Flurry now measures apps used on more than 1 billion smartphones and tablets each month. As connected devices reach critical mass, marketers are more seriously incorporating mobile into the marketing mix. But there are pros and cons. While the collective size of the mobile audience is rivaling that of TV and other media, it still requires aggregating the audiences of many apps to reach what can be reached through a few TV programs. That said, the numbers are likely closer than you think. Additionally, mobile offers unique ways to engage consumers given its “always on, always present” characteristics.
In this report, we look into what it takes to reach comparably sized audiences across different media like television, print, online and mobile apps. We also drill down into how the size and engagement of the mobile app audience varies across days of the week and hours of the day, and how it presents unique opportunities.
Let’s start by considering when people use apps.
The chart above shows how app usage varies over the course of a day, cut by weekend versus weekday. Data used for this chart comes from the top 250 iOS and top 250 Android apps measured by Flurry Analytics during February 2013. Through the top apps Flurry sees, app usage spikes during primetime to a peak of 52 million consumers. Make a mental note of that number, because we’ll revisit it a little later.
Comparing weekday to weekend curves, the general shape is similar. App usage ebbs overnight and then grows throughout the day, peaking in the early evening. While weekends also have a distinct primetime window, they see higher daytime usage across the day between 9:00 AM – 5:00 PM, ostensibly when someone would normally be working. However, the overall difference in audience size during the day between weekdays and weekends is not substantially different. Let’s look at 11:00 AM, for example, when the number of people using apps varies the most between weekdays and weekends. The size of the audience during this time is only 25% greater on weekends. Looking at it another way, this means that during the normal workday, people use apps at least 75% as much as they do on weekends. This creates a unique opportunity for advertisers to reach desired audiences over the course of the day via mobile.
The App Audience: Big But Fragmented
Now, let’s return to that 52 million primetime app user number. To get to an audience of that size, you’d need to combine the circulation of the largest 200 weekend newspapers in the U.S. or combine the audiences for the 3 most highly rated primetime TV shows during a good TV week (e.g., The Big Bang Theory).
We believe this comparison says a couple of important things about the app audience: first that it has reached critical mass, and second that it is still highly fragmented relative to more traditional forms of media. Additionally, while we don’t compare costs in this study, it is far more affordable to reach an audience on mobile versus Print or TV.
Now let’s consider how the app audience compares to the audience that is reachable through larger digital devices like laptops and computers. Flurry measured 224 million monthly active users of mobile apps in the United States in February of this year. During the same month, comScore counted 221 million desktop and laptop users of the top 50 digital properties in the United States. From this, we conclude that the U.S. audience that is reachable through apps, albeit more fragmented, is now roughly equal to that which can be reached on laptops and desktops.
There’s An Audience for That, on Mobile.
Earlier this year, Morgan Stanley analyst Benjamin Swinburne showed that “There has been a 50 percent collapse in broadcast TV audience ratings since 2002.” As the prized 18 – 49 year old demo is further lured to digital media, marketers need to adjust. But the mobile industry also needs to do more to make media planning and buying more efficient for advertisers and agencies.
The more mobile ad networks increase their ability to deliver the right combination of reach and targeting, the easier it will be for advertisers to invest in mobile and leverage the unique value it offers. Mobile, in particular, can deliver different ads to different users within the same app or the same ad to similar types of people across different apps, based on the varying interests of those individuals. Dynamic segmentation is much more possible on mobile compared to earlier forms of broadcast media. Now, fast forward one year from now, by which time Flurry estimates the installed base of smartphones and tablets will have doubled to 2 billion active devices per month. That should leave marketers of nearly every product thinking: on mobile, there’s an audience for that.
GDC is in San Francisco this week, just next to Flurry’s headquarters. By the size of the crowds, we (very scientifically) estimate that attendance should easily surpass last year’s record of 22,500. Having tracked the growth of mobile games for several years, we weren’t surprised to see more than 30 sessions during the week focused on smartphone and tablet gaming.
