Posted by Peter Farago on Tue, May 08, 2012
With the frenzy created by the speed and price for which Facebook bought Instagram, app entrepreneurs and investors are excitedly looking for where consumers will next flock within mobile apps. In a recent report, Flurry quantified the dramatic increase in usage among social networking apps on smartphones. For the first time since the App Store launched in summer 2008, the Games category found itself rivaled by another category in terms of time spent in apps. The rise in popularity of apps like Instagram, Path and Skout signals a new era of content consumption on mobile phones where consumers are finding new, compelling ways to spend their time beyond just games.
This report reveals emerging trends in mobile app category usage. By studying how consumer time is shifting across app categories, we provide an early, clear demand signal. In other words, we see where consumers are spending an increasing amount of time in apps beyond Games and Social Networking to show what’s next in mobile app popularity. For this study, Flurry leverages a sample of 8 million active mobile app users across all app categories. Flurry Analytics tracks more than 180,000 applications for more than 67,000 companies across iOS, Android, HTML5, Windows Phone and BlackBerry. The chart below shows the fastest growing app categories based on where consumers are spending their time.
The above chart shows the top five app categories based on growth in minutes spent from October 2011 to March 2012. Starting on the left, the Photo & Video category has grown the most, by 89%, in minutes spent per active user. Music, Productivity, Social Networking and Entertainment round out the top five with growth of 72%, 66%, 54% and 40%, respectively. These categories represent the fastest growing categories in mobile apps over the last 6 months. When considering what’s hot beyond the gaming category on mobile, this gives us a strong indication. Beyond the topical Instagram success story, chances are that future hits are among these categories. Some apps with momentum today include Path, Skout, Viddy, SocialCam, Evernote, Spotify and more. Please note that for iOS and Android, Flurry looks at equivalent categories (e.g., Photos & Videos in the iTunes App Store vs. Media & Video on Google Play). For all charts we use iOS category names.
Trendspotting: The Instagram of Video
We next drill down into the Photo & Video app category to better understand growth in this category. Expanding the time range in this chart, we show the number of minutes spent by active user per month from July 2011 through March 2012.
The “overnight” sensation of video sharing apps like Viddy and SocialCam has actually been more like a 9-month tsunami gaining power. Looking at growth from July 2011 to March 2012, time spent in Photo & Video has grown by 166%. Video sharing apps offer a compelling benefit to consumers, allowing them to conveniently capture, edit and share videos on-the-fly using the powerful mobile computing devices in their pockets. Trained by the sharing behavior of Facebook, and enabled by a confluence of underlying technology like built-in HD video cameras, hardy on-device processors, increased network bandwidth, cloud storage and user-friendly applications like Viddy and SocialCam, social video apps are taking off. It’s a meaningful example of the unique innovation possibilities afforded by mobile apps.
Cool Kids with Pumped Up Kicks tell YouTube: “You Better Run Faster than My Bullet”
Back in 2006, Google acquired the buzzy YouTube for $1.65 billion after its own Google Video service could not keep pace. Now it appears new “cool kids” in the form of Viddy and SocialCam threaten to disintermediate the web juggernaut’s acquisition. In a recent Forbes article, Eric Jackson laid out a hypothesis that the new breed of social companies, typified by Instagram, view mobile as their primary, often exclusive platform. “They don’t even think of launching via a web site. They assume, over time, people will use their mobile applications almost entirely instead of websites.” He concludes that “we will never have Web 3.0, because the Web’s dead.” Just consider that it’s now possible to capture, edit, share and view engaging, meaningful videos among friends, all from your phone, without ever touching a computer. In this perspective, a threat to YouTube begins to feels real.
To generate a comparison between mobile app and Internet video consumption, Flurry combined its data set with publicly available comScore Video Metrix data. In the chart above, we show the number of minutes consumers spend per month using smartphone video apps versus Google Sites on the Internet (primarily YouTube). Over the course of 2011, minutes spent viewing video content online grew from 276 minutes to 472 minutes, or 71%. Over the same time period, video apps grew from 63 minutes to 152 minutes, or 141%. While mobile app video consumption grew more than online consumption, the gap in usage at the end of 2011 was still meaningful. During 2012, however, is where things get interesting. As online video consumption dropped by 10%, mobile app video consumption increased by another 52%. By then end of March, consumers were spending 54% of amount of time in mobile video apps compared to Google Sites online, 231 minutes in apps versus 425 minutes online.
While it cannot be concluded that mobile video apps are cannibalizing YouTube, the shift in time spent between these two platforms appears to be a signal of disruption. Think of it this way: With every mobile video you share of friends, family, vacations, parties and weddings, you are likely loading another bullet in the chamber for Web 3.0. For YouTube, it appears they need to run, outrun your gun.
Posted by Peter Farago on Fri, Apr 27, 2012
The app revolution has changed the way software is distributed and used among consumers. With a perfect storm of digital distribution, free content and powerful touch screen devices, the success of mobile apps has disrupted industries from telecommunications and games to music and news. To date, no category of apps has been more successful than Games, directly disrupting the traditional gaming industry. Flurry recently wrote about the impact iOS and Android game popularity has had on Sony and Nintendo. And with low barriers to entry for armies of entrepreneurial developers, indie game developers continue to thrive on iOS and Android.
Something Disruptive This Way Comes
Consider for a moment Facebook’s speedy billion-dollar acquisition of Instagram, a service that succeeds by delivering Facebook’s core value proposition of photo sharing, but only on mobile. When one understands that consumers now spend more time in mobile apps than they do online, Instagram’s value begins to make sense. With over 500 million iOS and Android devices in the market, mobile apps are the new battleground for consumer engagement. If Facebook feels compelled to snap up Instagram in this way, perhaps this is an indication of how relevant social networking has become in mobile apps, or simply how relevant mobile has become overall. In this report, Flurry focuses on the rise of the Social Networking category in mobile apps. Let’s start by looking at where consumers spend their time by application category.
