AppLovin Corp: Conversion Rates Are Rising...and That's the Key to the Bull Case

研报英文原文证据摘录

AppLovin Corp: Conversion Rates Are Rising...and That's the Key to the Bull Case

IdeaM

Why The In-Game Ad Market Backdrop Is Supportive of

APP's Growth

Investor debate has centered on what the potential headroom for future growth is on

ad platforms like APP. Specifically, these concerns are focused on the room for continued

growth in gaming and the future performance of web/e-commerce advertising. We expect

independent in-app ad tech to grow at an 11% CAGR through 2030, and in-app remains

meaningfully under-monetized versus other ad channels. Continued platform

improvements can lift conversion rates and increase net revenue even if advertiser

spending remains stable. In our view, these dynamics suggest growth can continue to

compound even at the scale APP has reached.

Independent In-App Ad Tech Remains a Meaningful Growth Market, with Non-Gaming

Verticals Expanding... In-app advertising remains heavily weighted toward mobile gaming

today, while verticals outside gaming like retail and entertainment are important drivers of

future growth. We expect the industry to reach ~$139bn by 2030, representing a ~11%

CAGR. As gaming remains the majority of in-app performance advertising today, we see

expansion in non-gaming advertising as an incremental growth driver that can expand the

addressable market for ad platforms over time.

Exhibit 9: We expect global ad spend on independent in-app ad tech platforms to

reach $136bn in 2030.

Source: Altman Solon, Morgan Stanley Research

...While Operating Inside the Larger Global Mobile Ad Spend TAM of $554bn. Although

the near-term serviceable opportunity for independent in-app ad tech is ~$79bn, the total

in-app and mobile advertising market is meaningfully larger when including walled garden

platforms like GOOGL and META.