Here’s the big picture, based on our estimates: There are now over 1 billion active smartphones and tablets using apps around the world every month. And of all the apps consumers use, games command more than 40% of all time spent. Looking at revenue, games also dominate. Today, for example, 22 of the top 25 grossing apps in the U.S. iTunes App Store apps are games. Gamers spend money, and game makers are in love.
In this installment of research, Flurry studies how age, gender and engagement vary across key game types. Understand this, and a game developer can design a more engaging game that appeals to the right audience. In short, they can build a better business. In this study, we included more than 200 of the most successful free iOS games, with a total audience of more than 465 million month active users. For a better comparison, we organized these games by their game type (aka game mechanic) instead of traditional, less granular genres. Let’s start by looking at how different kinds of games appeal to gamers by age and gender.
The chart above plots game types by age and gender. From left to right, we show what percent of the game audience is female, with the far right equaling 100% female. The opposite is true for males. For example, 0% female equals 100% male. From bottom to top, we show the average age of the game type’s user base, between 20 to 50 years old. Putting it together, games in the upper right quadrant are preferred by older females. Games in the lower right are preferred by younger females. Games in the lower left are preferred by younger men, and so on.
Young Men and Their Competition
Inspecting the chart, the tightest cluster appears in the lower left; specifically, game types such as Shooters, Racing, and Action RPG skew younger and more male. Card-battle and Strategy games also skew toward younger males. The only genre that skews toward males over 35 is Casino/Poker, with pure poker games skewing even more male than the game type as a whole. This appears to leave a big gap in the market for developers who can create games that appeal to middle-aged and older men.
While men tend to gravitate toward competitive games, women gravitate toward games that are less competitive and tend to be played in a more enduring way. These include Management/Simulation games where players can build out an environment, Social Turn-Based games in which they can play over time with friends, and Match3/Bubble Shooters and Brain/Quiz games, to which users can frequently return when they have a few spare minutes. Slots and Solitaire are both solo-play game types that skew toward females who are over 40, suggesting that they serve as long-term time-fillers.
From a marketing perspective, mobile game publishers can also leverage this knowledge to design targeted campaigns appropriate for the kind of audience to which a game appeals. Flurry’s ad network, AppCircle, allows publishers to target specific demographics for efficient spending.
From Courting to Betrothed
We find that mobile gamers tend to prefer playing a few kinds of games and demonstrate highly predictable play patterns. In other words, they form relationships with their games. Savvy publishers understand these dynamics and use them to inform acquisition strategy, gameplay design, and both in-app purchase and ad-based monetization tactics.
In the chart below, we map game types by usage and retention. On the y-axis we show the number of times per week consumers play different game types. On the x-axis we show how long different games retain their user (i.e., Flurry defines Rolling Retention as the percentage of users that return to the game 30 days after first use, or any day after that). To see how usage and gender work together, we’ve also colored-coded game types by whether they are more male, female or neutral in appeal. Let’s take a look.
The chart above reveals that different strategies should be employed for different kinds of games. It also shows, loosely, that women are more committed while men are more fickle. Sound familiar in life? Hmmm. For the gaming industry, the universal take away is that to optimize engagement, retention, and monetization, developers must tailor their mechanics and messaging to match their ideal target audience. Let’s take a tour of the quadrants.
“Players” try a lot of different games, play for only a short time and tend to be found in highly competitive games (e.g., “Player vs. Player style games). While fickle, they tend to have a high willingness-to-pay in order to progress faster in a game or increase their ability to compete at a high level versus other players. Attracting the right users through targeted acquisition can pay off, as those that stay will pay. Notably, Card-Battle games have very low retention but off-the-charts monetization, extracting enormous revenue from the small number of users that stick. One implication is that these games need to be highly polished at launch with updates ready to go, as gamers will discard games quickly and move on if the game fails to resonate. From a design standpoint, these games should offer immediate opportunities for users to advance by purchasing upgrades and boosts. For the users that might not spend, a lucrative option is to offer in-game currency for watching video ads.