In the chart above, Flurry compares the time consumers spend across different application categories when using smartphones. Starting on the left, we look at the average number of minutes a consumer spent each day, over the course of Q1 2011, across different app categories. For this period, we calculated that consumers spent 25 minutes (37%) of their app-using time in Games. They additionally spent 15 minutes (22%) of their time in Social Networking apps. News and Entertainment were the next most popular categories, garnering an average of 11 (16%) and 10 (15%) minutes per day, respectively. All other categories combined made up the final 7 minutes (10%) of time. During Q1 2011, Flurry tracked approximately 30 billion application sessions worldwide.
On the right, we conduct the same analysis for Q1 2012. Compared to the same quarter in 2011, time spent per consumer each day increased from 68 to 77 minutes. Additionally, the distribution of time spent per category shifted. Games usage dropped by 4% down to 24 minutes per day, while Social Networking increased by 60% up to 24 minutes per day. Games and Social Networking categories each controlled 31% of consumers’ time. News, Entertainment and Other categories commanded 12 (15%), 10 (13%) and 7 (9%) minutes, respectively. Flurry tracked approximately 110 billion application sessions during Q1 2012.
The most significant trend is that, for the first time in the history of applications (Flurry began tracking application usage in 2008), another app category is rivaling Games. We take the rise in Social Networking apps as a signal of maturation for the platform. As game demand may be hitting its saturation point, consumers are also discovering other apps, namely Social Networking. The year-over-year growth in Social Networking has been staggering. Not only has time spent increased by 60%, but also within a growing amount of total time spent in smartphone apps among consumers, from 68 to 77 minutes, or a growth rate of 13%.
Money Pools Where Audiences Aggregate
Through its mobile app traffic acquisition network, Flurry AppCircle, the company can also see how apps with growing audiences earn revenue through advertising. When app developers amass larger audiences, among the chief ways to monetize their businesses is by showing ads to their consumers. In the chart below, we show revenue earned by publishers in the Flurry AppCircle ad network for each of the last three months. Flurry AppCircle reaches over 300 million unique devices per month, making it one of the industry’s largest ad networks by reach. The columns in the chart grow from month-to-month at the same proportion as AppCircle publisher revenue growth. From just February to April of this year, Flurry AppCircle publisher revenue has grown by 23%. Please note that we forecast the remaining few days of April for the chart below.
From inspection, ad revenue in apps is driven primarily by Games and Social Networking categories. In other words, audiences using these apps a combination of the largest and most receptive to ads. For February, March and April, Games apps earned 35%, 35% and 36% of total ad revenue in the AppCircle network. Over the same three months, Social Networking climbed from 24% in February to 25% in March, and then to 37% in April. This is the first time in Flurry’s history that any category has surpassed Games in ad revenue generated (Flurry launched AppCircle summer 2010).
SoLoMo Not So Loco?
Over the last couple of years, the term “SoLoMo” was coined to describe the convergence of social experiences on mobile devices that leverage some element of proximity (i.e., location) to the experience. While a Silicon Valley term in origin, it speaks to the new consumer experiences possible when dreaming up any combination of these three factors. Phones are powerful, connected and always with consumers. And they are considered personal devices that easily enable sharing of personal content and information through apps. Build a clever app that leverages these aspects in a compelling way, and you could have the next Pinterest or Instagram.
As business ventures, the ability for Social Networking apps to engage consumers in a meaningful way is driving a wave of investment and bullish valuations. Social networks like Pinterest, Path and Skout are raising major venture capital rounds. This month, Andreessen Horowitz invested $22 million into Skout, and Greylock and Redpoint helped plow $30 million into Path. Pinterest, which has a strong mobile component, has become the third most popular social network behind Facebook and Twitter, and ahead of LinkedIn, Tagged and Google+. With so much innovation, coupled with high engagement among consumers, this appears to be only the beginning.
Games Don’t “Like” Social Networking Apps
The rise of Social Networking apps also signals the end of the era of gaming dominance within mobile apps. While the free-to-play business model performs extremely well, enabled by in-app-purchases, it does so primarily for simulation games, a sub-genre of the total games category. As long as the total iOS and Android installed base grows, all categories will continue to grow naturally. However, as we reach saturation for mobile gaming on a per user basis (one consumer can play only so many free-to-play games), the Games category could start behaving more like a “zero sum game” from here on out, meaning that game companies would have to fight over a finite group of consumers in order to grow their businesses. For one app to grow, it would have to take from its competitors. Even with an influx of new consumers into the market, the expected would-be casual gamers will be increasingly wooed away from games by compelling Social Networking and other apps. Going forward, the Games category will have to look to innovate on mobile to maintain its dominance and growth.
A Note about Methodology
For the comparison of minutes spent in this blog post, it’s important to clarify that these figures exclude tablet usage, and focus on smartphones only. While Flurry calculates that consumers spend an average of 94 minutes per day using mobile apps, that figure is a reflection of total usage spread over both smartphones and tablets. When we isolate just smartphone usage, as we’ve done in this analysis, the number of minutes spent on apps is lower.
Posted by Peter Farago on Fri, Mar 30, 2012
The economic boom created by Apple and Google through their iOS and Android platforms has precipitated a renaissance among entrepreneurial developers. With some of the lowest barriers to entry in the history of software development and distribution, apps are getting built and downloaded at breakneck speeds. Earlier this month, Apple crossed a record 25 billion downloads from more than 550,000 available apps. Google announced in December 2011 that it had crossed 10 billion downloads from 400,000 available apps.
