The Maze: AppLovin, an advertising network that sells space inside mobile apps and games, reported on November 4 that third-quarter revenue rose 55% from a year earlier to $2.18 billion. Management also said a group made up mostly of online retailers increased its ad spending. For a store weighing its next ad buy, that puts the spotlight on a familiar question in a different setting: can an ad inside a game bring in orders the store would otherwise miss?
The Details:
The network earned more per app install. AppLovin said better performance at its advertising business was the main reason revenue grew. In its quarterly filing, the company said the net revenue it earned per app installation rose 55% from a year earlier while the number of installations rose just 2%. An installation in that measure is an app install. An order on a retailer’s website is a separate outcome. On the earnings call, finance chief Matthew Stumpf said spending by consumer advertisers, mostly web retailers, rose by double digits from the previous quarter and at least doubled from a year earlier. AppLovin gave no dollar figure for that spending and did not disclose ecommerce revenue separately.
Stores buy space in the same games. AppLovin started bringing web retailers onto its network in 2024. A store can run a full-screen video during a break in play, or a player can choose to watch it in exchange for an in-game reward. After the video, a player can see an interactive page and a catalog of products chosen for them. AppLovin’s chief executive described retailers and game developers bidding for the same ad spot. The network gives stores a way to reach people while they play. The filing does not show whether the competition has raised prices for those spots.
A sale credited to an ad may have happened anyway. AppLovin’s reporting can count purchases after someone clicks an ad, and advertisers can also choose to include purchases after a same-day view. Imagine a player who sees a shoe ad, goes back to the game and buys the shoes later that day. The sale may appear in the dashboard even if the player already planned to buy. The reverse is possible, too. Someone who sees the ad and buys after the reporting window could be missing from the count. AppLovin itself distinguishes dashboard figures from controlled tests that compare sales in areas with ads and similar areas without them.
MarketMaze Take: A mobile-game campaign earns a bigger budget if it brings in enough extra profit to cover the cost of the ads and the videos needed to run them. An online retailer can compare total store sales in similar regions, running the ads in one and holding them back in the other while keeping promotions comparable. That comparison helps show what AppLovin added, including purchases that show up under another channel in the store’s reports. AppLovin’s growing revenue makes game inventory worth a look. The retailer’s own test determines how much it’s worth paying for.
