Optimism is in the air. As we move through 2024 and edge into 2025, the Indian app market is hitting its full stride—backed by resilience and primed for growth. Last year, the Indian app ecosystem really flexed its muscles, boasting a projected GDP growth of 6.3%. It’s clear we’ve got a unique and adaptable market running on all cylinders.

The market is evolving as more mobile users enter the middle class, despite a modest annual growth of 1% in mobile user base according to a 2023 IDC report. Our user growth numbers largely reflected this, as Android app installs also nudged up by just 1%. But these numbers hide a steep rise in app usage: Users are online way more than before, thanks to the steep drop in mobile data costs. Findings from Goldman Sachs show a whopping 20x increase in mobile data usage over the last five years—and it doesn’t look like it’s slowing down.

Notably, Apple’s market share in India rose to 6.4%, contributing to a surge in iOS app installs, a trend that is expected to continue into late 2024 and 2025, especially in sectors like Finance, Gaming, and Travel. Marketers are responding to these changes by boosting engagement strategies and ad expenditures.

Android advertising spending increased from $76 million in January 2020 to $159 million by January 2024, a growth of 109%. iOS advertising also saw a substantial rise, growing from $5.4 million to $12 million over the same period, a 55% increase.

Looking ahead to late 2024 and 2025, the market’s bounceback promises to yield quite a few opportunities, particularly in accessing untapped rural markets, trying innovative approaches like creative optimization and wading into emerging platforms such as CTV. Stepping up to these opportunities could be the key to shifting from business as usual to finding exponential success.

Domestic apps remain dominant but experienced a slight dip this year. Indian apps now account for 46% of the top 200, down from 52%, totaling 92 apps. 

China still holds second place, though its share has continued to fall, now at 11.5%, a steep drop from its highs of 43% in 2018. 

Israeli apps continue to eat into China’s slice, with a share of 7.5%, reflecting similar increases from last year. 

Meanwhile, US-based apps also continued their downward trend, now representing just 1.5% of the top 200, with just three apps remaining.

Out of the total 3.4 billion NOIs measured, the top 10 states dominate India’s marketing landscape, accounting for over 70% of the nation’s NOIs.

This year, Maharashtra surprisingly widened its lead over other Indian states, and now commands a 16.1% share of non-organic installs (NOI) in India, up from 13.2% last year. 

Despite being the most populous state, Uttar Pradesh saw a significant jump in NOI from 12% to 18%. 

Different states show varying receptiveness across categories. Uttar Pradesh excels in the Education sector, holding a 17.4% share of NOI, and leads in Shopping as well. 

Maharashtra tops the charts in Finance and Food & Drink with commanding NOI shares of 22.6% and 25.8%, respectively.

India’s ten largest metropolitan economies remain dominant contributors to the nation’s NOI, collectively accounting for over 25% of the total share this year. 

Delhi, however, has dropped to second place, contributing 5.1% to the NOI, while Mumbai surged to the top with a significant increase to 6.6%—nearly double its contribution last year. As the financial heart of the country, Mumbai led in both the Finance and Food & Drink sectors, accounting for 13.17% and 15.7% of their respective categories. Bangalore, securing third place, led the Travel category with 5.94% of NOI.

Nevertheless, Tier 2 and Tier 3 cities remain critical engines of growth, driven in part by the rise of ‘vernacular apps’ catering to various Indian languages beyond English and Hindi. Cities such as Pune, Jaipur, Patna, Lucknow, Surat, Indore, Ludhiana, Khurda, Nagpur, Bhopal, and Coimbatore have particularly dominated the NOI volumes

These apps are pivotal in leveraging the digital surge in these cities, enabling businesses to connect with a burgeoning, digitally savvy population. This trend is set to drive a new wave of user acquisition and app installations.

Despite efforts to broaden their reach, marketers find that the country’s leading regions continue to be the primary revenue generators. The top 10 states command an impressive 78.5% of all app-related revenue, showcasing an even greater concentration than NOI. 

Within this top tier, revenue distribution shows a more balanced picture, with healthy competition and more mature user bases among these key markets. Maharashtra, Uttar Pradesh, and Delhi each contribute roughly 10% to the overall revenue, collectively accounting for about 30% of the national total. 

The urban-rural divide also remains stark, with the top 10 cities claiming 36% of the total revenue. Delhi leads this urban pack, contributing a significant 7.4% to the national app revenue. This concentration in major urban centers highlights both the success of targeted marketing in these areas and the ongoing challenge of penetrating smaller cities and rural markets.

The Indian mobile app market is back on a robust growth trajectory, particularly on the iOS platform. While Android app installs edged up by a mere 1% over the past year, iOS app user growth soared by an impressive 24%. 

This surge is closely tied to India’s growing significance in Apple’s global strategy, with iPhone sales nearing $10 billion, driven by record-breaking quarterly revenues. This upward trend continued into the first quarter, with a remarkable 39% year-over-year increase in iOS app usage.

Interestingly, all of Android’s growth occurred in the latter half of 2023, whereas iOS demonstrated consistent expansion year-round. Costs per install dropped 35% year over year in 2023, and we observe this trend continuing in Q1 of 2024. 

The sector-specific performance was varied: Travel apps saw their user growth more than double, while the Entertainment sector experienced a 41% decline on Android. Growth in the Finance sector, meanwhile, continues to accelerate, registering a 46% increase on Android and 38% on iOS.

