AppFlood Global Mobile Android Advertising Insights

Q1 2014

Q1 2014 mobile ad ecosystem

at a glance

• Mobile traffic grew 45.47% QoQ

• eCPM rose 100% YoY to $0.97

• CPI prices declined to $0.30 in Q1 2014 post-holiday season

• Rich media ads grew 34% MoM and shows signs of chipping away

at interstitial mobile ad revenue

• Asia and the Middle East traffic accounted for 50% of global traffic

combined

• China spread out its mobile ad spend globally, but U.S. advertisers

re-invested 62% of its budget back into the U.S. alone

Global mobile traffic continues growth

With more mobile devices shipping to the global market, mobile traffic continues its

consistent growth as traffic increased 45.5% QoQ between Q3 2013 and Q1 2014. Traffic

grew 25.09% MoM.

eCPMs are on the upswing

eCPMs have kept pace with mobile ad traffic growth as inventory grows. eCPMs reached

$1.26 in February 2014. Q1 2014’s eCPM rose 100% to $0.97 compared to the same quarter

last year.

Cost-per install levels off

post-holiday season With demand from performance advertisers for traffic cooling off, CPI prices declined

from a high of $0.51 during Q4 2013 to just $0.30 by the first quarter of next year.

Interstitials are a cash cow,

but rich media revenue is rallying Interstitials accounted for the lion’s share (70%) of total mobile ad

revenue by ad format in Q1 2014.

However revenue from the interstitial mobile ad format declined 14% MoM as rich media

ate into interstitial revenue and climbed 34% MoM.

All eyes are on Asia & the Middle East

Collectively the largest source of traffic in Q1 2014 originated from Asia and accounted for

27% of total traffic. However, the Middle East followed with 23%.

Traffic from Asia and North America are

more likely to convert into users The second largest volume of traffic may have originated from the Middle East, but the

region’s users only accounted for 12% of total installs generated. North America and Asia

lead with 23% of total installs and 21% of total installs respectively.

Not surprisingly, western regions clearly lead on install-rates. North America peaked at

7.72% during Q1 2014, while Asia’s IR was just 2.83%.

Western Europe and North America compete for

mobile ad spend with the east - Asia and Middle East

North America and Europe combined received 1.7 times the investment

than Asia and the Middle East.

Chinese developers outspent U.S. on mobile in H2

2013, but U.S. eclipsed China in Q1 2014

Mobile ad spend from Chinese advertisers outpaced the U.S., growing 110% QoQ

compounded between Q2 2013 and Q1 2014 to the U.S.’s 86% QoQ.

However U.S.

advertisers bounced

back to overtake

China by February

and March 2014.

During the first

quarter of this year

China’s spend

declined 15% MoM,

while the U.S.’s spend

increased 16% MoM.

Chinese advertisers have global agendas, while

U.S. advertisers are sticking close to home

To Chinese

advertisers, Asia and

the Middle East

regionally were the

highest priority, which

accounted for 32%

and 21% of their total

budgets in Q1 2014

respectively.

U.S. developers on the

other hand simply re-

invested in the U.S.

with as much as 62%

of their total mobile

ad budget spent on

targeting North

America alone.

The U.S. outspent China in Q1 2014, but Chinese and U.S. advertisers clearly exhibited

completely different mobile advertising strategies. Chinese advertisers diversified their

spend by running global campaigns.

Interest in the Middle East mobile market is

growing and can’t be ignored

A clearly underrepresented region increasingly targeted by both western and eastern

developers is the Middle East. The emerging region of Southeast Asia on the other hand

continued to be in demand by Chinese advertisers.

As the smartphone penetration rate grows and matures in the Middle East, more mobile

advertisers are demanding Middle East traffic. Consequently, global spend into the Middle

East grew 62.4% QoQ since Q3 2013.

The mobile app

economy is evolving

While the mobile app economy has traditionally been western-centric, we’re beginning to

witness a marked shift whereby the east is growing into a contender with the west.

• As demand for inventory increases, the buying power is shifting to China, although

western budgets from the U.S. are competing hand-to-hand.

• Advertisers from China are investing not only in western traffic, but more investment

on mobile is being allocated into eastern traffic from regions including South East Asia

and the Middle East, while U.S. advertisers are reinvesting their spend into the U.S.

• With the app economy evolving, there’s a growing demand for rich media ads as more

brands enter the mobile ad space from both the east and the west.

Data and analysis in the AppFlood Global Mobile Android Industry Insight report are derived from on AppFlood’s mobile

advertising network, including AppFlood Android advertisers, publishers, and partners.

Launched by PapayaMobile in July 2012, AppFlood is the

largest global mobile RTB network from China.

AppFlood has since attracted more than 10,000 Android

and iOS developers. Since launch, more than 400 million

unique handsets globally have displayed app promotions

from the AppFlood network.

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