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In recent times, perhaps no other consumer electronic device has impacted consumers as much as mobile phones. Mobile devices are everywhere. In the United States, for example, 91% of adults used mobile phones in 2013, and nearly 40% lived in households that had a mobile phone but no landline phone.1 Even among Americans above age 65, 77% reported having mobile phones.2 The total number of unique individual mobile subscribers worldwide is estimated to be around 4.5 billion.3
Smartphones make up an increasing share of mobile devices. Mobile penetration is expected to rise from 61.1% to 69.4% of the global population between 2013 and 2017.4 At a minimum, most phones in the future will be able to use mobile apps, which are among smartphones’ most popular features. The all-time cumulative total number of mobile app downloads stood at 37 billion at the end of 2011, but showed dramatic growth in 2012 — more than doubling in one year to 83 billion all-time total mobile app downloads.5 By July 2014, there were 1.3 million Android apps and 1.2 million Apple apps available.6 On average, smartphone users have about 40 apps on their phones and regularly use about 15.7
For companies, apps provide ample revenue opportunities. Worldwide revenue from apps was approximately $12 billion in 2012 and is estimated to increase to over $60 billion in 2017.8 Yet as free apps become increasingly prevalent, paid app downloads are expected to decline, and advertising and in-app purchases are likely to become the main revenue streams in the coming years. Mobile advertising has seen triple-digit percentage growth each year since 2010, when PricewaterhouseCoopers began capturing this data.9 In coming years, many new capabilities and potential revenue paths are expected to emerge in the mobile app space.
Yet some people have doubts about the effectiveness and viability of mobile advertising and believe that apps are a better medium.
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1. L. Rainie, “Cell Phone Ownership Hits 91% of Adults,” June 6, 2013, www.pewresearch.org; and S.J. Blumberg and J.V. Luke, “Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, January-June 2013,” December 2013, www.cdc.gov.
2. A. Smith, “Older Adults and Technology Use,” April 3, 2014, www.pewinternet.org.
3. MobiThinking, “Global Mobile Statistics 2014,” June 13, 2014, www.mobiforge.com.
4. eMarketer, “Smartphone Users Worldwide Will Total 1.75 Billion in 2014,” January 16, 2014, www.emarketer.com.
5. Portio Research, “Mobile Applications Futures 2013-2017,” 2013, www.portioresearch.com.
6. “Number of Apps Available in Leading App Stores As of July 2014,” www.statista.com.
7. S. Gupta, “For Mobile Devices, Think Apps, Not Ads,” Harvard Business Review 91, no. 3 (March 2013): 71-75.
8. K. Whitfield, “Revenue Growth in the Apps Market: Where Is the Money Coming From Over the Next Five Years,” March 26, 2013, www.portioresearch.com.
9. PricewaterhouseCoopers , “IAB Internet Advertising Revenue Report: 2013 Full Year Results,” April 2014, www.iab.net.
10. Gupta, “Mobile Devices.”
11. Y. Bart, V. Shankar, F. Sultan and Glen L. Urban, “Are the Drivers and Role of Online Trust the Same For All Web Sites and Consumers? A Large-Scale Exploratory Empirical Study,” Journal of Marketing 69, no. 4 (October 2005): 133-152.
12. Dubble Wrap was deployed in the iPhone app store in 2010 to support the market research study. MoveTools was launched in 2011 and revised in 2014.
i. R.R. Gosline, G. L. Urban and N. Putnam-Farr, “Strengthening Consumer-Brand Relationships With Social Media: How Enabling Identity Work Via Social Embeddedness, Customization and Discovery Impacts Consumers’ Connections to Brands,” unpublished ms, 2013.