Eric Seufert - State of the App Economy: 3 Opportunities and 3 Challenges

1. State of the App Economy: 3 Opportunities and 3 Challenges Eric Benjamin Seufert Online Marketing Rockstars March 3rd, 2017

2. Who I am Heracles Mobile Dev Memo Freemium Economics

3. Who I am

4. Presentation Structure

5. Presentation Structure 1) Current State of the App Economy;

6. Presentation Structure 1) Current State of the App Economy; 2) 3 Challenges & Opportunities in 2017.

8. Current State of the App Economy

9. • Tech giants own considerable mobile audience and that audience is growing; Current State of the App Economy

10. Source: Nielsen Current State of the App Economy

11. - 8 / 10 of the most used apps (in terms of unique audience) owned by Facebook & Google; - “Legacy” apps like Facebook, YouTube, Gmail still growing at >10% YoY. Source: Nielsen Current State of the App Economy

12. - Many of these apps are ad channels and / or third-party content distribution channels. * * * * * * * Source: Nielsen Current State of the App Economy

13. Google Maps is an ad channel and / or third-party content distribution channel? Current State of the App Economy

15. • Tech giants own considerable mobile audience and that audience is growing; • Tech giants are turning their apps into content consumption platforms; Current State of the App Economy

18. • Tech giants own considerable mobile audience and that audience is growing; • Tech giants are turning their apps into content consumption platforms; • Increased consumer engagement / spending on mobile continues to drive advertising budgets. Current State of the App Economy

19. Source: SensorTower Current State of the App Economy

20. Source: SensorTower / Unity *Applies specifically to mobile gaming Current State of the App Economy

21. Source: Flurry Current State of the App Economy

22. Source: eMarketer Current State of the App Economy

23. Source: eMarketer Source: Zenith Current State of the App Economy

26. Facebook is at the center of much of this growth, pushing new innovations in video and other mobile placements; Current State of the App Economy

27. Source: Facebook Q4 2016 10-Q Current State of the App Economy

28. Source: Facebook Q4 2016 10-Q Current State of the App Economy

30. Challenge / Opportunity: Making sense of proliferation of new platforms for user engagement / content consumption.

31. When every device is connected, every device appears to be a platform on which to develop & reach a new audience: 3 Challenges & Opportunities in 2017

32. When every device is connected, every device appears to be a platform on which to develop & reach a new audience: 3 Challenges & Opportunities in 2017

33. • Tech media sometimes uncritically promotes all emerging platforms as ascendant “next big thing”; 3 Challenges & Opportunities in 2017

34. • Tech media sometimes uncritically promotes all emerging platforms as ascendant “next big thing”; 3 Challenges & Opportunities in 2017

35. • Tech media sometimes uncritically promotes all emerging platforms as ascendant “next big thing”; • New platforms are appealing (first mover advantage, lack of price discovery, etc.) but developers need to be able to discern hype & time deployment correctly. 3 Challenges & Opportunities in 2017

36. • Example: VR vs. Mobile Gaming Source: SensorTower / Unity 3 Challenges & Opportunities in 2017

37. OPPORTUNITY: Opportunities to reach new audience emerge constantly as connected devices proliferate and create platforms; CHALLENGE: Difficult to know which platforms will truly reach scale, and being early same as being wrong. 3 Challenges & Opportunities in 2017

38. Challenge / Opportunity: As mobile video advertising surges, attribution and ROI calculation becomes problematic.

39. 3 Challenges & Opportunities in 2017 • Many developers rely on patchwork marketing infrastructure comprised of many 3rd party tools:

40. Data Warehouse (S3, etc.) Data Visualization Tool (Tableau, etc.) Attribution Platform Ad Network Cost Aggregation Platform Ad Networks N1 N2 N3 PMD 3 Challenges & Opportunities in 2017

41. Data Warehouse (S3, etc.) Data Visualization Tool (Tableau, etc.) Attribution Platform Ad Network Cost Aggregation Platform Ad Networks N1 N2 N3 PMD Marketing Team 3 Challenges & Opportunities in 2017

42. Data Warehouse (S3, etc.) Data Visualization Tool (Tableau, etc.) Attribution Platform Ad Network Cost Aggregation Platform Ad Networks N1 N2 N3 PMD Marketing Team 3 Challenges & Opportunities in 2017

43. 3 Challenges & Opportunities in 2017 • Shifting to video complicates this further because clicks / installs aren’t attributable;

44. 3 Challenges & Opportunities in 2017 • Shifting to video complicates this further because clicks / installs aren’t attributable; • Formats such as Facebook Live / Influencer Campaigns can be totally contextual;

45. 3 Challenges & Opportunities in 2017 • Shifting to video complicates this further because clicks / installs aren’t attributable; • Formats such as Facebook Live / Influencer Campaigns can be totally contextual; • Probabilistic models help advertisers match clicks / installs to campaigns.

46. OPPORTUNITY: Continued popularity of video on mobile creates endless new opportunities for audiences to be reached (sometimes cheaply); CHALLENGE: Fuzzy attribution makes it difficult for advertisers to understand ROI. 3 Challenges & Opportunities in 2017

47. Challenge / Opportunity: Growth of Walled Garden advertising platforms.

48. 3 Challenges & Opportunities in 2017 • The biggest mobile advertising platforms are becoming siloed, both in terms of tool offerings and inventory offerings;

49. Existing / Old Paradigm: Inventory Pool Mobile Gaming Advertisers Mobile Commerce Advertisers Dating App Advertisers Mobile Gaming Publishers Dating App Publishers Mobile Commerce Publishers Ad Networks / Native Inventory Sources 3 Challenges & Opportunities in 2017

50. Emerging Paradigm: Mobile Gaming Advertisers Mobile Gaming Publishers Dating App Advertisers Dating App Publishers Mobile Commerce Advertisers Mobile Commerce Publishers & travel, etc. Brand Advertisers & travel, etc. Retail Advertisers 3 Challenges & Opportunities in 2017

51. 3 Challenges & Opportunities in 2017 • The biggest mobile advertising platforms are becoming siloed, both in terms of tool offerings and inventory offerings; • Owned inventory platforms have created vertical-specific inventory pools;

52. Ad Networks / Exchanges Owned Inventory ● Retail; ● Brand; ● Mobile commerce; ● High-LTV / High-CTR Games. ● Intent-based advertising (travel, in-store retail). ● Brand; ● Youth-oriented retail; ● Entertainment. ● Games; ● Finance 3 Challenges & Opportunities in 2017

53. • NOTE: This segmentation is soft. Every type of app is & will continue to be advertised everywhere; 3 Challenges & Opportunities in 2017

54. OPPORTUNITY: Platform-specific tools and inventory help advertisers reach appropriate audiences more efficiently; CHALLENGE: Walled gardens create scaling difficulty for advertisers. Analytics / infrastructure “lock in” can limit growth. 3 Challenges & Opportunities in 2017

55. http://hrcls.co eric@hrcls.co @eric_seufert Thank You!