In 2023, NOI on the Android platform experienced a steady 4% year-over-year increase, with an additional 4% rise in the first quarter of 2024. However, the standout performer was iOS, which saw an astonishing 77% growth in NOI, driven by a remarkable 166% surge in the latter half of the year. This momentum intensified in the first quarter of 2024, with NOI on iOS skyrocketing by an incredible 218% year over year. A key factor behind this surge on the iOS side was Apple’s impressive 40% increase in iPhone sales for the second consecutive year in FY23

Sector-specific growth in 2023 presented a mixed landscape, but iOS consistently outshone on all fronts. As in years past, Finance spearheaded category growth, with a robust 72% increase on Android and a record-breaking 319% surge on iOS. The Gaming sector also saw notable gains, with a 21% rise on Android and an energetic 157% leap on iOS. It seems rather obvious that marketers in the Finance and Gaming verticals might want to focus more on growing their iOS user base.

Additionally, the Shopping category enjoyed solid 13% growth. Not all sectors fared as well. The Entertainment and Food & Drink categories faced setbacks, with declines of 37% and 7% in NOI on the Android platform, respectively—even as CPI declined 30% YoY in Entertainment. Sector performance continues to remain dynamic across platforms.

The Indian app market is experiencing strong revenue growth, particularly in Travel and Finance, driven largely by iOS in-app purchases (IAPs). This expansion indicates that marketers in these sectors should target iOS users, who are more likely to engage and spend.

Indian consumers are increasingly willing to spend on in-app purchases, creating a robust market for both major platforms. In-app purchase (IAP) growth is on the rise across platforms. Android’s IAP growth increased by 5%, indicating steady user engagement.

Marketers in Travel and Finance should note the growing influence of iOS in India. The iOS platform has a fast-growing, spend-ready user base, making it crucial for reaching India’s affluent, tech-savvy consumers.

iOS saw a 40% rise in IAPs, reflecting its rapidly growing user base. This trend continued into Q1 2024, with Android achieving a 15% year-over-year increase in IAP growth, while iOS saw a 68% increase.

A tourism boom in India is truly fueling some impressive numbers. In 2023, in-app purchases (IAPs) on travel apps soared by 37%, with iOS leading the charge at a 56% increase. 

According to travel industry expert Skift, outbound travel from India more than doubled in 2023 compared with 2019, showing a 110% jump. Finance apps are also on a hot streak, with a 31% increase on Android and a stunning doubling on iOS last year.

However, not all sectors are enjoying the same success. Gaming saw a notable dip, with Android IAPs tumbling down by 56% year over year. Shopping and Food & Drink apps didn’t see much action either, mostly flatlining on the Android platform. 

Finally, Entertainment apps had a tough time as well, with a 23% drop in Android IAPs, though iOS did see a 51% uptick.

Retention rates across the board have been slipping since 2022, and as we head into 2024, it’s clear we’re facing a trend that demands  attention. The drop is even more stark on the iOS platform, traditionally a stronghold for solid retention metrics, which now shows significant weakening.

To tackle these challenges, a fresh take on the onboarding experience could make all the difference. The goal? To immediately capture users’ interest from the moment they first open the app. Another strategic move is to tweak promotional incentives, ensuring users engage more deeply with the app before they can score any initial rewards. 

This could help mitigate app tourism and the resulting fast fade-off seen after Day 1. By sharpening these aspects of user interaction, marketers have a real shot at patching up the retention leaks and building a more robust engagement structure that lasts.

Over the past couple of years, we’ve noticed a bit of a slide in the 7-day and 14-day retention rates for overall app installs. 

Retention rates, which peaked at 8% on Day 7 of January 2022, have steadily declined to 7% by October 2023. Although this might appear as a small drop, considering the ongoing downward trend, it’s crucial to address this continuous decline.

This downturn might tie into an uptick in non-organic installs we observed in the latter half of 2023, but is concerning nonetheless. 

Interestingly, retention rates for these non-organic installs by day 7 and day 14 also saw slight decreases, falling from 7.3% (day 7) and 4.85% (day 14 )in January to 7.14% and 4.77% in October, respectively.

What’s more striking is that Day 1 retention rates took a sharper dive—from 22.71% at the start of 2022 to just 18.87% by January 2024. For app marketers, this is a clear signal to rethink and optimize that initial user experience to boost Day 1 retention. 

This is a crucial period to grab and keep user interest—and right now, it looks like there’s room for improvement.  As observed in previous years, incentives aimed at attracting users can result in superficial installs, with apps being discarded soon after rewards are claimed. 

So it is imperative that app marketers focus considerably on re-engagement campaigns to prevent user inactivity and eventual uninstall. Additionally, limited device storage has often been seen as a reason for users to delete newer apps to make room.

As more people download mobile apps to merely try them out, it’s standard to see uninstall rates climb as well. But the uptick, especially noticeable in the second half of the year, highlights a real concern about the speed at which users are ditching apps. 

For those in app marketing, this trend across various sectors really puts the spotlight on the urgent need for creative re-engagement strategies. These efforts are key to keeping users interested and improving the overall app experience.

The decrease in retention is driving uninstalls. We saw in 2023 a 5% increase in uninstalls on Android compared with the previous year, which appears to have been driven by a combination of higher initial installation rates and lower overall retention. 

Interestingly, a significant portion of these uninstalls occurred in the latter half of the year. On a more positive note, the first quarter of this year has shown a promising downtrend, with uninstalls decreasing by about 4%. If advertisers don’t plan ahead, they stand a very strong possibility to increased uninstall rates

The Finance sector continues to impress, with significantly fewer users hitting the uninstall button. Uninstalls have plummeted by 17% year over year in 2023, and the momentum didn’t stop there—a further 27% drop was recorded in the first quarter alone. 

Coupled with robust installation rates, it’s clear that Indian consumers are increasingly turning to fintech apps. Meanwhile, Shopping apps have largely held steady, experiencing a small 2% decline in 2023, while posting a sharper 21% drop in early 2024.

Entertainment apps, however, saw the steepest climb in uninstalls, soaring by 38% YoY in 2023, though there was a noticeable 18% reduction in the first quarter. Both the Food & Drink and Gaming sectors also felt the pinch, with uninstall rates surging by 27% and 21% respectively last year. 