As markets mature, rational economic behavior emerges. Even the most passionate, idealistic software start-ups focus increasingly on markets where revenue generation is highest. In this report, Flurry compares the ability for app developers to generate revenue per user across the major app stores. We examine a basket of top-ranked apps that have similar presence across iOS, Amazon and Android. Their primary business models are in-app purchase, which is the revenue type we compare for this analysis. Additionally, earlier research by Flurry found that the in-app purchase revenue model generates the majority of revenue for apps. Combined, these apps average 11 million daily active users (DAUs). We measured their revenue per user over a 45-day period, from mid-January through the end of February 2012.
The chart above compares revenue generated per user across iOS, Amazon and Android app stores. We start by taking the revenue generated per user in the iTunes App Store and setting it to 100%. We then compare the relative revenue generated per active user from Amazon and Google to the amount of revenue per active user generated by the iTunes App Store. Doing so, we find that Amazon Appstore revenue per active user is 89% of iTunes App Store revenue, and Google Play revenue per active is 23% of iTunes App Store revenue. Another way to interpret the results is that, for the same number of users per platform, every $1.00 generated in the iTunes App Store, will also fetch $0.89 in the Amazon Appstore and $0.23 in Google Play. These results mirror those of a similar analysis conducted by Flurry last December, where we found for every $1.00 generated per user in the iTunes App Store, developers generated $0.24 per user in the Android Market.
Amazon's bet to fork Android in order to put consumers into their own shopping experience on Kindle Fire appears to be paying off. Showing its commerce strength, Amazon already delivers more than three times the revenue per user in its app store compared to what Google generates for developers.
For some possible insight, let's consider the DNA of each company. Apple runs the highest revenue-per-square foot generating retail store on the planet as well as the successful iTunes store. Amazon, who invented the one-click purchase, perfected online shopping with data, efficiency and customer service. Google’s strength is in scalable online search engine and advertising technology. Running a store, retail or digital, has not been Google's traditional core competency.
As developers make decisions to support different platforms, the ability to generate revenue per user will always be a key factor. Based on revenue potential, we expect to see an increasing number of developers support Amazon. We also believe that companies such as Samsung, the leading Android-supporting OEM, could also consider emulating Amazon’s move to fork Android. Google, who recently saw the departure of Eric Chu, the most public-facing proponent of Android Market improvement, will need to reduce commerce friction to maintain strong developer support. From an ecoystem perspective, the emergence of Amazon as an additional distribution channel appears to be a boon for developers.
[UPDATE: For clarity, I went back through this post and specified, where appropriate, including in the title of the chart, that the revenue comparison in this analysis was per user, not total revenue generated. Peter]
Posted by Peter Farago on Wed, Mar 21, 2012
Flurry recently quantified China’s meteoric adoption of iOS and Android applications. While China ranked 10th in application sessions at the beginning of 2011, it finished the year in 2nd place, only behind the United States. With its large population and rapidly emerging middle class, adoption of apps vaulted China into the position of world’s 2nd largest app economy. In additional analysis, Flurry also determined that China has the most market upside, based on calculating those in China who can afford smartphones versus the current installed base.
This report reveals that, for the first time ever, China now leads in new smart device adoption (iOS and Android smartphones and tablets). We also update app usage velocity trends for China and the rest of the world, since first studying this late last year. For this report, Flurry used its entire data set, tracking more than 1 billion anonymous, aggregated application sessions per day. More than 60,000 companies use Flurry Analytics across more than 160,000 applications.
China's Growth Spurt
Let’s start with a look at the fastest growing countries, as measured by app session growth.
Comparing Q1 of 2011 versus Q1 2012, the chart above shows the ten fastest growing countries in terms of app sessions. A session is the launch and use of an application. For example, a consumer who opens a news application and then spends two minutes reading various articles counts as one session. Starting on the left, China leads the world in app session growth, with an enormous growth rate of more than 1100% between Q1 2011 and Q1 2012. China’s growth rate is particularly staggering given that it was already the world’s 7th largest country in terms of app sessions by the end of Q1 2011. This speaks to the country’s sheer population as well as increasing affluence among a meaningful part of its population. Please note that we project the last ten days of Q1 2012.
Building an App? Go East, Young Man!
We next study new device activations between China and the U.S., with amazing results.
The above chart shows new iOS and Android device activations per month in the U.S. and China for the last 15 months, from January 2011 through March 2012. In January 2011, the U.S. accounted for 28% of the world’s total iOS and Android device activations, while China accounted for 8%. In February, Flurry calculated that China surpassed the United States in monthly new iOS and Android device activations for the first time in history. China is now the world’s fastest growing smart device market. For March, we project that China will account for 24% of all iOS and Android device activations, while the U.S. will account for 21%. Again, please note that we project the several days of March to round out Q1 2012.
With China now activating more devices per month than the U.S., this means that the gap is closing between the two countries in terms of installed base. Not only is China already the second largest app economy, but also could eventually overtake the U.S. as the country with the largest installed base of smart device users. We estimate that the U.S., a more mature market, currently has more than twice as many active devices than China. However, China, a faster growing, emerging market, already has twice as large an installed base as the next largest market, the UK.
Apps Without Borders
In this last chart, Flurry looks at the shift in application usage across the world.
The chart above compares mobile app sessions tracked by Flurry Analytics in Q1 2011 versus Q1 2012. The green area shows the percent of app sessions occurring in the United States, the leading mobile app market. While the absolute number of sessions in the U.S. has more than doubled between Q1 2011 and Q1 2012, its share of total sessions has declined from 56% to 46%. In other words, while the U.S. app market is growing rapidly, the rest of the world is growing even faster. Looking at the balance of the top 10 countries (ranks 2 – 10: China, UK, South Korea, France, Australia, Canada, Japan, Germany and Spain), this group has increased in collective sessions by 3.4 times between Q1 2011 and Q1 2012, resulting in an increase in total session-share from 27% to 30%. Further, the rest of the world (another 217 countries across which Flurry tracks user sessions), has grown by more than 4 times, increasing in session-share from 17% to 24%.
