AppsFlyer: Apple Search Ads tripled market share as others sank in privacy push

AppsFlyer said in its mobile advertising report that Apple Search Ads tripled market share since the first half of 2020, even as other companies hurt as Apple shifted priorities from targeted third-party ads to privacy on iOS.

To me, that sounds pretty anti-competitive, but we’ll see what regulators and courts think about that. As companies damaged by these changes seek shelter through business combinations, we’re seeing a remaking of the adtech, app, and mobile gaming landscapes.

The first half of 2022 was marked by continuing privacy changes, a global economic downturn and a post-Covid cooldown that caused a reshuffling across the ecosystem, with smaller players seizing the opportunity to gain market share as the top media sources, namely Google Ads and Meta Ads, losing ground.

“All of these changes for marketers and media companies have presented multiple opportunities. Apple’s privacy changes continue to pose challenges, while macroeconomic conditions are forcing marketers to be ruthlessly focused on the most profitable media sources and channels as costs of media rise,” said Shani Rosenfelder, director of marketing insights at AppsFlyer, in a statement. “Ecosystem players need to rapidly adapt to a more risk averse environment and think outside the box to maintain efficiency at scale. Adaptability can prove instrumental and separate between tomorrow’s winners and losers.”

With the launch of iOS 14.5 last spring, Apple stopped letting advertisers use the Identifier for Advertisers (IDFA) to track users on an individual level and made it much easier to users to opt out of tracking. Dubbed the App Tracking Transparency (ATT) framework, the result was that user acquisition wasn’t as effective any more and marketers had to find other ways to get users to adopt games and apps.

AppsFlyer said the aftershocks created ATT continue to generate major challenges for app marketers and media companies alike. When comparing pre-ATT to post-ATT market share (H1 2020 vs. H1 2022), the top media sources, Google Ads and Meta Ads in particular, have lost ground on iOS. That has resulted in billions of dollars in lost revenue.

Although both companies were negatively impacted, ATT has been much more painful for Meta. Despite the fact that the social giant is performing well on Apple’s own SKAdNetwork (SKAN) campaigns, it is still far from where it used to be before Apple’s privacy changes came into effect.

For the Android market, Google Ads and Meta Ads still dominate and continue to stand atop the global power ranking, and global volume ranking. However, both giants did lose app install market share in Android during the first half of 2022, but still ranked on top thanks to their unrivaled scale.

TikTok For Business surged in 2022, significantly increasing its scale on Android from Q1 2021 to Q1 2022. The rising social network is dominant in non-gaming, where it ranked third in the global volume ranking. However, a drop in Q2 of 2022 led to its overall install market share rising mildly between H2 2021 and H1 2022.

Additionally, Apple Search Ads (ASA), which functions independently of SKAN and deterministically attributes users regardless of ATT consent, gained the most ground, tripling its market share since H1 2020 and taking over as the number one media source in the iOS rankings.

Economic slowdown places extra pressure on marketers and media companies

The unique market conditions that have emerged in 2022 have deepened the challenges mobile marketers and mobile media sources are facing. App install ad spend budgets dropped 14% in Q2 vs. Q1 of 2022, after a 2% increase between Q4 of 2021 and Q1 of 2022.

The average app budget was down 12%, with a slightly higher drop on Android compared to iOS (-13% vs. -9%). On the media side, seven out of the top 10 and 14 of the top 20 media sources saw the user
acquisition budgets drop in Q2 compared to Q1, including the top three players Google, Meta, and Unity.
All three of those companies have been cutting back on staff this year.

Each of the top three networks lost significantly more than the average dip among the top 10 media sources. A year-over-year comparison shows overall media spend changes in 2022 were four times higher than 2021 (-12% vs. -3%).

In the midst of rising media costs and an economic slowdown, the use of owned media is on the rise, especially among non-gaming apps. Overall, we saw an 18% increase in installs driven by owned media on Android in H1 2022 vs. H2 2021 (compared to a 2% increase in paid media). On iOS, the shift to owned media is higher, surging by 30%. The average per account also shows clear gaps: while paid increased by 3%, owned media jumped 25%.

Media sources across the ecosystem see shift in market share in gaming

For Android gaming, the retention index ranking shows Google Ads maintained its lead in the global power and volume rankings thanks to its unrivaled scale. A deeper look into the numbers, however, shows the search giant lost a very small portion of its install market share, when comparing H1 2022 to H2 2021.

Meta Ads, however, dropped one position in both the global power and volume rankings, which is also seen in a more significant loss of install share. Unity Ads and TikTok for Business both dropped in the rankings, with IronSource gaining significant ground in gaming app installs. The rise of IronSource, which is in the process of being acquired by Unity, is mainly driven by a surge in causal games at the expense of TikTok, Unity Ads, and Meta.

In iOS gaming, Meta Ads held its first-place position in the power and volume rankings in the SKAN Index. The second place ranking was held by TikTok For Business which even gained one spot in the volume ranking to reach the fifth spot. After an extremely slow start, Google Ads did pick up some ground in SKAN, finishing third in the IAP ranking — up three spots in both the power and volume rankings. Applovin and ironSource, however, lost quite a bit of share, each dropping three places in the power ranking.

Unlike the gaming space, the non-gaming app environment is completely dominated by Google and Meta. TikTok For Business has definitely gained ground but it remains a distant third. Due to Google and Meta holding such a significant share in non-gaming, the rankings, where both companies maintained their first and second positions, don’t tell the entire story. A closer inspection shows that Google lost a rather small share of the ecosystem, while Meta shed a more significant percentage.

Methodology

AppsFlyer’s Performance Index analyzed a total of over 500 media sources, 27 billion installs, and over 19,000 apps from January to June 2022. From this, the SKAN Index covered 450 million postbacks from over 2,400 apps and 45 media sources.