App marketers are at a critical juncture and will need to innovate their re-engagement strategies to reclaim their audience.

Recommendation: Do A/B testing to identify the ideal ratio between the number of re-engagements and uninstalls.

The Indian app market faces significant challenges, with retention rates dropping by Day 7 and day 14 and uninstall rates increasing. In this environment, remarketing is crucial for sustaining user engagement and growth.

In 2023, effective remarketing strategies led to substantial improvements across various app categories. The Finance sector on Android saw a 39% increase in remarketing, despite a 19% decline in its share of total installs. Shopping apps experienced a 43% rise in remarketing conversions on Android and 145% on iOS, boosting their install share by 8%. 

Food & Drink on Android nearly quadrupled its remarketing activities, increasing its install share by 44%. Conversely, Entertainment saw a 19% drop in remarketing on Android, though its share still grew by 7%.

With AI and machine learning reshaping campaign management, advertisers must focus on ad copy and creatives to stand out. AI helps analyze ad elements, enabling the refinement of content for maximum engagement and impact.

Remarketing has always played a key role in boosting revenue—or an app’s share of paying users. On Android, the share of paying users dipped slightly from 2.71% in 2022 to 2.3% in 2023, stabilizing at 2.35% in early 2024. 

Yet, remarketed Android users boasted a significantly higher share at 3.1%, compared with just 1.66% for those not retargeted.

iOS conversely saw a huge jump in proportion of paying users, with the share of paying users leaping from 3.43% in 2022 to 5.17% in 2023. The difference between remarketed (5.33%) and non-remarketed users (5.04%) was narrower, but the trend in Q1 2024 suggests growing benefits from remarketing. 

These numbers further validate the value of remarketing in enhancing user monetization and retention strategies.

In the latter half of 2023 and into Q1 2024, India’s finance app sector saw explosive growth again, particularly on iOS, with a staggering 38% year-over-year increase on iOS. Android mirrored this trend at 46%, though some of the growth was driven by remarketing efforts, which saw a 56% YoY surge in conversions.

Surprisingly, the boom wasn’t led by digital wallets and payment apps. Instead, other financial services sub-verticals, including investment and personal loan apps, took center stage. The highest volume of installs clustered around Q3 and Q4 of 2023, extending into Q1 2024. 

This spike likely resulted from a combination of aggressive user acquisition efforts and the traditional seasonality of higher installs in the latter part of the year.

The momentum was particularly noteworthy for Financial Service, Investment and Personal Loan apps. These categories amassed approximately half of their total installs from the past nine quarters in just the latest three quarters ending Q1 2024. 

In contrast, digital wallet and payment app installs showed a more evenly distributed pattern over time.

The Food & Drink category was largely driven this year by aggressive remarketing efforts. While Android saw a modest year-over-year user growth of 5%, iOS platforms outpaced this with a robust 24% increase. 

However, Q1 2024 marked a dramatic turnaround for Android, showcasing a 72% surge in user growth.

This growth spike is tied to an incredible 364% increase in remarketing conversions in 2023, which even picked up pace to 370% in Q1 of 2024. These numbers really speak to how well-targeted remarketing strategies can pull in users. 

However, this aggressive approach did come at the expense of NOI, which dropped by 63% in 2023 as a share of installs from remarketing.

It’s interesting to note that the growth wasn’t uniform across all segments. The Food, Grocery, and Quick Service Restaurant (QSR) segment, which was at the forefront in 2023 (12% YoY rise), didn’t keep up the pace in early 2024 (5% YoY increase in Q1 2024) compared with other segments.

In India’s fast-paced economy, marketers need to stay ahead. Creative optimization and Connected TV (CTV) are transforming how brands connect with audiences digitally.

Using AI, creative optimization refines ad content—from user-generated snippets to animations—highlighting what resonates with viewers, helping brands craft effective campaigns.

CTV’s rapid rise, driven by more viewers on mobile and CTV platforms, is revolutionizing digital marketing. Projections show 100M households and $500M in CTV ad investments by 2027.

CTV offers a goldmine for targeted, compelling ads. Together, creative optimization and CTV ensure ads not only reach audiences but also engage them, boosting ROI.

Creative optimization is crucial for gaming and non-gaming apps, each benefiting from tailored ad strategies. Marketers must align their creatives with what works best for each channel and context using AI. 

In gaming, especially hyper-casual games, the focus is on maximizing installs per mille (IPM). Data shows that ads excluding user-generated content (UGC) achieve an IPM of 16.33, compared to 5.77 for those including UGC. Animated ads also perform well, with an IPM of 16.52, indicating gaming ads should emphasize direct gameplay visuals and animations. Additionally, gaming video ads longer than 15 seconds show a 30% boost in 30-day retention on social platforms.

For non-gaming apps, UGC performs better, particularly on social media, with an IPM of 2.36 versus 1.7 for non-UGC ads. This trend highlights the effectiveness of authentic content in sectors like retail, education, and lifestyle, encouraging these apps to use real-life scenes and personal testimonials.

Overall, setting realistic expectations based on market verticals and understanding the nuances between IPM and retention can help optimize return on ad spend.

India’s app-driven economy presents a major opportunity, with e-commerce sales projected to reach $325 billion by 2030. Traditional app marketing tactics are declining in effectiveness, prompting the rise of commerce media. This new approach goes beyond traditional advertising, creating a strong link between content and commerce, allowing brands to strategically place targeted messages on platforms where consumers are engaged.

Commerce media empowers both brands and platforms by leveraging purchase intent data to create targeted ad opportunities, driving sales and conversions. For example, a user browsing an e-commerce app sees an ad for shoes they were considering. The brand leverages platform data within a privacy-compliant environment, ensuring relevant ads reach the right audience.