“Going Steady” game types are found in the lower right quadrant of the chart. Usage is less frequent but retention is very high. While these gamers don’t play as often, they are loyal. This group of games tends to be easy-to-learn and easy-to-return-to even after a lapse in playing. They lend themselves to quick play while in a “wait state” (e.g., waiting in line, taking a bus or perhaps checking out of the meeting or class they’re in). Since these are not particularly immersive or competitive games, they are less likely suited to in-app purchase. However, they can generate significant ad impressions over time, and can be designed to show banner or interstitial ads without being overly disruptive to the experience. For games with larger audiences, publishers are utilizing mediation platforms that enable the use of multiple ad networks in one system, ensuring maximized fill and ad-revenue for each space.
“Committed” comprise of consumers who play games for the long-haul. As such, game makers should think of it like a marriage. Think about appoint mechanics like setting a date (hey, even married people need to keep it fresh). These games should be designed with deep content and not try to sell too hard to their users too quickly. From a monetization perspective, commitment-oriented games have great potential for in-app purchases since users of those games are likely to value such purchases and amortize them over long periods of gameplay. And while only the largest titles have achieved this to-date, this group of games are great candidates for in-app product placement. Additionally, with high impressions counts, it is worth publishers’ investment to implement monetization platforms that make ad spaces available to real-time bidded ad exchanges, ensuring they reach the brands and advertisers that value their audiences.
“Infatuated” consumers have fallen hard and fast for their games, but the candle that burns twice as bright burns half as long. They have crushes, and show binge behavior. During the “crush” window, the developer needs to work hard to extract as much revenue as possible. As such, developers must provide vast amounts of content to the users, consistently, in a short-window. Matching monetization to game type, the competitive nature of Strategy games, and Slots users’ incessant desire for in-game currency, make a solid in-app purchase strategy paramount. Sales, events, and purchase opportunities timed with key moments of emotional investment can drive significant profits for publishers.
There’s a Pebble on the Beach for Everyone
In gaming, there are a vast number of game types that attract distinct audiences. And these different consumer segments display very different usage patterns, which have direct implications on monetization strategies. As in life, where the richest relationships are borne from knowing oneself and his or her partner, game companies must also understand both. Only then can you get the most out of the relationship.
The Super Bowl is one of the world’s top media events. This year’s contest, Super Bowl XLVII, was hosted in New Orleans and drew an average of 108.4 million viewers, the third largest audience in U.S. television history. According to Nielsen, previous Super Bowls captured the top two U.S. TV audiences, with last year’s event drawing 111.3 million viewers and the previous year’s attracting 110.0 million.
While the contest on the field pitted the San Francisco 49ers against the Baltimore Ravens, an equally fierce battle for consumer engagement was waged across multiple screens. As the world’s top brands paid up to $4 million to air 30 second television spots, consumers were more distracted than ever, accessing mobile apps and social media in droves. Twitter reported 24.1 million Super Bowl-related tweets, the most popular of which focused on Beyoncé, Destiny’s Child, the Superdome power outage and key game moments. Facebook reported similar increases in conversations around these topics.
Mobile Apps Make TV the Second Screen
In this report, Flurry finds that mobile appears to have become the first screen. The implication is that, from this day forward, as marketers advertise on television, they must ensure that the content is sufficiently compelling to pull the consumer away from her smartphone or tablet. While TV may continue to be widely regarded as the first screen, Flurry believes that brands need to reverse that logic in order to reach and engage their consumers.
For this study, Flurry measured U.S. app session starts, per second, over the course of this year’s Super Bowl, last year’s Super Bowl, and the equivalent time period on the Sunday before this year’s Super Bowl (to establish a baseline for an average Sunday) from 3 PM PST to 8 PM PST. Flurry Analytics is used by 275,000 apps, including many of the most-used apps, with aggregate daily usage sessions of 2.4 billion.
For this analysis, we estimated U.S. app session starts occurring on Super Bowl Sunday by sampling from our own data and extrapolating based on the proportion of the market that Flurry "sees." To be able to compare across last year's to this year's Super Bowl, we created an index where “100” represents a baseline for app usage. Let’s start by looking at how this year’s Super Bowl app activity compared to that of last year’s.