No matter how we slice it, the application market continues to grow at unprecedented rates, and increasingly across more borders. With smart devices adoption rates more than four times greater than those witnessed during the 1980s PC revolution and twice as great as those seen during the 1990s Internet Boom, no other consumer technology has been more accessible than smart device application software. It’s literally taking over the world.
Posted by Peter Farago on Tue, Mar 06, 2012
The popularity of iOS and Android gaming is driving among the largest disruptions in video game history, already eclipsing portable platform gaming revenue. With low barriers to entry and potent revenue generation possibilities across more than 500 million active iOS and Android devices in the market, casual gaming is reaching new heights on mobile.
In this report, Flurry compares traditional versus independent game companies in the new mobile app marketplace. To set the stage, let’s get a current read on which kinds of apps consumers use most.
Gaming Dominates Mobile App Usage
For the first two months of 2012, Flurry Analytics measured that more than half of all end user sessions were spent in games. Across January and February, Flurry observed sessions across a sample of more than 64 billion applications sessions across more than 500 million iOS and Android devices. In addition to the snapshot above, we lay out the trend in app session growth over the last three years.
Game Session Growth Exploding
The above chart compares normalized game session levels seen in 2010 versus 2011 and 2012. We did so by first taking game sessions tracked by Flurry Analytics in Q1 of 2010 and setting that as a baseline. We then compare gaming sessions observed in subsequent years against the 2010 baseline. By our calculations, 2011 and 2012 gaming session grew by 5.3 times and 20.5 times, respectively, over the level observed in 2010. Note that we use the first quarter of each year, extrapolating Q1 2012 from January and February of this year.
Indie Games Dominate Consumer Usage
For the above chart, Flurry separated game sessions between indendent game developers who started their businesses on iOS and Android versus established gaming companies who extended to iOS and Android from other platforms. Starting from the left, in 2010, we see that about 60% of all mobile game sessions occurred in games built by independent studios. In 2011, this figure declined slightly to 56% primarily due to a wave of consolidation by established game companies who acquired independent studios (e.g., EA acquiring Chillingo, Zynga acquiring Newtoy, DeNA acquiring Ngmoco and Gameview, etc.). However, in 2012, another larger wave independent companies appeared to emerge, overwhelming established companies once again, pushing indie game session share to 68%.
Historically, the video gaming industry has been ruled by brands and established IP from a few major game publishers such as Electronic Arts, Activision, Ubisoft, THQ and others. High production, marketing and distribution costs created formidable barriers to entry. High retail price points created risk for consumers to try new titles with which they were not familiar. For these reasons, brands published by larger companies dominated the landscape.
With Apple and Google entering the ecosystem, the rules of competition have changed dramatically, arguably creating the most open, egalitarian market in the history of video games. Flurry first wrote about this phenomenon in 2009 in a series entitled The Rise of the Middle Class. While we would have expected indie game developers to fare better early on in the history of iOS and Android mobile app platforms, it's remarkable that their dominance has grown over the last several years, with no signs of slowing. Even when traditional, established game companies have attempted to buy a stronger position on iOS and Android through acquisition, the reduced importance of brand power in mobile app gaming allows indie developers to continue to innovate and capture increasing consumer mind share.
In the new smartphone app economy, Apple and Google have truly empowered indies to thrive. And among indies, game developers are thriving the most.
Posted by Peter Farago on Mon, Feb 20, 2012
Smartphones and tablets continue to break new consumer technology adoption records. From earlier research, Flurry found that iOS and Android smart devices have experienced twice the uptake rate compared to that of Internet adoption, and four times the rate compared to that of PC adoption. Following this unprecedented adoption, advertising dollars are beginning to flow into mobile. A recent IAB study reported that 63% of top brand marketers have increased their mobile advertising spending over the last two years, and that 72% plan to increase advertising spending over the next two years.
Focused on mobile advertising, this report has two parts. First, Flurry compares the allocation of advertising spending across various media versus the actual time consumers spend across those same media. Next, through detailed demographic breakdowns, we share which audience segments are best responding to mobile advertising. Let’s start by understanding trends in media usage versus ad budget allocation.
The Great Mobile Ad Spending Gap
In the above chart, Flurry aggregated publicly available data from VSS and Mary Meeker (KPCB), then layered in its own analysis to reflect the growth in app usage we observe. With our adjustment, we resized the totals for U.S. advertising spending by media and consumer time spent using each media. From left to right, represented by the green columns, is the proportion of advertising spending across each major media. TV and Print command the greatest advertising spends in the U.S. with 43% and 29% of the total, respectively. Web, Radio and Mobile channels round out the balance of media spending with 16%, 11% and 1%, respectively. Adjacent to the ad spending columns is the amount of time consumers spend by media type, represented by blue columns. TV leads consumption with 40%, followed by Mobile and the Web with 23% and 22%, respectively. Radio and Print complete the picture with 9% and 6% of usage, respectively.
Comparing where usage and spending vary most, one notes severe over-spending in print advertising and even more severe under-spending in mobile. Web usage also shows sizable under-investment, relative to platform usage, though not as dramatically as seen on mobile. In short, despite the fact that mobile advertising is growing, the platform is far from getting rational levels of spending compared to other media.
We believe the main reason for this disparity is that the mobile app platform has emerged so rapidly over such a short period of time. With the iOS and Android app economy only three-and-half years old, Madison Avenue and brands have yet to adjust to an unprecedented adoption of apps by consumers. Further, the mobile advertising ecosystem remains nascent, without sophisticated platform tools. Concepts of audience measurement and segmentation on mobile are still forming, and mobile lacks the kinds of systems that agencies take for granted on the web. For instance, mobile inventory is difficult to buy in volume, ad networks have yet to be integrated into Demand-Side Platforms (DSPs) and common standards for ad serving, tracking and settlement are yet to be defined. Just consider that large publisher properties like Facebook have yet to monetize their mobile properties, with many still needing to hire media sales organizations to position themselves to do so. As the mobile platform matures, and these problems are addressed, mobile advertising is poised to take off in earnest.