PubMatic’s report indicates that global commerce media ad spend, currently at $128 billion, is projected to grow to $220 billion by 2027. Data Collaboration Platforms (DCPs) and privacy-enhancing technologies enable advertisers to use insights from user data to deliver hyper-targeted product recommendations.

Commerce media fosters trust by showcasing products within trusted apps, reducing purchase hesitancy and complying with privacy regulations. For Indian advertisers, embracing commerce media is a strategic imperative, merging content and commerce to succeed in the booming digital marketplace.

Don’t be fooled by the modest growth in mobile gaming in the last couple of years as some key trends were reshaping the industry landscape: the strengthening of hybrid monetization models, and a rise in Casual games.

On the hybridization front, we saw Mid-Core games – traditionally reliant on in-app purchases – beginning to embrace advertising more openly. In parallel from the other side of the spectrum, Hypercasual games, once the bastion of ad-based revenue, started flirting with in-app purchases.

Overall, the adoption of hybrid models surged by 20% across the industry, in what we’re calling a “two-sided trend”. This dual approach has redrawn the boundaries between Hypercasuals and Mid-Cores, creating a more nuanced and adaptable market. This isn’t just a niche trend; it’s a meaningful shift affecting the entire mobile gaming ecosystem.

Meanwhile, Casual games climbed across most categories, contrasted against the mixed performance of Mid-Core and Hypercasual games. This steady increase, both in installs and ad spend, highlights the ongoing appeal and success of Casual games in that evolving market.

As we navigate this evolving landscape, we encounter buzzwords like “Casualization” and “Hybridization.” But do these terms describe gameplay mechanics or monetization strategies? Our analysis focuses primarily on the latter. By understanding these dynamics, we can better prepare for the future of mobile gaming.

The mobile gaming landscape continued its march toward hybrid revenue models in 2024. The adoption of hybrid models by Hypercasual games jumped from 19% to 26% (+37%) in just nine months. Mid-Core games weren’t far behind, with RPGs increasing from 41% to 51% (+24%), Strategy games from 59% to 66% (+11%), and Shooting games from 66% to 73% (+10%). Overall, the industry’s embrace of this dual approach surged from 36% to 43%. RPGs saw an IAA hike and an IAP dip, while Android Hypercasuals saw IAP decline as IAA rose.

So, what’s driving this change? For Hypercasuals, Apple’s App Tracking Transparency (ATT) has made it tough to turn a profit in this slim margin genre due to reduced data availability. In the privacy era, it’s harder to identify and activate high-value users, or “whales,” which has contributed to a general decline in user acquisition efficiency.

Mid-Cores are also moving towards hybrid models for several reasons. In-app purchases (IAP) growth has stagnated over the past two and a half years, prompting developers to diversify revenue sources. Plus, improved ad formats and practices have made ads less intrusive and more acceptable to players, no longer posing a significant hurdle to retention.

Let’s set the scene: Non-organic installs (NOI) for Casual games are climbing across most categories. Meanwhile, Hypercasualand Mid-Core NOI is declining, with the former seeing a 5% YoY dip on Android in H1 and a 15% drop on iOS. RPG, Strategy, and Shooting games also faced notable year-over-year declines on both platforms.

Ad spend trends reinforce this. Investment in casual games rose, with cross-platform gains in categories like Match (13% on Android), Action (18% on iOS), Simulation (25% on Android), and Tabletop (29% on iOS). iOS-specific categories like Sports and Puzzle games also saw substantial increases. Conversely, Hypercasual and Mid-Core games saw decreased ad spend, especially on iOS, where Hypercasuals saw a 34% YoY drop, and Mid-Core genres like RPGs plunged 35%.

The lagging performance of Hypercasual games compared with their Casual counterparts suggests a shift toward more engaging and complex casual gaming experiences. This evolving landscape is driven by the rise of a potential new category of hybrid casual games, which blend elements from both Casual and Mid-Core genres. These games strike a “middle ground,” appealing to broader audiences by combining the simplicity of Casual games with the depth of Mid-Core games. Experts suggest this trend points to a fragmentation in game categorization, driven by diverse gameplay and monetization strategies.

Consumer spending on in-app purchases (IAP) dropped while in-app advertising (IAA) rose. Overall, IAA increased by 4% in Q2-2024 compared with Q2-2023. Android saw a 12% uptick, while iOS suffered a 10% dip. Year-over-year, there was a 3% total increase, driven by a 7% rise on Android offset by a 4% drop on iOS.

Android’s IAA growth was led by Hypercasual, Puzzle and Simulation games. Hypercasual games saw a 5% rise in Q2-2024 (YoY 10%), while iOS dropped by 21% (YoY -13%). However, IAA decreased in some genres, with Match games declining on both Android (-19%) and iOS (-15%) in Q2-2024.

In contrast, IAP revenues broadly declined, with a 15% overall decrease on Android and a sharper 35% drop on iOS. This decline is led by RPG (Android -19%, iOS -29%), Simulation (Android -57%, iOS -19%) and Casino on iOS (-38%). Despite this, some genres saw boosts in IAP revenue: Match (Android +9%, iOS +25%), Puzzle games on Android (+80%), and Shooting games on iOS (+67%).

Finally, hybrid models have become 30% more prevalent on iOS in terms of the IAA/IAP/hybrid split. This trend was also evident in the Casino genre on iOS, with a 30% increase in the hybrid app mix despite declines in both IAA and IAP.

The first week tends to be make-or-break for in-game purchases —underscoring once again the importance of early engagement. Conversion will always be a challenge, however, as most mobile gamers are not spenders. Only a select few open their digital wallets, typically less than 5% of users. Genres such as RPG, where in-app purchases are more important, however, tend to boast a higher percentage of paying users.

That’s why timing is key. As mentioned, there’s a lot of movement in the first week. On iOS, the spending spree starts fast.The first purchase drops around the time Day 2 rolls around, accounting for a quarter of all buyers. By Day 3, another 17% join the party. Each day bringing new spenders into the fold—but at a decreasing rate. As the days tick by, purchasing continues to slow. The third purchase usually happens around Day 5, a last hurrah before the initial rush fades.