The chart above shows this year’s Super Bowl in blue compared to last year’s Super Bowl in grey. The spark lines show application session starts in the U.S. sampled from Flurry’s system, per second. The way to interpret the chart is that if the line is moving up, consumers are picking up their phones (or tablets). And if the line is moving down, consumers are putting down their phones (or tablets). In other words, when something on the TV cannot sufficiently hold the consumer’s attention, she often reaches for her connected device. The advantage for using mobile app usage as a signal is that we can accurately measure when consumers are interacting with the mobile apps. In this way, we can distinguish between active (consumer is using the "app") and passive use (app is just "on"). Using mobile app usage as a signal, the events to which consumers paid the most attention were the National Anthems, Halftime shows and close finishes.
A few structural differences to the length, shape and height of the curves are worth noting. First, last year’s Super Bowl was faster up through the first half, as we see that Madonna’s half time show started earlier compared to Beyoncé’s. Additionally, this year’s Super Bowl was further extended due to the 34-minute power outage in the Superdome just after the beginning of the 3rd quarter. Relative to last year’s Super Bowl, consumers began picking up their phones and tablets en masse during this period. Next, this year’s Super Bowl curve (blue) sits higher than last year’s curve (grey), which indicates that there was more relative app usage in the U.S. this year versus last year. Specifically, we measure a 19% increase in app usage between last year’s Super Bowl versus this year’s.
The chart above plots app usage during this year’s Super Bowl against the same time period from the Sunday before. This gives us a sense for how much application usage varies on a normal Sunday compared to Super Bowl Sunday. Overall, total app usage dropped in aggregate by only 5% from the Sunday before to Super Bowl Sunday, which suggests that the Super Bowl largely failed to curb consumer app usage when compared to normal behavior. The height and the shapes of the curves are very similar. More notable differences did appear from just before the Super Bowl started up until about half way into the second quarter of the game, where consumers appeared to be paying more attention to the Super Bowl (i.e., the blue line was modestly below the grey line for that period). We also note a spike in app usage during the Jeep halftime report during the sports analyst commentary, followed by a plummet in activity during Beyoncé’s performance. Next, during the outage, consumers began using their apps. After gameplay resumed, app usage was very similar to a normal Sunday except for the last minutes of this year’s close Super Bowl finish, as the 49ers mounted an exciting, narrowly-missed comeback.
Next we studied how app usage varied during different times during the Super Bowl: while the game was on, when ads were broadcasted, during halftime and during the power outage. We used app activity during the game as a baseline.
The overall finding was that app usage did not vary greatly between commercials and game play, with only a slight increase in app session starts during ads in this Super Bowl, and an even smaller decline in session starts during the last Super Bowl. In contrast, session starts dropped by nearly ten percent during this year’s halftime. That suggests that while Beyoncé was compelling enough to cause viewers to put down their phones, much of the game and many of the ads were not. The large increase in app session starts during the power outage provides additional evidence that TV cannot hold attention without compelling content. Consumers turned to their smaller screens in great numbers as soon as there was a lull in the action on TV.
Of course, there is variation within these averages. Groups particularly prone to starting app sessions during ads include: Photo & Video Enthusiasts, Real Estate followers, Small Business Owners, TV Lovers and Movie Lovers. For your convenience, you can find Flurry (psychographic) Personas listed here. Consumers less inclined to start app sessions during ads include iPad Users, Food Enthusiasts, Catalog Shoppers, Fashionistas and Home & Garden Enthusiasts. Those most inclined to take a break from their apps and watch the halftime show included Home & Garden Pros, Health & Fitness Enthusiasts, Fashionistas, Catalog Shoppers and Food Enthusiasts. Groups whose app use climbed most during the power outage – suggesting that they were paying closest attention to the game at other times – were Males, Seniors and Sports Fans.
