Mobile App Inventory Hungry Enough to Eat Internet Display Ad Spend
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 …
Context & Ripple Effects
Flurry's claim that worldwide app inventory is soaking up internet display budgets lands six months after a Bits report projected mobile app revenue reaching $38 billion by 2015 — the same arc, now measured from the advertiser side rather than the developer side. The mechanism behind the inventory boom is the one Flurry has tracked all along: explosive iOS and Android adoption, extended by devices like the 24 million iPod Touches it counted back in 2009.
The supply of ad slots is also being fed by a business-model shift Flurry confirmed in July 2011: free-to-play revenue has overtaken premium pricing in the App Store, and its Game Acceleration Program is actively consulting developers on making that switch. More free apps means more sessions, which means more inventory to fill.
First-order effects
- Web publishers competing for the same display dollars now face a rapidly expanding pool of cheaper in-app inventory, pressuring their CPMs right as iOS and Android device growth accelerates.
- Developers who adopted free-to-play — the model Flurry says already out-earns premium in the App Store — gain a second revenue lever, since ad fills monetize users who never pay.
Second-order effects
- Ad networks and exchanges are pushed to build mobile-specific targeting and measurement, because desktop-era display tooling cannot price an audience defined by app sessions rather than pageviews.
- Premium game and app publishers face margin pressure on paid downloads as free-to-plus-ads rivals undercut them, reinforcing the very inventory growth Flurry describes.
Third-order effects
- If ad spend keeps chasing app usage, media measurement migrates from pageview-based metrics toward time-in-app and session counts, forcing agencies and publishers to reprice audiences across screens.
- The pattern points toward a two-sided consolidation: platforms with the largest installed bases capture both the inventory and the demand-side tools, squeezing independent web publishers and small ad intermediaries.
The trend: Advertising budgets are following consumer attention as it migrates from the open web into smartphone apps, with device adoption and free-to-play economics compounding the inventory supply.