And for some genres, the drop-off is even more dramatic. Take Casino games, for instance. By Day 2, nearly a third (29%) of their buyers have already placed their bets, making their first purchase.

Attracting whales — particularly on iOS — has become even more challenging recently. In mobile gaming, “whales” – the 2-5% of big spenders who generate a significant portion of revenue – are crucial, often contributing more than 50% of a game’s income.

But in the last quarter, revenue from whales declined when compared with 2023. This trend is particularly noticeable on iOS, where the share of revenue from whales in North America dropped from 34% in Q1 2023 to 27% in Q1 2024, a 12% decrease. On the flip side, Android has seen stability or even a slight increase, with whale revenue in North America rising from 34% to 35% over the same period.

Regionally, whale behavior varies significantly—although there is typically no difference between developed and developing markets. In Africa, Southeast Asia, and India, the biggest spenders – who make up 2% to 10% of total users – are responsible for a larger share of revenue compared with other regions—up to 38% in Southeast Asia. These markets are particularly lucrative, making them attractive for whale investment. In contrast, Eastern Europe sees only 29% of revenue coming from whales. North America sits in the middle, with whales contributing to 31% of the region’s revenue.

The user growth picture in the first half of 2024 was mixed. Android saw modest growth with a 3% YoY increase in H1 in both total installs and NOI, while iOS faced declines, down 9% overall and 2% in NOI.

iOS’s drop was especially noticeable in certain genres. Hypercasual games took a significant hit, with both overall installs and NOI down by 15%. Interestingly, this decline aligns with Android, where Hypercasual NOI is also down by 5% and overall installs by 9%. Mid-Core genres on iOS also struggled. RPGs were down 36% in installs and 25% in NOI, while Strategy games showed a 15% drop in installs and a steep 48% decrease in NOI.

On the flip side, Android is seeing some bright spots. Casino games surged with overall installs up by 64% and NOI up by 2%. Simulation games also performed well, with NOI up by 22% and installs up by 9%. Shooting games are on the rise too, with a 33% increase in NOI and 27% more installs.

What’s interesting is that the trends we’ve seen in Q1 often picked up speed in Q2. The patterns we noticed early in the year have become even more pronounced as time goes on, warranting close observation to see how they evolve or break—in either direction.

Looking more closely into the gaming subgenres, as defined by Data.ai’s Game IQ, reveal an added layer of nuance in NOI trends across iOS and Android platforms.

Among the various Hypercasual subgenres on iOS, Racing, Sports and Merge games saw the most impressive year-over-year growth in NOI, capturing user interest and driving significant installs. But Io and Simulation games struggled, indicating a shift in player preferences. Casino Games and Bingo in the Casino category enjoyed robust NOI growth, but RPG and Strategy games presented a mixed picture, with no single subgenre emerging as a clear leader. The Tabletop category offers a clearer narrative though, as Coloring games saw a notable surge in NOI, attracting users with their engaging and creative gameplay.

On the Android front, Puzzle games were the clear winners in the Hypercasual category, driving substantial NOI growth. But Merge, Io and Music games struggled to spark user interest. Within the Puzzle genre, Sudoku stood out as a star performer, enjoying a significant increase in installs. In the RPG category, Action RPGs crushed the competition, leading in NOI, while Strategy games faced a decline. Simulation games also did well, with Driving games taking the pole position in terms of NOI growth.

Broadly speaking, it’s been a good year for global markets. The overall picture showed stable NOI with continued growth in the largest markets across both platforms. While iOS encountered challenges in a few regions, Android demonstrated robust performance across all major economies.

The US, by far the world’s largest iOS market, showed modest YoY growth at 1%. European markets performed even better, with the UK and Germany posting increases of 9% and 14% respectively. However, some Asian markets experienced headwinds with South Korea suffering a substantial 39% decrease in installs, while Australia and Japan faced declines of 15% and 11%, respectively. On a brighter note, Mexico, a closely monitored market, achieved a 21% increase.

Android, in contrast, displayed positive trends across all major markets. The Philippines led with a 26% increase, followed by Japan at 16% and Indonesia at 13%. India remained steady with a 2% rise. The UK and USA also showed growth, increasing by 18% and 5% respectively. Notably, none of the main Android markets exhibited noteworthy declines.

Mobile gaming attracted a total of $29 billion in app install ad spend in 2023. The US continued to dominate gaming ad spend—by a large margin. The world’s largest mobile market pulled in $6.6 billion on iOS and $5.5 billion on Android in 2023, outpacing the next 10 markets combined. Japan followed in Asia with $1.8 billion on iOS and $1.2 billion on Android, with South Korea coming in third.

The largest European markets—the UK, Germany and France—brought up the rear. When we look at genres, the highest volume of installs were driven by Match games (which require players to match similar elements) and Mid-Core categories such as Strategy and RPGs.

One key trend in 2023 was the shift in media costs between global Android and iOS platforms. Media costs on iOS fell, while Android’s costs inflated. This trend was especially notable in categories like Hypercasual, Simulation, Match and Puzzle.

This drop in iOS media costs can be traced back to late 2022, a period marked by a price spike due to inefficient ad targeting brought on by Apple’s App Tracking Transparency (ATT) system, which led to a significant drop in user-level data. With fewer potential users (or “targets”) available, supply and demand pushed media prices higher. But the recent decrease shows that large media networks have adapted to these conditions and become more efficient in their targeting.

So, what types of creatives perform the best? It turns out that user-generated content (UGC) is the secret sauce for retention across various ad networks, demand-side platforms (DSP) and social channels. This is especially true for Mid-Core, Casual and Hyper-Casual game categories, with the exception of Casino games. The magic of UGC lies in the trust it builds. Users are more likely to install and engage with an app when they see content created by real people they can relate to.