Mobile Is Killing The TV Star
Ratings from Nielsen confirm that people continue to sit in front of TVs on Super Bowl Sunday. However, the fact that overall app usage declined by less than just 5% compared to same time period on the prior Sunday suggests that a large amount of consumers’ attention is spent in apps, even as they sit in front of the TV. This should cause advertisers to question the value of paying a premium for Super Bowl ads when the attention premium they command is eroding. That’s particularly true for some groups. For example, overall app usage by Moms, during the time the Super Bowl was on, dropped by less than two percent compared to the previous week. While Tide’s “Miracle Stain” ad was certainly entertaining, it appears that the “Mom” target market was not paying attention.
The price of a Super Bowl ad pays for a lot on mobile whether that’s in app advertising, sponsored content, in-app product placement or branded apps, and Flurry believes many marketers may benefit from reconsidering their media mixes in light of evidence in this report showing that unless exceptionally interesting things are happening on TV, a significant and increasing amount of consumer attention is spent using smartphones and tablets.
New Consumer Behavior. New Strategy.
Brands who continue to believe in the potential of TV during major events such as the Super Bowl must also now understand the multi-screening behavior of their target market, and take that into account in developing their campaigns. For example, marketers targeting Fashionistas would be well-served by scheduling ads to run during or near the half-time show, while running in-app ads during the game itself. The reverse strategy would apply to groups such as Sports Enthusiasts. These results also have implications for those who wish to run integrated campaigns across screens: those will only be effective if the TV portion is compelling enough to pull attention away from the screens in the hands of the audience.
With the holy grail of TV events disrupted, advertisers need to take note. The winner of the Screen Bowl is the smartphone. Mobile is here. Mobile is the new first screen.
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.
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.
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.
Apple and Google have ushered in a new era of mobile computing whose consumer adoption is rivaled only by the PC revolution of the 1980s and the Internet boom of the 1990s. Since 2007, more than 440 million iOS and Android devices have been activated, with 1 million additional devices across both platforms now activated each day.
On top of this massive and rapidly expanding platform, a software battle is raging. With very low barriers to entry, and friction-free digital distribution, companies have been feverishly building, shipping and updating applications, intent on capturing and monetizing consumer audiences. To illustrate this growth, let’s look at the number of available apps in the App Store vs. the Android Market.
This chart is comprised of publicly available data. Where data wasn’t available for the same month in both markets, we estimated the number of available apps based on interpolation (e.g., approximating a point between two existing data points), or by looking at the growth rate leading up to a specific month. The number of apps is growing significantly in both markets. And while the App Store has attracted more apps to date, the Android Market is closing the gap. Now, let’s turn our attention to total app downloads.
The chart above sums Android Market and App Store downloads per month. Starting on the left, with January 2010, we show downloads per month every three months, until we reach October 2011. In October 2011, we estimate over 2.6 billion apps were downloaded. The number of apps now downloaded is four times greater than this time last year, in October 2010. With the holiday season under two months away, the 3 billion-mark download per month mark surely will be shattered this December. Month-over-month, app downloads have been growing at an astounding rate 11.4%. With app downloads growing swiftly, even faster than the number of apps being made available, let’s now look at app retention.
This chart shows the percent of consumers that continue using an app, since their first use, over 12 months. At the far left, marked as month “0,” 100% of a consumer cohort begins using an app. After three months, 24% of them continue using. After 6 months, this percent shrinks to 14%, and, by 12 months, only 4% are left. For this analysis, we compiled data from 25 apps downloaded a cumulative 550 million times.
With app downloads increasing month-over-month and app usage not only climbing, but also surpassing web usage, we know that consumers are both discovering and using apps more than ever. And while the industry often talks about discovery as a problem, we think the real problem is traffic acquisition. To understand this, we turn to the web.
Online, website marketers don’t stop marketing after they get a consumer to visit the site only for the first time. They can get in front of the consumer in various ways again, and spur a return visit by having the consumer click on a link. Typically, online, a visit starts from an organic search result, but search doesn’t exist for apps the same way, and consumers seem to browse more, especially given touch interfaces. The closest thing to search in the app world is a consumer browsing the top ranking lists, which represents “popularity” in a similar way to top ranking organic search results. However, in the app world, top rank lists are more like “paid search” since heavy advertising is what typically launches an app to rank high, at least for a while.
