As the global economy becomes increasingly mobile-first, the app startup ideas and opportunities are exploding. The value of the global app economy is set to soar from $1.3 trillion in 2016 to a staggering $6.3 trillion by 2021, driven by device base growth and increasing engagement with apps. With the user base expected to nearly double from 3.4 billion people in 2016 to 6.3 billion in 2021, time spent in apps will grow even faster, from 1.6 trillion hours in 2016 to 3.5 trillion in 2021.
The growth of annual spend per user from $379 to $1,008 on a global basis is fueled by innovation and the transition from physical transactions to mobile. For instance, Alibaba's China retail marketplaces saw mobile transactions account for an impressive 79% of total transaction value generated in fiscal year 2017, up from 65% in fiscal year 2016.
However, these statistics only scratch the surface of the impact of apps on businesses and economies worldwide. For example, growth in usage of retail banking apps is driving down costs for large multinational institutions like Bank of America and Barclays to serve their customers by reducing visits to branches. Moreover, many developed western economies will lag behind Asia-Pacific countries in the shift of activity, consumer spend, and ad spend to mobile.
The Engines of Growth: App Stores, In-App Ads, and Mobile Commerce
App Store Forecast
As the demand for apps continues to rise, app stores are poised for explosive growth. Meanwhile, global in-app advertising spend is set to nearly triple in size from $72 billion in 2016 to $201 billion in 2021. Asia-Pacific is projected to outpace other regions, growing at a 25% CAGR to hit $77 billion.
In-App Advertising Forecast
The Americas is forecast to remain the single largest region for in-app advertising spend, growing at 26% CAGR to hit $85 billion. EMEA is expected to trail the global average growth rate with a 15% CAGR mainly due to greater inefficiencies in some markets and lower advertising dollars targeting consumers in parts of the Middle East and Africa.
Mobile Commerce Forecast
Mobile commerce is driving the growth of the mobile and app economy, representing a clear demonstration of the shift to mobile. Global mobile commerce is outpacing other forms of monetization and growing at a 38% CAGR through the forecast period. It is projected that mobile commerce per user globally will increase from $344 to $946 by 2021.
As we've seen before, Asia-Pacific has developed more quickly in terms of the shift to mobile and is forecast to grow at a 36% CAGR to reach $3.2 trillion in 2021, remaining the single largest region for mobile commerce revenue through the forecast period. Commerce in the Americas is in the midst of its transition to mobile and will grow at an impressive 44% CAGR to hit $1.7 trillion. Finally, most of EMEA is beginning this transition; given its relatively small base today of $210 billion, it will see the highest growth rates as it expands nearly five-fold to reach $1.0 trillion in 2021.
The app startup ideas and opportunities are vast, with the potential for businesses to reap significant rewards by embracing mobile-first strategies. As the global economy continues to shift towards a more mobile-centric landscape, entrepreneurs and innovators alike will need to stay ahead of the curve to capitalize on this explosive growth.