But while UGC is the star, it still needs the right supporting cast to shine. In Hyper-Casual games, both real and animated scenes significantly boost retention on social channels and ad networks, though gameplay footage doesn’t have the same impact. The winning combo here is UGC paired with either real or animated scenes.

For Mid-Core games, the best results come from a mix of UGC and gameplay footage, along with real and animated scenes. This blend is effective across social channels and ad networks.

Casual games, however, require a bit more finesse. On ad networks, combining UGC, gameplay and real scenes leads to the highest retention. For DSPs, animated scenes steal the show. And on social channels, the best performance comes from a trio of UGC, gameplay, and animated scenes.

Mobile app commerce saw a significant uptick in 2023, particularly among iOS users. Notable gains were registered across a variety of metrics including app downloads, remarketing conversions, and transaction volumes — a trend extending into 2024. Ad spending also went up, especially on iOS, while Android saw increases in most countries but a drop in the top two markets of India and Brazil.

The rise in iOS activity was driven by three main factors:

1. The general economic recovery which led to increased consumer and advertising spend.
2. A renewed marketing focus on iPhone users, who typically tend to have high purchasing power, amid increased confidence in measurement during the data privacy era.
3. Substantial investments from Asian mobile apps in ad campaigns — efforts which successfully produced a large volume of installs in affluent markets that later translated into a significant audience of loyal consumers.

Another key change that transpired in the past year is the shift back from owned media towards paid re-engagement campaigns—quite the pivot from the previous year.

With intense competition for eCommerce app downloads and usage, marketers are reevaluating their strategies and increasing budgets to stand out. As we approach the 2024 holiday season, it’s evident that the industry is evolving, and keeping abreast of these shifts is crucial for brands seeking a competitive advantage.

The 2024 edition of The State of eCommerce App Marketing offers insights to help eCommerce brands successfully navigate these changes. By understanding the current trends, businesses can confidently implement acquisition and remarketing efforts that focus on ambitious loyalty programs, aiming to boost revenue and customer lifetime value.

After a tougher 2022, mobile eCommerce has seen healthy growth since March 2023. Year-over-year data reveals that not only did in-app purchases (IAP) see a substantial 15% increase in Q4 of 2023 compared with the previous year, but the growth momentum also carried into Q1 of 2024: +21%. This rising trend lends solid evidence for the ongoing expansion in mobile commerce.

As we look across the timeline, the classic seasonality in shopping behaviors is evident, with Q4 consistently demonstrating a seasonal boost in IAPs. This pattern held steady across both iOS and Android, confirming a predictable peak in consumer spending towards the end of each year.

Interestingly, the spring of 2023 brought an uncharacteristic spike in IAPs in specific markets like the UK and France. It appears that this increase can be attributed to marketing efforts by some large Asian apps and a corresponding rise in user engagement. This dynamic led to a notable, though temporary, lift in consumer spending, reflecting the powerful impact of all-in paid marketing. 

As we’ve seen above, we note that the share of paying users has increased by 12% on both platforms during the peak season, especially in Brazil, the United States, and India (on Android).

Heightened competition in the eCommerce space is more than evident when we look at the share of buyers among installers. At most, only 1 in 10 convert and that’s just for iOS in peak season, while off-season numbers can drop below 5%.

But once users cross that line, nearly 60% become loyal consumers (having made at least two purchases). This attests to the powerful loyalty channel that is the mobile app, as these users demonstrate a higher degree of interest and engagement.

From that perspective, the time to purchase has to be measured thoroughly. According to our data, the average user makes that coveted first purchase 3.6 days post install – with no significant differences between iOS and Android numbers.

Remarketing activations should therefore focus on the first week post install to convert as many installers as possible. Marketers are following this strategy, doubling down during the first day with 40% of conversions (when a user clicks on a remarketing ad and opens the app), and over 75% during the first week. On average, within a 30 day period, the first paid remarketing conversion is registered 2.5 days post install.

We then note that a second purchase occurs 10 days post install. To secure this order, marketers should explore whether to drive more remarketing investment around this time frame.

Several large Asian apps launched ambitious and successful marketing campaigns across major Western markets including the United States, UK, and France, challenging the traditional surge in app installs typically seen during the holiday season.

That momentum didn’t slow down as the first quarter of 2024 rolled around: the apps that dominated in Western markets also began making waves in Japan, Brazil, and Saudi Arabia. These markets have one thing in common: their iOS users generally have more to spend.

The Asian players also managed to pull in more repeat shoppers each month than established names, although they still have a ways to go to catch up with giants like Amazon and Walmart. Will the connections made by aligning low-cost product strategies with budget-savvy shoppers turn into love that endures? Despite ongoing trust issues, the allure of great deals continues to draw in crowds, setting the stage for a showdown between price appeal and brand loyalty.

Looking ahead to the rest of 2024, the temperature is only going to rise. These Asian apps have settled in and are gearing up to give retailers a run for their money, especially as we near the crucial Q4 shopping spree. Many players could be affected, even indirect competitors whose offering is vastly different, as rising competition will impact not only consumers’ attention but also media costs, which are expected to rise.

The global app market saw a generous infusion of cash in 2023. We saw an impressive total app install spend of $6.6 billion, with iOS platforms leading the charge at $2.9 billion despite only a 15-20% device market share.

However, budget allocations between Android and iOS diverge significantly. Android saw an 18% cut in ad spend from 2022 to 2023, while iOS saw a robust 43% increase. Higher spend also led to higher CPI, which meant overall higher install costs for iOS marketers.

Looking at the geography of app spending, the US and key Western European nations such as the UK, France, and Germany dominated the global stage. This is primarily due to the higher Cost Per Install (CPI) rates found in these regions, which starkly contrast with the far more modest CPIs in emerging markets such as India.

