(Preview) Mailbag: AppLovin on a Tear, The Business of OnlyFans, Questions on OpenAI and Elon Musk
Sharp Tech with Ben Thompson
Deep Dive
Why has AppLovin seen such significant growth in 2023?
AppLovin has surged past a $100 billion market cap due to its dominance in the mobile gaming ad network space. The company has benefited from Apple's App Tracking Transparency (ATT) changes, which disrupted traditional ad tracking methods. AppLovin's ability to operate both the demand and supply sides of the ad market, combined with its acquisition of MoPub, has allowed it to infer user value through pricing signals, creating a virtuous cycle of performance and growth.
How did Apple's ATT changes impact the digital advertising landscape?
Apple's ATT changes removed the IDFA (Identifier for Advertisers), which previously allowed advertisers to track user behavior across apps and attribute conversions. This disrupted ad targeting and attribution, particularly for companies like Meta and Snap, which relied heavily on IDFA. However, companies like AppLovin adapted by leveraging pricing signals and market data to infer user value, allowing them to thrive in the post-ATT environment.
What makes AppLovin's business model unique in the mobile gaming ad space?
AppLovin operates both the demand and supply sides of the ad market, allowing it to control the entire ecosystem. By owning platforms where ads are bought and filled, AppLovin can infer user value through pricing signals, even without direct tracking. This all-in-one approach, combined with its acquisition of MoPub, has given it a significant competitive advantage in the mobile gaming ad space.
How is AppLovin expanding beyond mobile gaming ads?
AppLovin is rolling out e-commerce advertising, leveraging its existing ad network infrastructure. This expansion is significant because e-commerce is the largest category for digital advertising, even larger than gaming. By applying its successful mobile gaming ad model to e-commerce, AppLovin is positioning itself as a major alternative to Meta in the digital advertising space.
Why has Snap struggled in the post-ATT advertising environment?
Snap has struggled because it failed to develop effective targeting capabilities after Apple's ATT changes. Unlike AppLovin, which adapted by leveraging pricing signals and market data, Snap remained reliant on its own platform for ad delivery. This lack of innovation and adaptation has left Snap at a disadvantage compared to companies like AppLovin and Meta.
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