Mobile commerce to top US$6 trillion by 2021

App Annie says in-app advertising growth to remain strong too

LONDON: Tech stocks may be slumping, but the growth of mobile commerce – one of the key trends that has underpinned investor enthusiasm for the sector in recent years – is only likely to accelerate, according to App Annie, a research company specialising in mobile applications.

The San Francisco-based firm forecasts that mobile commerce will top US$6 trillion annually by 2021, App Annie’s founder and chief executive Bertrand Schmitt said in an interview here on Monday.

That figure represents a 160% increase from this year’s US$2.3 trillion estimate for transactions conducted through mobile apps.

Schmitt said that the increased time users were spending on their mobile devices was largely responsible for driving higher spending. People spent about 1.6 trillion hours in aggregate on mobile apps in 2016. App Annie forecasts that will grow to 3.5 trillion hours by 2021.

That figure in turn has been driven by the growing adoption of smart phones and tablets worldwide. “By 2021, you will really have almost everyone on the planet, ages five to 75, using either a smartphone or a tablet,” Schmitt said.

In-app advertising growth will also remain strong, App Annie is forecasting. It estimates that total in-app ad spending will grow to US$201bil by 2021 from an estimated US$101 bil this year.

In addition, App Annie analysts see the mix of that advertising shifting. Traditionally, ads for mobile games dominated in-app advertising.

But this year, App Annie forecasts that revenue for other types of products and services will exceed game-related ads for the first time.

And by 2021, the research firm forecasts that non-game ads will represent US$115bil in spending, while game ads will be US$86bil.

Purchases of mobile apps themselves will generate US$139bil a year by 2021, App Annie forecasts, up from US$62bil last year.

But here games will maintain their dominance. They accounted for 80% of app store revenue last year and will still make up about 75% in 2021, App Annie predicts.

Schmitt said that despite lots of hype a year ago about the coming dominance of messaging apps and the use of chatbots within these applications for commerce, the number of standalone apps people use has only continued to grow.

The average person uses 35 different applications each month. And in China, the figure is 39 apps on average, despite the importance of the messaging app WeChat in that market.

“WeChat is not taking over from other apps,” Schmitt said.

Schmitt was also skeptical that intelligent digital assistants, like Amazon.com Inc’s Alexa, Apple Inc’s Siri, Microsoft Corp’s Cortana and Alphabet Inc’s Google Assistant, will come to dominate how people interact with apps.

“There are some good use cases for digital assistants,” he said. “But 90% of interactions will not be replaced by these bots.”

He noted that while Amazon shipped 10 million units of its smart speaker Echo – which is the way most people interact with Alexa – last year, 1.2 billion smart phones were shipped.

“That’s a 1:100 difference,” he said.