This surge in iOS ad spend is an expression of strong confidence among marketers in the platform. With iOS users generally having more to spend and the platform offering a premium environment, investing in iOS advertising is increasingly seen as a strategic move.

This further highlights the platform’s ability to attract quality engagement, making it a prime choice for app developers and advertisers aiming to maximize their reach and impact.

As the economy improved throughout 2023, marketers showed more willingness to pay. In contrast to 2022, when tight budgets drove brands toward cost-effective owned media channels for their remarketing efforts, improved economic conditions last year saw a significant shift towards paid remarketing.

This change not only reflected increased budgets but also signaled an economic recovery, empowering advertisers to more actively engage their audiences, which in turn boosted paid marketing conversions.

The iOS remarketing landscape also experienced profound transformations due to the evolving dynamics of user-level data. The rollout of iOS 14.5 and its stringent privacy measures led to a steep 65% drop in remarketing conversions that lasted until March 2023. But the latter part of the year witnessed an impressive turnaround, with conversions climbing by 103%. 

Despite the loss of IDFAs, remarketing on iOS can still work on large platforms and depend on the match rate — how many users the platform can recognize. When combining IDFA from consenting users (roughly 25%), email records, and even phone numbers, the match rate can be high. Therefore collecting these 1st party data signals with consent is key to successful remarketing on iOS.

If there’s one thing we know from today’s environment, it’s that privacy is king and data is scarce. That’s why eCommerce marketers need to get creative. Even with tighter privacy laws making lower-funnel data harder to come by, there’s now a goldmine of insights at the beginning of the customer journey, thanks to AI. Marketers are now tapping into this early-stage top of funnel data, focusing on the finer details of creative elements such as text, colors and backgrounds.

The ability to measure the impact of creative nuances has become a game-changer. With AI, we can dive deep, analyzing the specifics of an ad to see exactly what elements work best—let’s call it “the revenge of granularity.” This approach lets marketers get incredibly detailed, examining everything from scene types to individual design elements, to really understand what drives performance.

Data from non-gaming apps reveals, for instance, that ads with user-generated content see a 22% higher install-per-mille (IPM) rate on social platforms. Even more, ads with real-life footage perform 15% better than those with animations. This is why it’s crucial to embrace a granular approach to measurement. Detailed insights from creative analysis gives marketers a strong foundation to enhance their strategies.

With advertisers ready to ramp up spending on Retail Media Networks (RMNs), retail media is on the brink of a major boom. Looking ahead to 2024-2028, eMarketer predicts a doubling in retail media ad spend, although the growth rate is expected to even out over time. Advertisers are confident about this channel with 73% planning to bump up their RMN budgets within the next year. Moreover, a notable chunk—$1 of every $6 spent on digital ads—is predicted to go to retail media.

What’s the secret sauce behind the surge of retail media? A smart blend of managing, using and monetizing first-party data in ways that are both trusted and in line with privacy regulations. Brands are getting increasingly savvy with innovative data collaboration systems that allow them to share their own highly valuable data without risk for the purpose of segmented audience creation, optimization, and measurement. 

For publishers, retail media is evolving into a significant source of revenue by monetizing first-party data directly. Advertisers see it as an ace up their sleeve, effectively using first-party data from other brands to fuel growth across various platforms.All these factors are aligning to skyrocket the influence and significance of retail media.

Welcome to the AI age of the ad creative. Recent years have seen the role of creatives in advertising evolve significantly, blending their traditional value from the “Mad Men” era with Generative AI. This fusion has transformed ideation, concept development, and design, making AI vital to every touchpoint in the process.

Yet, the realm of hyper-granular creative measurement and optimization represents another major development in the advances of AI. It can, for example, identify specific scenes and elements within thousands of creatives, automatically dissecting everything from user-generated content (UGC) to gameplay snippets, and animation. This granular level of analysis allows marketers to correlate specific creative components with performance metrics, unlocking insights into what combinations emerge as creative winners.

Another level of granularity is offered on the creative engagement level. Platforms like TikTok, YouTube, and Meta are also adapting by offering enriched engagement metrics. AppsFlyer’s own standard of Enriched Engagement Types (EET) also offers deeper insights into campaign engagement beyond just views and clicks, marking a pivotal shift in how campaigns are measured and attributed.

With privacy concerns narrowing down-funnel data availability, there’s now a greater focus on top-of-the-funnel creative measurement. Ad content now plays a vital role, acting as essential first-party data for the ad platforms themselves in a privacy-focused ad landscape. 

Let’s start with a striking number: Just 2% of creative variations consume 68% of ad budgets. What’s more, nearly 90% of spend goes to just 10% of creative variations, as media platforms focus heavily on the best-performing variants while ignoring underperformers. This underscores a sobering reality: scoring just one successful ad may require a whopping 50 ad variants.

This scenario frames a relentless numbers game, compelling marketers to mass-produce variations. The factors underpinning the success of top-performing ads are often unknown, and results vary across platforms. Given banner blindness and inevitable ad fatigue, an ever-expanding arsenal of creative concepts—at least 10 per campaign—is often needed. It’s a never-ending cycle. AI has become an invaluable ally in generating this content at scale, signaling a significant shift in creative strategies.

This is why the role of creative strategists has also become indispensable to manage the magnitude of such a massive production. Just a few years ago, it was virtually nonexistent; its inception over the last couple of years marks a significant paradigm shift. 

A cornerstone metric, installs per mille (IPM) gauges ad creative performance, indicating ad effectiveness and influencing the cost per install (CPI). High IPM signifies strong performance, reflecting the strength of the creative and resulting in lower CPIs, whereas a lower IPM might suit high-revenue models that can tolerate higher CPIs.