Further, always trying to rank high, as a tactic, is not only untargeted and expensive, but also suffers from diminishing returns. First, the bar required to make the top 25 keeps rising, as the installed base of consumers grows and more apps compete for a fixed number of top spots. Regarding diminishing returns, an app can only appeal to first-time-users each time it ranks. It’s a pure first-time acquisition tool. App users don’t re-launch apps when seeing them in the top rankings. They need to go to their app icon and launch from there. So as an app’s installed based grows over months, even years, the relative number of incremental users that can be added from ranking in the charts continues becomes relatively smaller. In other words, over time, an app is better off targeting its much larger installed base of users to increase usage. This is the equivalent of traffic acquisition.
The key challenge is that developers lack the tools to bring traffic back to their app, post-download. And, therefore, the industry has a traffic acquisition problem, not a discovery problem. Only when compelling ways of connecting with existing app users are established, that allow the easy re-launch of an app, can app makers address retention through marketing, and fully control their own traffic acquisition.
On broadcast television, brands seek to reach their target audiences as efficiently as possible. For example, a brand might run a TV campaign targeting 24 – 35 year old females through prime-time shows that reach that desired audience.
Prime-time, from 7 pm to 11 pm, is widely known as the part of the day that attracts the most viewers on television. In advertising parlance, this is referred to as a “daypart.” And given its popularity, networks charge significantly more for ads aired during this time.
On radio, “drive time” is the most valuable daypart. Online, the evening has seen an increase in relative usage with the popularity of social networks like Facebook, instant messaging like Skype and video-on-demand services like Hulu.
This report focuses on dayparting in mobile apps. Through Flurry Analytics, Flurry tracks more than 110,000 mobile apps on iOS, Android, Windows Phone, BlackBerry and J2ME. The sample used for this study assembled a bundle of popular iOS and Android apps across games, social networking, music, news, sports and communication categories. In total, this group of apps is used by more than 15 million consumers each day.
For a point of comparison, we overlaid our mobile app daypart graph onto a chart shared by Michael Zimbalist, VP Research for the New York Times, in a guest post he authored for AdAge. Let’s take a look at the findings.
The chart shows the percent of its own total user-base that a given medium reaches, each hour of the day, starting at 5 am. In keeping with Mr. Zimbalist’s analysis, we also limit our mobile app data set to include those 15 years of age and older. For each curve, the percent displayed on the y-axis relates to the proportion of consumers reached during a given hour on that respective medium. Note that the total audience size for each medium reached varies in terms of its own absolute number of users. We’ve chosen to overlay Flurry’s data onto this chart to compare the shape of the curves, which indicate the relative concentration of usage during different times of the day. For reference, we shaded the hours that make up the prime-time television slot.
Our analysis shows that, compared to relative TV viewing and Internet usage, mobile app usage is higher from 6 am to 6 pm. And while the relative percent of television viewers surpasses that of mobile app users during prime-time, mobile app usage continues to climb until 9 pm, exceeding relative Internet usage throughout the prime-time window. Mobile consumers are using apps either instead of, or along-side prime-time television and the Internet. In fact, the percent of relative mobile app usage is greater than that of relative Internet usage every hour of every day.
To provide a tangible example of audience size for mobile apps, we estimate that the combined number of active iOS and Android devices in the U.S. is approximately 110 million. Taking 10 am as a daypart of mobile apps (the red curve), 30% of iOS and Android device owners, or 33 million consumers, use an application during this hour. In theory, apps are like TV shows, in that they reach specific audiences. With the eventual ability to target apps by various criteria such as age, gender, dayparts and more, advertisers can one day target a tightly defined audience that uses different applications.
To put the sheer size of the mobile application audience into perspective, consider that the American Idol finale, which airs once per season, reaches approximately 20 million viewers on that day. Mobile apps already reach more than 20 million U.S. consumers per hour, from 7 am to 11 pm. That’s already the equivalent of 17 American Idol finales each day, or more than 6,200 American Idol finales per year.
