ByteDance Ltd.’s TikTok has achieved a key milestone in the mobile app business by becoming the first app to cross $10 billion in cumulative consumer expenditure. This is a pioneering achievement. According to a data.ai analysis, TikTok’s in-app purchases—more particularly, the sale of credits that are used to tip live streamers and content creators—are the reason for the platform’s success. This monetization technique has raised the bar for the sector and is referred to as “unlocking the secret to mobile monetization.”
Credits: Bloomberg
Video Streaming Platforms Drive App Sales Surge
Video-streaming services like TikTok and Disney+ emerged as major contributors to an 11% increase in consumer app sales in 2023, despite a difficult year for the games industry. The research highlights the tenacity of the demand for video content in contrast to a double-digit sales fall in China’s game industry, which had a detrimental influence on worldwide sales. This change in customer preferences for streaming services and user-generated content is indicative of a larger trend.
Monetization Beyond Advertising: TikTok’s Pioneering Role
The paper highlights the critical role of social apps and the creator economy while shedding insight into the changing landscape of monetization tactics. TikTok’s creative tipping system for video creators is praised as a trailblazing initiative that transcends conventional advertising. According to Lexi Sydow, Director of Corporate Marketing and Insights at data.ai, this method created the foundation for new revenue streams. According to the analysis, direct consumer monetization through in-app purchases in social apps is expected to expand by 150% and reach $1.3 billion by 2024.
Advertising Remains Dominant: Battle for User Attention Intensifies
While spending in apps, particularly in streaming, user-generated content, and dating apps, saw significant growth, advertising retained its position as the primary revenue driver. Advertising revenue rose by 8% in 2023, reaching a substantial $362 billion and constituting two-thirds of mobile sales. As the industry anticipates a projected $402 billion in global mobile ad spending in 2024, the battle to attract and retain user attention becomes paramount. Companies are expected to intensify efforts in user engagement strategies and innovative ad formats to capitalize on this lucrative market.
Global Variations in App Usage and Spending Habits
The report highlights the diverse patterns of app usage and spending across the globe. Consumers in Indonesia lead in daily smartphone usage, averaging over 6 hours per person per day. The top 10 markets collectively hit an average of 5 hours of daily app usage, with a 3% increase in app spending observed in 2023. South Korea, Brazil, Mexico, and Turkey stand out with remarkable growth rates, each experiencing a 25% or more increase in consumer app spending for the year.
Chinese Apps Shein and Temu: Surging Downloads and Market Impact
Chinese budget shopping sensations Shein and PDD Holdings Inc.’s Temu have experienced a significant surge in download rankings, growing by an impressive 140%. Temu, in particular, has led downloads across 125 markets. The success of these apps underscores the global influence of Chinese companies in the mobile app space. The increased adoption of these platforms could potentially impact local competitors and reshape the global e-commerce landscape.
Revival of Travel and Ticketing Sectors: Post-Pandemic Trends
In a post-pandemic landscape, the travel and ticketing sectors have witnessed a rebound in popularity and spending. The report attributes this resurgence to the growing demand for in-person events and experiences. As restrictions ease and confidence in travel returns, companies in these sectors are likely to benefit from renewed consumer interest. This shift provides opportunities for innovation and competition within these industries.
AI’s Ascendance: Generative AI and Digital Innovation
The report highlights the ascendance of artificial intelligence (AI) as a key factor in attracting new users. Generative AI, in particular, experienced a sevenfold surge, with distinct sub-segments like AI chatbots and art generators emerging. Generative AI apps surpassed $10 million in monthly consumer spending by late 2023.
