality customers.

It won’t be the year of 5G. While there has been a ton of talk about 5G and what it’s going to mean for users (namely speed and increased connectivity to things like home appliances and wearables), it’s not going to make a huge impact on the mobile industry until 2018 at the earliest. Don’t get me wrong: it’s going to be huge when it hits mass adoption, and it has enormous implications for VR and AR, but until then, it’s not going to have significant impact.

But it will be AR’s breakout year. As I recently wrote in VentureBeat, it looks like AR’s time has come. Developers can build on this year’s successes and lessons learned (think Snapchat and Pokemon GO), and the opportunity for monetizing within AR is encouraging. Industry heavyweights like Microsoft, which has released Hololens for developers, and Apple, which is integrating AR technology into the iPhone and is rumored to be developing AR glasses. I’m not saying that by the end of 2017 we’ll all be living our lives in AR, but I am confident that we’re going to see some game-changers with the technology.

APAC’s influence on the entire ecosystem will continue. In APAC, as smartphone penetration rates increase at incredible rates due to infrastructure upgrades and the increased availability of lower-cost smartphone models, the market there is going to play an even larger role in the greater mobile ecosystem. There are now more than one billion smartphone users in APAC (in 2017 there will be over 600 million in China alone), and in some countries the rate of growth is astonishing. India has the fastest growing smartphone market in the world. Countries in Southeast Asia are also rising rapidly when it comes to mobile: Vietnam will likely be a real powerhouse before long (apps are growing there at a phenomenal rate there and smartphone users spend about 5 hours per day on their phones), as will Indonesia, where there’s the powerful combination of a massive population, a growing middle class, and an expanding 4G network. All of this means that APAC offers hundreds of millions of users that can be engaged, and more inventory.

It’s going to be an exciting year for mobile. Video advertising will continue to eclipse banner ads as the most effective format, and Android’s IAP market share will increase relative to iOS. AR will spread beyond its current niche status, and growth in APAC will spawn additional growth across the global ecosystem.

Mark Rosner is AppLovin’s Chief Revenue Officer.