Mobile Advertising Audience Sweet Spot
For the second part of our analysis, we measure which audience segments respond best to mobile advertising, leveraging data from our own ad network, AppCircle, as well as publicly available data. Taking a sample of 60,000 daily active users on iOS, from among a total group of 6 million for whom we have demographic data, we calculated the effective cost per mille (“thousand” in Latin), or eCPM, earned by publishers. Using eCPM allows us to consider both branding (e.g., CPM) and performance (e.g., CPC and CPA) advertising campaigns in our calculations to get an accurate read on which mobile audiences monetize best. In the following charts, we display eCPMs by age and gender, household income and educational level attained. The higher the eCPM earned by audience attribute, the more valuable the audience is to both advertisers, who pay top dollar to reach this audience, and publishers, who earn the most revenue for selling access to this audience. Let’s start with audience breakdown by age and gender.
The chart above shows the value of mobile application segments by age and gender. Males are shown in green and females are shown in blue. The value above each respective column is the eCPM earned by that segment. For example, 25 – 34 year old females fetch the highest eCPMs at around $13, driven by underlying high click-through and conversions rates. In fact, females are the more desirable target audience across most age breaks, tied with men in the 18 – 24 year old age range, and exceeding them at 25 and older.
Breaking out eCPMs by household income shows that income ranges from $60,000 to $100,000 are the most valuable, with $100,000 to $150,000 also performing very well. For mobile advertising, there appears a strong correlation between affluence and eCPMs. This squares with earlier analysis from Flurry that found households with iOS and Android smartphones are, on average, 50% more affluent ($44,000 average U.S. household income vs. $66,000 average U.S. smartphone household income). Smart device owners are, on average, more affluent and more educated.
Similar to household income, we find that those who attained higher levels of education are more valuable segments in terms of eCPM generation. Those with a bachelor degree fetch the highest eCPMs, close to $8.00. The second most valuable segment are those even more educated, having earned a master degree or higher.
The Cream-Skimmed Smartphone Upper Middle Class
As a total snapshot, our analysis shows that females and males, between the ages of 25 and 34 years old, who have higher levels of disposable income and a bachelors degree or higher, more strongly interact with mobile ads. Leading sociologists William Thompson and Joseph Hickey define this class as “the rich” or “upper middle class,” comprised of highly educated salaried professionals whose work is largely self-directed. Typical professions for this class include lawyers, physicians, dentists, engineers, accountants, professors, architects, economists and political scientists.
What bodes best for the outlook of mobile advertising is the quality and quantity of the audience that not only uses smartphones and tablets, but also interacts with ads on these devices. Based on our analysis, revealing that the most sought after segments already interact most with mobile ads, a key ingredient required to realize the promise of mobile advertising is the introduction of mobile ad platforms that can segment publisher audiences and enable targeting by advertisers to reach segments of their choice. Like online, which is infinitely more measurable than Print, Radio and TV, mobile advertising is poised to grow radically with the introduction of scalable, data-driven solutions that put advertisers and publishers in control of their own destiny. Actionable data and well-built platforms are the keys to unlocking Madison Avenue spending.
Posted by Peter Farago on Wed, Feb 08, 2012
The Super Bowl is an American phenomenon, now largely considered a de facto American holiday. As a premier media event, it regularly attracts record-breaking audiences. This year, Super Bowl XLVI became the most watched television program in history, drawing an audience of 111 million viewers according to The Nielsen Company. Prior to this, the record was held by last year’s Super Bowl, which itself had overtaken the number one spot held for twenty-eight years by the final episode of M*A*S*H.
The Second Screen
Also breaking new ground this year was the concept of the "second screen," which illustrates that while watching TV (the first screen), people often interact with second screens such as smartphones and tablets. To keep viewers focused on the first screen, marketers increasingly are exploring ways to complement the first screen experience with the addition of hash tags, QR codes, voting and more. Among the most ambitious is Shazam, a music and media discovery service, which worked with ad partners such as Toyota, Best Buy, Pepsi, Bud Light and Fed Ex to drive additional second screen interactions related to advertising via the Shazam mobile app. During the halftime show, for example, viewers could get the setlist, buy music and download mobile apps from the artists. Shazam reported millions of audio tags as a result.
Aside from a handful of innovators like Shazam, Flurry believes that the second screen is still largely more disruptive than complementary to first screen viewing. If a consumer is not paying attention to the television program in front of her, she is likely using an application to post social updates or play games. For example, if a Super Bowl ad isn’t holding a viewer’s interest, playing another round of Words with Friends is a likely activity. Monitoring app usage provides Flurry the ability to understand this tightly-coupled relationship between the first and second screen.
Massive Second Screen App Audience
For this report, Flurry tracked U.S. app usage, per second, over the course of Super Bowl XLVI, mapping application session starts to each television spot aired, game time segment, the halftime show, and more. We further studied behavioral differences between males versus females. With Flurry Analytics in over 160,000 applications, the company detects app usage on more than 90% of all iOS and Android devices per day. Let’s start by comparing how many people used apps during the Super Bowl to the number who watched the Super Bowl.
The left-hand column shows the number of users Flurry estimates launched applications in the United States between the hours of 3:15 and 7:15 PM PST on Sunday, February 5. During this four-hour window, in which the Super Bowl was played, Flurry estimates that nearly one-third of the U.S. population used an application. Compared to Nielsen’s estimate that 111 million people watched the Super Bowl this year, the two audiences are similar in size.
