Applovin - Key Competitors:

Overview:

In 2024, total digital mobile advertising spend was estimated to be around $400 billion USD (Statista, SensorTower), growing at an annual rate of approximately 10.8% over the past two years.

While some sources cite figures as low as $100 or $200 billion, these are likely inaccurate.
Multiple estimates suggest that average mobile phone usage per person ranges between 240 and 300 minutes per day (Statista, Datawrapper, Harmony). A portion of this time, around 7.9% (calculations below) is spent on mobile gaming, as calculated below.

Market Share:

Statista provides the following breakdown of engagement minutes spent on gaming by age group. Using this data, we can determine the appropriate weightings for different demographics.



According to Statista, the U.S. accounts for approximately 45% of all digital advertising spend, while China represents around 33%. However, due to regulatory restrictions, most mobile ad spend in China flows through domestic tech giants such as Baidu (the "Chinese Google"), ByteDance (TikTok/Douyin), and Tencent (WeChat).

Statista’s estimates appear reasonable, considering that AL operates globally, including in China, where it maintains a dedicated Beijing office. Their total FY24 revenue is as follows:


META, which allocates revenue based on the location of the ad impression, cannot be used within China to advertise to local consumers. However, Chinese advertisers can still leverage Instagram and Facebook to reach overseas audiences, with revenue recognized in the region where the impression occurs rather than where the advertiser is located.


Similarly, Alphabet’s (Google) advertising network does not directly target users in China but allows Chinese advertisers to market to global audiences. Google allocates its revenue based on the advertiser’s billing address.

The lower APAC revenue base may be partly attributed to Google’s lower market share in South Korea (33%), where Instagram holds a ~48% share.

An interesting point would be the percentage of ad spend that is domestic—where both advertiser and consumer are in the same country. While this likely represents a slight majority, it is not a critical factor in our analysis and will not be explored further.

Using the age distribution data, we can cross-reference with Statista’s figures on daily gaming time to approximate the total market size.


For this analysis, we focus on the U.S. and Europe. The average daily time spent on mobile gaming appears to be around 20.9 minutes. Since this is a minor factor in the overall calculation, we will use 20.9 minutes as our benchmark.

For the final analysis, it would be useful to find data on gaming engagement minutes broken down by gender and age group, if market share proves to be a material factor in pricing.

Given that the average person spends approximately 20.9 minutes per day on mobile gaming and total mobile screen time falls between 240 and 300 minutes, gaming accounts for 7.0% to 8.7% of total engagement minutes.
Using a simple proportional allocation, we estimate that around 7.0% to 8.7% of all mobile ad spend is directed toward gaming. This implies a total market size of $28 billion to $34.8 billion.
From AL’s financial statements, their FY24 revenue was approximately $4.7 billion, giving them an estimated market share of 13.5% to 16.8%.

Applying similar assumptions, we estimate the gaming ad market share of META and Alphabet as follows:

• Meta: Assuming ~7.9% of total ad revenue is allocated to gaming → $12.6 billion
• Alphabet: Assuming ~4% (0.5 * 7.9%) of total ad revenue is allocated to gaming → $10.5 billion

(Statista estimates that ~$400B was spent on mobile advertising and $790B billion on total digital advertising.)

Assumptions based on a midpoint market size of $31.4 billion (7.9% engagement minutes share), with market share estimated by revenue.

Ideally, we would also have supply-side data, such as the number of mobile games/apps with AL’s AppDiscovery installed. However, this information was not readily available.
That said, the mobile gaming ad market has grown at ~10.8% annually over the past two years. During this time, AL’s AppDiscovery installations increased by 17.5% and 50% in consecutive years, while revenue per install rose by 35% and 22%. Notably, supply-side market share is not mutually exclusive, as app developers can integrate multiple ad network SDKs.

Demographics:

A more critical driver of financial performance is audience demographics.

Applovin’s core ad supply caters primarily to casual mobile gamers, a demographic that skews younger

and female


similar to a key competitor, Meta.


This demographic also happens to be the most engaged with online shopping (BELVG, amzscout, Digital Position)

Additionally, a firm called Digital Position claims to have interviewed an AL founder to produce audience statistics for AL’s platform:

While the validity of this data is unconfirmed, it aligns with expectations based on their core market.

Another factor to consider is ad engagement. In-app ads are often unskippable and require user interaction to dismiss, making them more engaging than Instagram ads, which can be scrolled past instantly. This suggests that AL’s ad inventory may be more valuable than Meta’s, potentially reflecting higher eCPM rates for advertisers.

Next Steps

In the next post, I will delve into the company’s financials, explore preliminary price targets, and discuss key catalysts and risks for the stock.

Stock Price at time of first publish: $318.00 USD