With Google recently acquiring Motorola and Apple gearing up to launch the iPhone 5 this fall, these numbers will continue to grow. Further, with companies like Amazon pushing harder into tablets with its recently announced Kindle Fire, and companies like Nokia and Microsoft partnering to stay competitive, we can easily imagine a world of mobile apps where it’s prime-time all the time.
Smartphones app usage, facilitated by explosive iOS and Android device adoption, has created among the fastest-growing media channels in the history of consumer technology. Flurry estimates that, worldwide, over 600 thousand apps are available for over 350 million iOS and Android devices. On average, consumers have downloaded over 65 apps per device.
While micro-transaction models, largely associated with free-to-play games, have proven the most lucrative business model for iOS and Android apps, there have been big bets placed on advertising. In addition to its own iAd initiative, Apple acquired Quattro, a mobile ad network, for $275 million in January 2010. This was shortly after Google announced its intention to acquire Admob, a rival ad network, for $750 million in November 2009.
In June 2011, Gartner projected that mobile advertising revenue would double to $3.3 billion worldwide in 2011, and grow from around $300 million to over $700 million in 2010 in North America. eMarketer, a research firm, predicts that U.S. mobile ad spending will top $1.1 billion this year.
In this report, Flurry focuses on the size and growth of available advertising inventory within iOS and Android applications. We used data from over 100,000 applications tracked by Flurry to estimate the size of this media channel. The chart below shows that U.S. app inventory is not only growing at a staggering rate, but also poised to absorb the equivalent of the entire U.S. Internet display advertising spend by the end of this year.
Reviewing the chart, we see that U.S. mobile app inventory has grown aggressively over the last year. With its growth trajectory, it will be able to absorb the entire U.S. online display ad spend by the end of the year. Another way to look at this is that, in approximately two years, mobile app inventory is growing so aggressively that it could easily meet the demand of a mature, 15-year-old form of online advertising.
To arrive at these figures, we first tracked the average number of ads shown per application session, which we found to be 4.3. The average application session is 4.2 minutes. For reference, the average session length of a website is just under 1 minute. We then looked at the number of sessions. Flurry tracks about 20% of all sessions in the market, and so we grew our numbers accordingly to come up with a market size.
We compared this inventory with the net spend on display advertising in the US. The US market currently spends a little over $12bn per annum on online display advertising. We assumed a conservative CPM (cost per 1000 impressions) of $2.50 for mobile application inventory. As a point of reference, a typical 30 second video on a large video streaming website such as Hulu has a CPM of $10-$15.
We at Flurry see four reasons why the market is growing at such a fast rate:
1) Smartphone growth – over a million smartphone devices are currently being activated on a daily basis
2) Publisher growth – The App store now has over 400,000 apps in the market and Android, with over 200,000, is catching up quickly
3) Session use growth - Flurry has previously found that smartphone users now spend more time in mobile apps per day than the average Internet users spends online.
4) Publisher integration of ads – with larger screens, targeting, and increased adoption of mobile applications, more publishers are integrating ads into their apps
Not only is inventory growing, but Flurry has also found that the average user of a smartphone is a very attractive target for advertisers. With a sample of more than 60,000 app users, we used location data and zip code statistics available from the U.S. Census Bureau to understand their demographics. On average, smartphone users are better educated and earn higher household incomes than the average of the U.S. population.
Additionally, looking at age and gender, we find that U.S. smartphone app users cluster into younger age groups and trend slightly more female.
In 1994, Hotwired.com was the first company to start selling display advertising in large quantities on the Internet. Back then, it took over six years for advertisers to embrace this model. For mobile apps, less than four years into their growth cycle, a critical mass of highly attractive consumers has been achieved. With growing awareness by brands and advertising agencies, we now expect digital advertising on mobile to take off in earnest.
Hardcore Gamers are so 2007
As the growth of iOS and Android mobile devices continues to explode, there is a tectonic shift in the landscape of video gaming, a medium that continues to reach the most powerful spenders in the economy. Not only are these emerging platforms attracting droves of existing gamers, but also spawning a new and highly engaged audience: the mass-market mobile casual gamer. The era of marketing singularly to the 18 – 34 hardcore male gamer is officially over.