The chart above shows estimated app session starts in the U.S. per second. Studying overall trends reveals a highly correlated, inverse relationship between app usage and game, halftime and commercial events. Generally, app usage increased steadily over the first three quarters of the game, showing the challenge in holding peoples’ attention over several hours. However, because this year’s game was close throughout, including an exciting fourth quarter finish, app usage remained relatively checked. Noticeably, app usage declined significantly during the last part of the fourth quarter. The most clearly visible change in app usage occurred during Madonna’s half time show, where app usage remained consistently low for the longest, sustained period of time. From this, we conclude that Madonna strongly held viewers’ attention on the first screen and was a major draw for the Super Bowl this year.
Looking more closely at the details, we see that key moments like the coin toss and kick off were paired with decreases in app usage. Additionally, we found that advertisement popularity could be inferred from rises or declines in app usage. For example, if app usage increases during an ad, we conclude that it did not hold the consumer’s attention. While there is the possibility that certain advertisements encouraged the use of an app, this was not the norm. Studying male versus female usage differences, we found that 62% of overall app usage during the game was driven by females. Flurry also found that women, on average, paid more attention to advertisements, and drove spikes in app usage upon return to the game after commercial breaks.
In this chart, we isolate app usage during broadcast game time only. All breaks for advertising have been excluded. This chart displays a clear pattern of usage by quarter. To create the chart, we took an average for app usage across the entire game, and then for each quarter. Starting on the left-hand side, app usage was lowest during the first quarter. The second and third quarters show increases in app usage, as we assume peoples' attentions waned over the long course of the game. The fourth quarter, however, shows a decline in usage due to the game’s close finish, which drew attention back to the first screen.
In this chart, we isolate app usage to only those times when advertisements were aired. Again, consumer fatigue played a role in attention paid to the first versus second screen. Even with a close Super Bowl game, viewers paid far less attention to ads during the second half. This would suggest that when buying ad times, advertisers should focus on Q1 and Q2 ad slots. Not shown on the chart, pre-game ads, as early as 20 minutes before game time, also held consumer attention well. Half-time, outside of Madonna’s half time show fared worst for holding consumer attention. We speculate that people were either taking a bathroom break or looking for information and/or content on their phones related to Madonna or other artists that appeared in the show.
Flurry Super Bowl Ad Rankings
Finally, Flurry ranks ad Super Bowl ad performance. During the times app usage spikes, we assume ad fail to appeal to the viewer. Conversely, if app usage declines during a TV spot, we assume that the first screen is where the consumer is focused. For each ad, Flurry counted the number of app sessions starts. We then divided that number by the number of seconds in the ad, to get an average number of session starts per second. This gives an apples-to-apples comparison for comparing varying ad lengths. Below, we share rankings for Overall, Male and Female user groups. By our count there were over 100 ads from pre-game through post-game.
The relationship between advertisers and consumers continues to change, with apps playing a key role. In a year when the industry is anticipating major moves from companies like Apple and Google around interactive television, app makers and marketers will need to learn and adapt. In the meantime, we know that Madonna still has the power to make you put your phone down, at least for a while.
Posted by Peter Farago on Fri, Jan 27, 2012
In just two years, tablet computing has gained unprecedented traction. According to research firm Strategy Analytics, global tablet shipments more than doubled during the last three months of 2011, rising to 26.8 units, up from 10.7 million a year earlier. And while Apple continues to dominate the tablet category, having sold a record 15.4 million units during the final quarter of 2011, Android OS tablets have increased their share of the tablet category, growing from 29% in Q4 2010 to 39% in Q4 2011.
The increase in market share is due largely to the entry of the Kindle Fire by Amazon. With Flurry in tens of thousands of Android apps, including many of the most popular, the company estimates that it tracks over 20% of all consumer sessions on more than 90% of all Android devices each day. A session is defined as the launch and subsequent exit (or pause for more than 10 seconds) of an app. For example, a consumer may play a game in one sitting for five minutes. Let’s take a look at the data.
The chart above compares application sessions among all Android tablets before and after the holiday season. For January, we use month-to-date figures, at the time this report was written. Since we’re looking at proportions of use, estimating the remainder of January would not change percentages. For an easier visual comparison, we label Amazon Kindle Fire in orange and Samsung Galaxy Tab in blue. On the left, in November, we see that Samsung Galaxy Tab dominated application session usage on Android, with the Kindle Fire only having recently launched. At that time, the Samsung Galaxy Time was widely considered the only viable competition to the iPad, though a distant second. In January, after the holiday boom in devices and in apps, we see that strong adoption of Kindle Fire, combined with significant downloads driven from the Amazon App Store, resulted in a massive surge in session usage that just edges out the Galaxy Tab. Unrounded, Kindle Fire represents 35.7% of sessions and Galaxy Tab represents 35.6%. Remarkably, and from a standing start, the Kindle Fire overtook the Galaxy Tab in just a few short months. Total Android tablet sessions in January more than tripled over November, with Galaxy Tab sessions increasing by more than 50%. Overall, Android Tablets are growing aggressively as a category.
Amazon Uses Its “Fork” to Eat Samsung’s Lunch
So how can a late entrant like Amazon, with little-to-no hardware DNA, waltz in and knock off a consumer electronics juggernaut like Samsung, a company that also enjoyed strong growth in 2011? This is where we believe things get interesting. In short, Amazon’s launch of Kindle Fire had more in common with an Apple-style launch than it did with aligning with the Android system. To date, the Android world has focused on marketing the operating system and the “power” of the devices, with quality of content and the consumer experience subordinated in priority. With Google managing the Android Market, which lacks content control and a seamless commerce experience, inertia pushes those developers who choose to build for the platform toward advertising models. Developers who monetize through other means tend to make less on the platform. To ensure that it could take full advantage of its unique digital store prowess, Amazon forked the Android operating system.
Apple, on the other hand, understands that great content is the key to increasing the attractiveness of hardware. They learned this hard way during the 1980s when an inferior combination of PC hardware and operating systems overtook Apple computers, primarily due to a lack of software. This time around, for the iPhone and iPad, Apple created a robust economy in which developers could thrive, ensuring their allegiance to innovating for the Apple platform, ultimately making Apple hardware more desirable, and creating a rare, but powerful virtuous cycle. To understand how well Amazon might attract developer support, we studied how well Amazon drives paid downloads in its store versus the Android Market through the Kindle Fire and Galaxy Tab, respectively.
