Another year has come and gone. 2016 was filled with many changes in the mobile industry. Pokémon Go brought augmented reality (AR) to the masses. India became the second-largest smartphone market in the world. Facebook encountered questions around how their platform measures ads. As we begin 2017, here are our 10 predictions for the mobile ecosystem in the next 12 months.
10. Android-first development will grow
Android is the operating system of choice around the globe—88% of smartphones sold are Android—and its users have an appetite for apps. In 2015, Google Play had twice as many app downloads as the iOS App Store. Yet, many app developers choose to create apps for iOS first. Google is dealing with the operating system version fragmentation issue with “Android Extensions,” which is Google’s way of bypassing device manufacturers and mobile carriers to deliver OS updates to all Androids at the same time. This could change the way users update their devices and will introduce app developers to an even broader audience that previously couldn’t download their app.
9. Android Instant Apps will arrive in India
In May 2016, Google introduced a solution for app abandonment called Android Instant Apps. A new development in the way people discover and share apps, Instant Apps allows users to use an app without downloading it on their device. This could be a valuable tool for users in emerging markets, where the high cost of mobile data limits app downloads. In 2017, we will see Android Instant Apps appearing in countries like India, the world’s second-largest smartphone market.
8. Chatbots come into their own
China’s WeChat used chatbots to help their app grow from a simple messaging app to the monster multi-purpose platform it is today. Facebook introduced bots to its Messenger app in 2016 to connect businesses with consumers in a new way. Between their launch in April and July 2016, 11,000 bots were added to messenger. By September, that number increased to 30,000. Now that Facebook is beta-testing payments within Messenger, it’s clear that the social giant is placing their bets on chatbots. We anticipate more developers will incorporate chatbots into their apps, as the move toward platforming apps progresses.
7. The rise of mini-apps
Retention is one of the most important measures of app success, yet it is a developer’s biggest challenge. Instead of creating large apps that take up space on a smartphone, rarely get used, and risk being uninstalled, developers are creating a streamlined app experience that lives within another app. These are a chatbot, mini-app, or instant apps that live within larger app experiences, like a messaging app or mobile browser. In 2016, we saw many developers try this new idea. Facebook Messenger introduced Instant Games, which allows users to play games within the Messenger app. WeChat introduced ‘mini programs’ a few weeks ago, the first of its kind in emerging markets. We believe this mini-app trend will continue well in 2017.
6. eCommerce usage will increase in India
Across the globe, eCommerce is growing at breakneck speed. In 2017, it is estimated that 55% of Internet users worldwide will make a purchase online. In particular, India’s eCommerce economy is growing rapidly. By 2020, India’s eCommerce market will reach $119B and the average spend (in USD) per online shopper is expected to reach $464, almost double the spend of shoppers in 2015. In light of India’s recent demonetization of 500 and 1,000 rupee notes, we anticipate an increase in eCommerce usage in India. As previous cash-on-delivery users transition to cashless transactions, the increase in digital payment methods will increase consumers’ trust in brands and ultimately, lead to more purchases.
5. Video advertising will take over social advertising
In 2015, YouTube outpaced Facebook as the top video advertising platform. 76% of U.S. advertisers expected to run campaigns on YouTube and Google. One year later, we experienced a shift. In a survey conducted in May 2016, 66% of those who planned to run social video advertising campaigns planned to use Facebook, while only 42% planned to use YouTube. Other social channels are taking notice. Twitter now allows pre-roll video ads. Pinterest launched Promoted Videos. Facebook just announced that they’re testing a “mid-roll” ad format, which will allow publishers to insert ads into video after 20 seconds of viewing. Snapchat began to insert ads in between users' snaps and Instagram inserted ads in between Instagram Stories. In 2017, advertisers will launch their video ads where their users are—on social media.
4. Chinese smartphone brands will reach 45% market share in India
Over the last couple of years, Chinese smartphone brands like Lenovo and Xiaomi have shaken up the market in India. According to Jana’s proprietary data, Xiaomi’s market share grew 3x in six months between August 2015 and January 2016. At the end of 2016, Chinese brands have captured nearly 30% of the Indian market, up from just 9% in 2014. How is this happening? For one, these brands have introduced affordable high-quality devices for users who want value at a low cost. Xiaomi has also taken advantage of the rise of eCommerce, selling most of their devices in large one-day online events, which drive excitement about the brand, as well as sales. As we move into 2017, these Chinese brands will continue to grow in India as more users get online. We predict that they will capture 45% of the market by the end of 2017.
3. Adblocking will force advertisers to rethink ad quality
At least 309M people—16% of the world’s 1.9B smartphone users—are blocking ads on the mobile web. That’s a staggering number, but consider that two-thirds of smartphone users in India and Indonesia are using adblocking browsers—two of the fastest-growing smartphone markets in the world. As more people come online, adblocking will follow. In 2017, we predict that the adblocking conversation will reach its peak. Advertisers will need to adjust their strategies in order to convince consumers that adblockers are not necessary. It’s no easy task, since ads slow down users’ devices, drains battery, and increases data costs—a serious concern for many smartphone users in emerging markets.
2. AR will move beyond Snapchat filters
While the world may not be completely ready for VR, it’s clear that smartphone users around the world embraced AR in 2016. Pokémon Go was an overnight global AR success, even in countries where the app’s release was delayed. In 2017, more apps will incorporate the AR technology in their app experience. Sears used AR this past summer with an-store scavenger hunt in their eCommerce app. Conan O’Brian’s app for his late night talk show also used AR to create a Catch Conan in-app game, which was very similar to Pokémon Go’s gameplay.
1. India’s demonetization will lead to mobile payment app adoption
In November 2016, India’s Prime Minister Narendra Modi announced that all 500 and 1,000 rupee notes would no longer be legal. The resulting panic was well founded, since 90% of all transactions in India are completed with cash and these notes represented 86% of the cash in circulation. With no way to make cash payments, many Indians are adopting payment apps to bridge the divide. Neilson estimates that 12M Indians adopted digital wallets in the days after the demonetization. Paytm gained 5M new users of their payment app within a couple weeks and registered 7M transactions in a day after the announcement. Mobikwik had a 40% increase in app downloads. As we move into 2017, we expect this trend to continue. Prime Minister Modi is in favor of a digitized India, after all.
As we start a new year, it's important to remember that emerging markets will continue to be at the forefront of mobile advertising. Tactics that were successful in developed markets may not work in India, Brazil, or Indonesia. Learn how to adjust to achieve success in our latest white paper, “Emerging Markets: Changing the Game of Mobile Advertising.”