This week we released our H1 2020 mobile advertising benchmark report! In this report we analyze our customer spending habits over the last five quarters. We reveal how the global pandemic impacted H1 and compare the share of wallet across iOS and Android to assess the potential overall impact that Apple’s IDFA changes might have.
To give you insight into the dataset we’re exploring, here’s some of the key stats and methodology behind the study:
- Over 100 different consumer mobile apps.
- The median spend of our customers is $354k per month.
- The total sample of annual spend we’re looking at is over $500m.
- We’ve ensured that no single advertiser represents more than 20% of the dataset to avoid data being skewed by one single advertiser’s dynamics.
- When we’re looking at different spend tiers over different quarters, if an advertiser’s spend increases or decreases then they will move between the buckets rather than staying in the bucket they started in.
- We don’t have significant spend in the APAC region, so trends are more reflective of western trends than global trends.
- It’s a longitudinal study starting at the beginning of Q2 2019 and finishing at the end of Q2 2020.
Spend falls QoQ, but climbs through Q2
At a high-level we saw that overall spend reduced 10.7% in Q2 20 compared to Q1 20, falling 9.7% and 11.1% for gaming and non-gaming respectively. However, from the first week of Q2 to the last week of Q2 overall spend was up 37% driven by 73% growth for gaming, meanwhile, non-gaming grew just 6%. Whilst non-gaming appeared to be on a downward trend towards the end of Q2, gaming spend seemed to be recovering significantly.
Facebook most impacted by IDFA loss
With the increased loss of IDFA in iOS on the horizon, we examined how spend looks for different media channels across iOS and Android. The hypothesis is largely that the loss of IDFA on iOS will reduce the ad revenue media channels can generate from iOS, as it is harder to identify high value audiences. This would mean that those with a large iOS share of spend will likely be negatively impacted.
What we see broadly in our customer base is that 41% of spend goes to iOS whilst 59% goes to Android. When looking at this by media channel, the mid- to lower-tier of adopted channels have a much higher percentage of their spend on iOS vs Android and likely have the most to lose individually.
However, in actual terms Facebook likely has the most to lose with a greater than 50% share of wallet of all iOS spend. So their overall share of wallet has a high chance of being impacted by the IDFA changes, which explains why they are working so hard to adapt to the changes. Interestingly, Snapchat also has a pretty significant amount of ad revenue tied-up on iOS devices.
However, in actual terms Facebook likely has the most to lose with a greater than 50% share of wallet of all iOS spend. So their overall share of wallet has a high chance of being impacted by the IDFA changes, which explains why they are working so hard to adapt to the changes. Interestingly, Snapchat also has a pretty significant amount of ad revenue tied-up on iOS devices.
Covid consolidation boosts duopoly and slows TikTok’s growth
Facebook and Google remain the top-tier channels in terms of adoption. Facebook averaged 92% adoption and Google 87% throughout the period examined. However, the meta trend was adoption falling quarter-over-quarter. No channel that we examined increased adoption between Q1 20 and Q2 20 as the number of channels used fell with spend.
In fact the only channel that didn’t fall in adoption was TikTok who maintained the same level of adoption, despite doubling adoption quarter-over-quarter in the previous four quarters. It may be that quarter-over-quarter stagnation is the new growth in the current climate. Particularly as TikTok overtook Twitter in terms of advertiser adoption.
However, overall TikTok saw a share of wallet reduction quarter-over-quarter as did every channel aside from Facebook, Google, Snapchat and Twitter. With more consolidation due to a reduction in Q2 spend, Facebook and Google have grown their overall combined share of wallet from two thirds in Q1 20 to three quarters of total spend in Q2 20. Snapchat maintained their share of wallet whilst also diversifying from the mid-tier of advertisers into the top and bottom-tier of spenders too.
Whilst consolidation was the overall trend there was signs of some channel saturation driving large advertisers to look for incremental gains with additional channels in Q2 20. They added an extra channel going from 10.5 channels in Q1 20 to 11.5 channels in Q2 20 an increase of 9.3%.
This suggests that saturation began to set in again on some channels in Q2 20, meaning that the largest spenders needed to invest in an additional channel to get their performance metrics hit and their budget away. This hints at signs of recovery during this period, as we saw both gaming and non-gaming budgets increase towards the end of Q2 vs the beginning of Q2.
Conclusion
What we see is that overall the Covid-19 pandemic has reduced budgets and increased consolidation throughout H1 2020. This has benefited the duopoly of Facebook and Google in terms of share of wallet. However, there are signs of recovery with spend increasing during Q2 for gaming brands and large advertisers having to have use an additional channel in Q2 vs Q1 20.
Whilst there have been big gains for Facebook in H1 20, the impending reduction in access to IDFA’s on iOS has the potential to set them back beyond other channels given their significant share of wallet on iOS. Many lower adopted channels could also be negatively impacted as more than half their ad revenue relies on iOS. The question now is how do they adapt to protect that spend? Facebook have moved out the blocks fast and significantly to do just that.
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