Why mobile app-install ads help developers, Facebook, and Twitter

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Mobile app-installs help app developers monetize their apps

In the previous part of this series, we discussed how only one-third of smartphone users download one or more apps every month in the U.S. Apps from Facebook (FB) and Google (GOOG)(GOOGL) remain popular options. This means it becomes difficult for app developers to monetize their apps. But mobile app-install ads have become a popular option among developers to promote their apps.

These ads appear below an app that the user is currently engaged with. These ads encourage users to download new apps directly from Apple’s (AAPL) App Store or Google Play. This helps developers promote their app and also helps in monetization.

Ad revenue share for FB and TWTR

Mobile app-install ads are a lucrative business for social networks also

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These ads have become a lucrative business for social networks such as Twitter (TWTR) and Facebook also. For example, Twitter has started to put these ads in its news feed. During Twitter’s Citi 2014 Global Technology Conference held earlier this month, management mentioned that it has a number of clients such as early-stage companies Uber and Lyft as well as established brand Electronic Arts (EA) promoting their brand through app-install ads.

Even Facebook has immensely benefited from these ads. It observed that App Installs have been one of Facebook’s best-performing ad products, driving over 350 million installs to date. Facebook launched this product in January 2013. The product has gained a lot of uptake—over 60% of the top-grossing apps on Apple’s and Google’s app stores use mobile app-install ads.

Social networks now derive the majority of their revenues from mobile devices

As the chart above shows, the ad revenues share from mobile devices has consistently increased for both Twitter and Facebook. Mobile platforms now constitute 81% and 62% to their overall revenues, respectively. This penetration is way higher for these companies compared to other Internet companies. Mobile app-install ads have played an instrumental role in growing their revenues from mobile devices.

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