To build this chart, we gathered download data from a “basket” of 5 paid apps that ranked in the top 10 apps in both the Amazon App Store and Android Market during January 2012. We then compared how many of these paid downloads were downloaded to the Galaxy Tab versus the Kindle Fire. From our analysis, we found that the Kindle Fire drove over 2.5 times more paid downloads to consumers than the Samsung Galaxy Tab. This shows that for tablets, the Amazon App Store can already deliver more direct revenue to developers than the Android Market. Even more impressive is that the Galaxy Tab, launched in November 2010, has a much larger existing installed base than the newly launched Kindle Fire. Flurry estimates that the active number of Galaxy Tabs in the market is at least twice that of the Kindle Fire.
Amazon Thinks Different
Amazon’s go-to-market strategy for the Kindle Fire is ground breaking among the Android guard. With its offering, Amazon takes the focus away from the device and operating system, emphasizing content, a differentiated consumer experience and commerce. For its launch, it lined up key content such as Facebook and Angry Birds, as well as offering Amazon Prime, its own streaming TV and movie service. Beyond leveraging its cloud and e-commerce infrastructure, Amazon controls its own store, commanding among the largest aggregations of consumer credit card accounts on the planet. Upon launching the Kindle Fire, consumers must either link to their Amazon account or enter credit card information. This makes the user base 100% payment enabled.
Amazon’s approach to the distribution of digital content is the ultimate razor-razorblade model, where the “stalk” (tablets) is given away for as little as possible and profits are made from the sale of razors (content). Understanding that Amazon is a high volume seller of goods, now becoming ever more digital than physical, sheds light on why they embrace the end-user experience and the religious focus on making the sale of content compelling and easy. Further, it shows us why launching with an aggressive low price penetration strategy for their hardware, priced at $199, was critical to its strategy.
Making the Old New Again
Amazon, who once moved the world from buying goods at retail to buying them online and having them shipped to doorsteps, is now distributing the new form of mobile store via tablets. In a move that reduces the possibility of its own disintermediation, Amazon’s distribution model starts with its own roots: books, music and video (aka “BMV”). Through this move, Kindle Fire is changing the rules of engagement on the Android platform to shape the playing field into one where they, the consumer and the developer win.
Posted by Charles Newark-French on Mon, Jan 09, 2012
The era of mobile computing, catalyzed by Apple and Google, is driving among the largest shifts in consumer behavior over the last forty years. Impressively, its rate of adoption is outpacing both the PC revolution of the 1980s and the Internet Boom of the 1990s. Since 2007, more than 500 million iOS and Android smartphones and tablets have been activated. By the end of 2012, Flurry estimates that the cumulative number of iOS and Android devices activated will surge past 1 billion. According to IDC, over 800 million PCs were sold between 1981 and 2000, making the rate of iOS and Android smart device adoption more than four times faster than that of personal computers.
Powerfully, smartphones and tablets come with broadband connectivity out-of-the-box, instantly combining the best of “Silicon” and “The Cloud” for consumers. The Internet, which served to connect the installed base of PCs, grew to 495 million users by the end of 2001, according to the International Telecommunication Union. With the Internet beginning its commercial ramp in 1996, iOS and Android devices will see double the number of device activations during its first five years compared to the number of Internet users reached during its first five years (Internet 1996 – 2001 vs. Smart devices 2007 – 2012).
On top of this massively growing iOS and Android device installed base, roughly 40 billion applications have already been downloaded from the App Store and Android Market. More than ever, consumers are splitting their time accessing services on the Internet from PCs versus doing so on mobile devices from apps. Last summer, Flurry published a report detailing how the average smartphone user, for the first time ever, began spending more time in their mobile applications than they do browsing the web. Updating the analysis, Flurry finds the usage gap continues to widen. Let’s look at the updated numbers.
The chart compares how daily interactive consumption has changed over the last 18 months between the web (both desktop and mobile web) and mobile native apps. For the web, shown in green, we built a model using publicly available data from comScore and Alexa. For mobile application usage, shown in blue, we used Flurry Analytics data, which tracks anonymous sessions across more than 140,000 applications. We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis.
Since conducting our first analysis in June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day.
Our analysis shows that people are now spending less time on the traditional web than they did during the summer 2011. This drop appears to be driven largely by a decrease in time spent on Facebook from the traditional web. In June 2011, the average Facebook user spent over 33 minutes on average per day on the website. Now, that number is below 24 minutes. Time spent on the web without Facebook has grown at a modest rate of 2% between June 2011 and December 2011.
The analysis also shows that people are spending ever more time in applications. In fact, time spent in apps and the web, combined, has grown as users lead a more connected life. This growth though has been driven entirely by applications. The growth in time spent in mobile applications is slowing – from above 23% between December 2010 and June 2011 this year to a little over 15% from June 2011 to December 2011. The growth is predominately being driven by an increase in the number of sessions, as opposed to longer session lengths. Consumers are using their apps more frequently.
Facebook Pushes into Mobile Apps
Based on our analysis, we believe that Facebook users, and users of other traditional style websites, are increasingly accessing services through mobile applications than from desktops. Nielsen recently reported that Facebook is the most used app on Android among 14 – 44 year olds, surpassing usage of Google’s own native, pre-installed apps. Additionally, Facebook Messenger became the top downloaded app, at least one time during 2011, across more than 100 different App Store countries. In the U.S., the largest App Store market, Facebook Messenger ranked as the top overall app across most of the holiday week, during which more downloads occur compared to any other week.
