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Today’s episode is a slightly edited version of a private interview that I did for someone in the investment community who was curious about some of the dynamics driving Applovin’s share price performance. (Note that this is not a live recording—I read out the questions I was asked and the answers to them.)

How does AppLovin stack up among the UA sources for your gaming advertisers?
They are typically the top source on iOS for gaming. They can be number one, two, or three on Android. On Android, that is primarily because Google UAC tends to be the strongest channel. 

IOS certainly continues to be the strongest channel across our gaming portfolio, and I believe this is primarily driven by their control of and visibility into ad inventory through MAX.

I’ve seen dramatically better performance on Applovin for advertisers that have MAX integrated. This makes sense as MAX gives Applovin visibility into ad mon bid levels and allows them to gain stronger efficiencies with UA bids.

How has that performance trended more recently, now almost a year into the launch of Axon 2.0? Does their share of UA budgets continue to grow, or has it stalled out, or is it declining these days?

I think it’s important to isolate and suss out seasonality when looking at scale and performance. Post-Q4, Q1, and Q2, it’s definitely lower and slower. Their share of UA budgets has not grown nearly as much in the last couple of months. But if you adjust for seasonality, I would say that their share of UA budgets continues to remain steady. Axon 2.0 has contributed to some of the performance – but as I mentioned above, I believe MAX is a stronger driver of performance than Axon 2.0. 

Do they have room to grow within gaming, or are they getting too big? Are there still many gaming advertisers spending the majority of their time on other networks?

They still have room to grow within gaming, primarily because significant spending continues to go to other channels—Unity, IronSource, Meta, and Google.

How about the same on the non-gaming side?

On the non-gaming side, they are nowhere as dominant, and I can see a day-and-night difference in performance since we work with non-gaming apps along with games. I hypothesize that this is because there are far fewer ad-monetized apps outside of gaming. The advantage of having MAX is largely absent in non-gaming. Axon 2.0, powered by purchaser data for targeting high-value users, faces challenges without inputs from MAX in non-gaming contexts. 

Small and medium-sized non-gaming advertisers often can’t even launch campaigns on AppLovin without a critical mass of spending and conversion data. Also, it is more difficult to test ad creative on AppLovin compared to platforms like Meta or TikTok, where extensive testing is feasible(for example, we test 50-100 videos a week on Meta and TikTok, which is something that isn’t really possible on Applovin).

What do you foresee for AppLovin as you look out at how the privacy landscape is evolving?

A complete crackdown on fingerprinting by Apple could pose a real risk. Although Apple has categorically stated that fingerprinting isn’t allowed, they have never really enforced this completely(although they’ve certainly taken baby steps in this direction via Privacy Manifests and Private Relay).

However, AppLovin’s significant SDK footprint through MAX may mitigate the impact, lessening any potential negative effects.

Any competitive threats you would be worried about if you were an Applovin investor? The ones that are usually top of mind for us are Google, Unity+ironSource, and FB, but just wondering if any of them has meaningfully improved their performance over the last 6 months or so or if anyone else is worth monitoring.

There haven’t been any massive shifts in the relative share of spend among the key channels, but the wild card I’d look out for that is not on your list would be TikTok, which certainly does tend to shine among some of the apps we work with.

We think Applovin MAX has a 60-70% share of the mobile mediation market. Is that share at risk of being picked away by Unity/ironsource’s LevelPlay or by Google, or do you expect MAX to remain the dominant mediation provider in mobile?

MAX is a very strong moat for Applovin for the reasons mentioned above. Apps with MAX see much stronger UA performance, which is a strong reason for apps to adopt MAX. The larger the footprint of MAX, the more bid data Applovin has—and the stronger their algorithms and performance end up being. For all of these reasons, I expect MAX to remain the dominant mediation provider in mobile.

BEFORE YOU GO

I have a very important favor to ask, which as those of you who know me know I don’t do often. If you get any pleasure or inspiration from this episode, could you PLEASE leave a review on your favorite podcasting platform – be it iTunes, Overcast, Spotify, or wherever you get your podcast fix. This podcast is very much a labor of love – and each episode takes many many hours to put together. When you write a review, it will not only be a great deal of encouragement to us, but it will also support getting the word out about the Mobile User Acquisition Show.

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Thank you – and I look forward to seeing you with the next episode!