A new report by AppsFlyer analyses the state of global app install ad spend, and forecasts that app developers will spend $94.9 billion in their attempts to acquire new users in 2025. This represents a 20% rise from 2023.

Several key reasons are identified in this forecast. Firstly, the market is recovering following a significant normalisation due to the easing of lockdown restrictions, with consumers worldwide spending less time on their phones following an extended period where new users turned to their phones for entertainment.

More recently, there’s been an uptick in investment in iOS following an initial decline during the release of iOS 14.5 and ATT, which caused significant struggles in terms of user acquisition. Since then, apps and media sources have increasingly adapted to Apple’s SKAdNetwork in spite of its restrictions due to the high average quality of the company’s user base.

Looking forward, adoption for SKAdNetwork 4.0 are expected to reach critical mass, and this will be followed by continued upgrades and enhancements, leading to the release of SKAN 5.0.

Putting privacy first

It isn’t just Apple that is putting the privacy of users first. Google will be rolling out Privacy Sandbox for Android in 2024, and this is expected to be a smoother release than SKAdNetwork. Additionally, the system will offer marketers enhanced visibility into campaign performance in terms of both user acquisition and remarketing, allowing them to analyse their campaigns and action any necessary changes.

The past year has also seen a significant increase in the use of data clean rooms (DCR), which process and manage sensitive data in a privacy compliant way. DCR’s allow marketers to join their first party data with conversion data to regain visibility.

Additionally, the continued rise of AI allows for more measurement and campaign optimisation solutions, which are expected to surge in the coming years. By utilising AI effectively, marketers can successfully navigate the changing user acquisition landscape.

Outside of marketers adapting to privacy changes, another significant factor has been identified in the forecast growth: the rise of mobile in developing nations. The number of smartphones is expected to increase 13% worldwide from 2022 to 2025, and marketers will feel pressure to target these new users in their user acquisition campaigns in order to effectively capitalise, which necessitates an increase in ad spending.

Earlier this year, AppsFlyer reported that consumers were exposed to $5.4 billion in app fraud last year.