With Facebook’s recent push into HTML5 with Project Spartan, where apps built for Facebook’s platform can run on top of the Facebook app, instead of requiring the user to launch the iOS app equivalent, this poses a disintermediation challenge to Apple. As Apple and Google continue to battle for consumers through the operating system and devices, Facebook is demonstrating that it can leverage its hold over consumers at the software level, through the power of the social network, across multiple platforms.
Facebook and Google are already locked in a battle for the online consumer, with Facebook having steadily taken share from the search engine giant over the last several years. Recently, as Google countered with its socially-oriented Google Plus, Circles and Hangouts services, Facebook added features such as news feeds to further lock in consumers to its service by obviating the need to discover content through search.
Likewise, Apple’s recently launched iCloud service, which allows consumers to store their most personal content, including music, photos and contacts, as well as its deep integration with social-service, Twitter, appears to buttress against Facebook’s ability to control the consumer relationship. With games as the top app category across Facebook, iOS and Android, as well as having become increasingly social in nature, Facebook is countering to reclaim valuable game play sessions it earned from its own platform play launched in 2007, rather than simply surrendering them to iOS and Android, who have effectively wooed consumers off of the web platform to mobile apps.
Games & Social Networking Dominate Mobile App Usage
With mobile app usage soaring, Flurry additionally studied which categories most occupy consumers’ time. The results are shown in the pie chart below.
The chart clearly shows that Games and Social Networking categories capture the significant majority of consumers’ time. Consumers spend nearly half their time using Games, and a third in Social Networking apps. Further considering that Flurry does not track Facebook usage, the Social Networking category is actually larger. Combined, from just what Flurry can see, these two categories control a whopping 79% of consumers’ total app time. This breakdown in usage reveals Facebook’s inherent popularity as the leading social network, as well as how important controlling the game category is for all platform providers. As we drill down into the category data, consumers use these two categories more frequently, and for longer average session lengths, compared to other categories.
Any way we slice it, Games and Social Networking apps deliver the most engaging experience on the web and mobile today, and set the stage for the battleground for controlling the consumer relationship going forward for all platform providers on all platforms.
Posted by Peter Farago on Mon, Jan 02, 2012
The last week of the year, from December 25 through December 31, sees more iOS and Android device activations compared to any other week of the year. Starting with Christmas Day, the largest single device activation day of the year, the week between Christmas and New Year’s Day is filled with significantly elevated device activations and app downloads. For application makers, this holiday “power week” is far more important than the run-up to Christmas itself. This report reveals that the last week of 2011 was the largest week for device activations and app downloads in iOS and Android history.
For this report, Flurry leverages its data-set from over 140,000 apps running on the significant majority of iOS and Android devices. With its application penetration, Flurry can detect over 90% of all new devices activated each day. Additionally, with its analytics service in more than 20% of all applications downloaded on a given day from the App Store and Android Market, Flurry can reliably estimate total iOS and Android downloads. To benchmark against the market, Flurry regularly triangulates its device and download figures with data released publicly by Google and Apple.
In its most recent report, Flurry estimated that a record-breaking 6.8 million iOS and Android devices were activated on Christmas Day, along with an equally record-breaking 242 million application downloads. Studying the data from December 25 – December 31, additional records were set, now for the highest number of device activations and app downloads of any week in history. Over the holiday “power week,” Flurry estimates that over 20 million iOS and Android devices were activated, and 1.2 billion applications were downloaded. Let’s drill down further into the downloads.
The columns in the chart compare the number of app downloads during Christmas through New Year’s Day (on the right) versus the average of the first two equivalent weeks of December (on the left). The seven days from December 25 – December 31 spanned from a Sunday to a Saturday. As such, we take the average of the first two full Sunday-to-Saturday weeks in December to establish a baseline. The average downloads over these weeks are surprisingly even. For background, the third full Sunday-to-Saturday week, not shown in the chart, December 18 – 24, is elevated slightly due primarily to December 24 downloads. Up until the final week of the year, this penultimate week set the download record with 857 million downloads. The final week of the year, between Christmas and New Year’s Day, grew by 60% over the early-December baseline, historically punching through the billion download barrier for the first time ever to deliver 1.2 billion downloads.
This second chart shows the top twenty countries across which the record 1.2 billion downloads were distributed. Starting from the left, the U.S. took the lion’s share with 509 million downloads, or 42.3%. Referencing an earlier report, wherein Flurry sized the current installed base and market upside for each country, it’s not surprising that the U.S. continues to lead the rest of the world by such a large margin. We estimate that just prior to the holidays, there were 109 million active iOS and Android devices in the U.S. market. Compared to the worldwide total active installed base of 246 million, this was 41%. China, the world’s second largest app market, which has roughly one-third of the U.S. installed base saw only one-fifth of the relative downloads. It’s important to note that the celebration of Christmas as a holiday impacted download performance. While the United States widely celebrates Christmas, China is largely non-religious, with over 60% of the population considering themselves agnostic or atheist. In China, Christians make up just 3 – 4% of the population.
Following the trend that Western countries more widely celebrate Christmas – note the higher positions of countries like the United Kingdom, Canada, Germany, France, Australia, Italy, Spain and Mexico in the chart – these countries over-indexed against largely non-Christian countries of China, South Korea and Japan. For example, South Korea and Japan have the 4th and 5th largest smart device installed bases of all countries, yet they ranked 7th and 10th, respectively, for downloads over the record week. Christmas is not recognized as a national holiday in Japan, and in South Korea, roughly half the population self-identifies as non-religious. As a point of interest, Canada appears to have over-indexed the most, using its 8th largest installed base to drive the 4th most downloads over the holiday period.
Looking forward to 2012, Flurry expects breaking the one-billion-download-barrier per week will become more common-place. While iOS and Android growth continues to amaze, the market is still by all measures relatively nascent. We look forward to continuing to chart the unprecedented adoption of mobile computing devices, usage of applications and the way in which this technology is changing consumer behavior worldwide. Happy New Year from everyone at Flurry.