Given the sheer size of the video game industry, this is a watershed moment. In January 2011, according to the NPD Group, 2010 worldwide video game revenue, excluding hardware, exceeded $15 billion. Strikingly, console game sales were down by 5% in 2010 over 2009. PC sales were up slightly by 3%, primarily due the release of the latest StarCraft installment by studio veteran Blizzard Entertainment. As Flurry described in its analysis last year, hardcore gaming is facing competition from more mass-market-friendly gaming apps on mobile devices. In particular, iOS is taking a bite out of portable platforms.
Below are two charts that demonstrate how age and gender demographics vary between the traditional gaming audience and mobile social gamers.
Reviewing the charts, it’s clear that mobile social gaming is attracting a much stronger female base, as well as a younger average user. Among mobile social gaming, there is also greater density in the 18 – 49 year old bracket, which indicates that iOS and Android devices are attracting users during their earning years versus, in particular, their teenage years, where they likely cannot afford more expensive mobile devices.
Mobile Bigger than Console, Portable… and TV
Just how big is the audience in this new era of smartphone mobile gaming? Consider that Flurry has detected over 250 million unique iOS and Android devices in the market, and is detecting more than 750,000 new devices daily. According to recent reports, this installed base is larger than the combined worldwide installed base of console industry leaders Nintendo Wii, Microsoft Xbox 360 and Sony PlayStation 3, estimated at approximately 180 million units. Likewise, iOS and Android devices command a larger installed base than the combination of portable game platforms Nintendo DS and Sony PSP, which recent estimates peg around 200 million devices worldwide.
Further sizing the segment of users that plays mobile social games, the audience exceeds that of any U.S. primetime television show, the best of which can top 20 million viewers on days airing new episodes. Contrast this to the 26 million unique users Flurry already detects 365 days of the year, and who spend more than 25 minutes per day in social games. On a broader scale, Flurry monitors more than 300 million user sessions across all games and apps. A whopping 37% of these are from games.
The Consumer behind Social Games: a Marketer’s Dream Target Audience
The audience playing mobile social games is beginning to attract the attention of major advertisers. For this study, Flurry used a sample of over 60,000 social gamers on iOS and Android who self-reported age, gender and location. For parts of this report, where we focus on the U.S. segment of the audience, we further crossed location information with United States zip codes to leverage U.S. Census Bureau data for deeper segmentation.
Let’s start by looking at the concentration of mobile social gamers by international region.
The chart above shows that mobile social gamers live in more developed economies, with the highest concentration in North America, followed by Europe. This hints strongly at a similar geographic footprint to iOS and Android penetration to date, with Asia beginning to grow more quickly as Android, in particular, finds increased distribution in this part of the world.
Next, we display a cross-tabulation of age and gender in a bar chart format for our worldwide sample. This provides the opportunity to study how male and female usage varies across age ranges.
From the chart above, it’s clear that female mobile social gamers are older than their male counterparts. While males have a slight lead in usage in the 13 – 25 year old range, more women play between 26 – 44 years of age. Additionally, referencing the earlier age comparison between traditional and mobile social gamers, the latter are younger, with an average age 28.2 vs. the traditional, more hardcore gamer, who is more often male with an average age of 34. Just below, we display separate charts for age and for gender.
The U.S. Mobile Social Gamer: Affluent and Educated
Studying the U.S. mobile social gamer, we note that she earns over 50% more than the average American, is more than twice as likely to have earned a college bachelor’s degree, and is more likely to be white or Asian.
The video game industry is transitioning from an era of hardcore male gamers who have dominated the landscape, to more mass-market usage across mobile social games. 18 – 34 year old males are being supplanted as the most attractive segment to target by big brands and agencies. The Mobile Social Gamer segment is highly engaged, younger, made up of more females, more educated and more affluent. In terms of usage behavior, they use social games far more often than they watch prime-time television shows, and using for 25 minutes per day, are heavy users of this interactive content. Mobile social gamers are the new mass-market powerhouse.