Hypercasual games lead in IPM on ad networks with 47.6, surpassing the more specialized RPGs at 3.1 IPM. However, high IPMs may not tell the entire picture; hypercasuals often face monetization challenges post-install, necessitating the lower CPI. In contrast, niche genres like casino and strategy RPGs target a smaller, more profitable audience, accepting lower IPMs for higher revenue per install, thus affording higher CPIs.

IPM’s effectiveness varies across media, with ad networks typically offering better performance for games due to contextual relevance. Outside gaming, Generative AI apps attract attention with a 5.1 IPM, while photo and video apps also perform well due to their creative ad potential. Entertainment apps, however, tend to lag in IPM figures, facing a more challenging environment. 

The distribution of IPM by creative closely aligns with distribution of cost: Only 2% of gaming and non-gaming ads hit an IPM above 80. Conversely, half of all ads barely make a mark.

In other words, only a select few creatives can captivate audiences enough to command significant attention and spend, making IPM an indicator of an ad’s resonance. From a pure performance perspective, a higher IPM is often beneficial for advertisers, media, and users, optimizing both user engagement and ad spend.

We see a big contrast in IPM distribution between gaming and non-gaming. The winner takes all in non-gaming: There’s a sharp divide between the high performers and the rest. The distribution of IPM scores for games is smoother, as gaming marketers often produce and test a vast array of ad variations. This approach, emphasizing continuous iteration and testing, helps even out IPM performance across the board, which means more creative winners, underscoring the gaming industry’s expertise in refining ad effectiveness.

Cost per install (CPI) stands out as a highly sensitive metric for marketers. A variety of factors, including geographic location, ad type, category, media platform and many others, can make a big difference. This level of complexity means marketers need to take a deep dive into super-granular data (see table below). In general, a lower CPI often correlates with a higher IPM.

But a low CPI isn’t always purely positive. For high monetization games that feature a higher average revenue per user (ARPU), adopting a higher CPI is not only acceptable, but strategic. Midcore games, for instance, will prioritize attracting a niche, highly engaged audience, emphasizing quality of user acquisition over volume. In contrast, hypercasual games, known for their wide appeal and ease of access, aim to attract a broad audience. These games typically see a lower CPI as they aim for volume, banking on the sheer number of installs to drive revenue.

For example, we can see in the chart below that midcore game marketers pay significant sums of money to acquire their users with videos ads on ad networks. 

Ad creatives don’t perform similarly across platforms. Our AI-driven analysis of over 220,000 video ads across media environments highlights the varying effectiveness of “scenes” within a creative such as user-generated content (UGC), gameplay demos which apply to both gaming and non-gaming, animations, and real life scenes (see the examples under the charts). 

When measuring IPM, video ads for games without UGC perform 20% better on average compared to ads with UGC (+25% on ad networks, and +15% in DSPs). Use of animation is also highly effective in games at 26% higher IPM compared to ads without animation (on average across media types). 

UGC finds its niche on social networks, an environment where this content is native, with UGC ads outperforming non-UGC ads by 12% in gaming, and even more so in non-gaming at 22% higher IPM. Use of real-life footage also yields better results in non-gaming, with a 15% higher IPM than animated ads.

No one scene type will excel uniformly across all platforms. Marketers must therefore align their content to each channel’s unique audience and context. 

As AI reveals optimal strategies for different contexts, remember that each product is distinct, and success may stem from diverse approaches. Marketers often experiment with a range of scene types within media platforms at a broad scale to enhance reach and increase the likelihood of success among varied audiences.

Because creatives often use a mixture of scene types, it’s interesting to see which combinations drive the best performance. In the context of ad networks, the data shows that game creatives should probably put less emphasis on UGC and more on animated characters within the same ad. The highest IPM is when gameplay is also added to the mix: a clear signal users want to see what the game/app is like before engaging into a download.

This makes sense as UGC doesn’t work as well in a non-social context, but when you are playing a game, you’re most likely to engage with an ad that shows gameplay and uses animated characters, which reflect virtual gaming environments. All other combos trail far behind.

On social platforms, gaming apps should experiment by combining animated and real life videos and put less emphasis on gameplay; adding UGC will deliver a slightly higher edge at the top of IPM performance. Interestingly, gaming and non-gaming apps have the same top two combos. 

In DSP settings, the data suggests that game ads should lean towards animated characters over UGC. Showcasing gameplay didn’t match animation but came in a close second in terms of IPM.  

Once again, a reminder that while AI unveils what works best in each context, keep in mind that each product is unique, and success can be found through various paths. Therefore, experimentation is vital to pinpoint the best combinations. 

Different channels and contexts affect retention for variants. While high IPM can attract users, it might also increase churn due to varying engagement levels over time. On ad networks, a mix of UGC, and animated plus real life footage emerges as the top performer for Day 30 retention in games, reaching an impressive 6.01%.

When isolating only UGC on ad networks for games, retention is higher when not using this type of creative. For DSPs, blending UGC and real-life footage without gameplay optimizes post-install user retention for games.

In fact, UGC as part of the mix improves retention rates across the board.  Social media platforms drive increased retention in games with gameplay and the use of animated plus real-life footage, while ads for non-games benefit most by combining UGC and gameplay. 

Balancing IPM with user retention is crucial for maximizing ROAS. Although high IPM can reduce CPI, it may also lead to higher user churn. The challenge lies in finding the sweet spot that attracts users efficiently but fosters lasting engagement. That’s why it’s vital to have full funnel analytics for the whole picture, and not stick to important but incomplete intermediary metrics like CTR, IPM or CPI.

Video length is another key metric to measure user engagement. We can see that gaming creatives above 15 seconds (long) perform well in social platforms with a 30% higher day 30 retention rate, and 9% higher in ad networks.

In non-gaming, social performs similarly in direction with a 12% higher retention from long videos, but in ad networks and DSPs the reverse is true: shorter videos under 15 seconds perform far better at no less than 50% and 80%, respectively.