The mobile marketing industry has gone through periods of consolidation for over a decade. Merger and acquisition deals heated up back in 2021 with almost 1,500 ad tech M&As between 2020 and 2021. This growth slowed considerably during 2022 due to rising inflation and global market uncertainty. Now in 2023, we are expecting to see a rebound in consolidation activity given the history of the ad tech industry. 

Consolidation can come in many different forms and has been a trend not only with ad tech companies, but with apps as well. In this blog, we outline why industries consolidate and how these mergers affect the app market as a whole. 

Why do Industries Consolidate?

Consolidation is a stage in the industry life cycle where competitors in industries start to merge with one another. Companies will seek to consolidate in order to gain a larger portion of overall market share and to take advantage of synergies. Consolidations can take the form of mergers, acquisitions, or partnerships. Some of the primary reasons for industry consolidation include cost savings, technological advancements, and elimination of competition.

Cost Savings and Efficiency

Consolidation can lead to economies of scale, where companies achieve cost savings by spreading fixed costs over a larger revenue base. This allows them to be more efficient and competitive in the market. When companies merge or acquire others, they combine their resources, infrastructure, and operations, leading to reduced duplications and overlapping functions. 

This streamlined approach leads to more efficient resource allocation, especially in the mobile industry. Two consolidated companies that specialize in certain areas can focus on their primary goals without having to hire additional staff or spend money on extra resources. Through these mechanisms, industry consolidation not only boosts ROI, but also enhances the overall competitiveness and resilience of the consolidated entities.

Technology Advancements 

Enhancing a company’s technological capabilities is one of the biggest drivers for industry consolidation. Combining resources and expertise from different companies can accelerate technological innovation, enabling them to stay competitive in rapidly evolving industries. In the ad tech industry, this technological advantage can lead to better products and support for users. 

With mergers, a smaller number of large and wealthy  ad tech vendors can invest in top-notch products. Scaled companies can also  provide better support for a large number of clients than tiny startups. However, making sure the support is still personalized and relevant is a key part of success while consolidating. 

Diversification

Consolidation can enable companies to diversify their product or service offerings, reducing their reliance on a single line of business. This can help mitigate risks and provide more stable revenue streams. When businesses combine forces, they can offer more products and functionality under one roof. For example, if a company is looking for a DSP and creative support partner, they would be able to find that all in one place such as YouAppi. This eliminates the need for clients to rely on vendors for each of their specific needs. 

Elimination of Competition

Industry consolidation can reduce the number of competitors in a market, leading to increased pricing power for the remaining companies. As companies merge or acquire their rivals, they reduce the number of players in the market. This reduction in competition can result in a more concentrated industry landscape where a few dominant players hold significant market share. With fewer competitors, these companies can exert greater control over pricing, product offerings, and market dynamics. 

Mobile Consolidation

In 2021, 90 M&A deals were struck in the ad tech industry, which accounted for an 82% increase overall from 2020. Since then, we’ve seen a steady decline in consolidation in the mobile industry. This may have been due to the unstable nature of the economic climate or just a natural rebalancing of the industry. 

Ad Tech Consolidation in 2023

The need to develop omnichannel solutions for marketers and publishers will drive additional industry evolution throughout 2023. It's imperative that mobile companies stay relevant in a privacy-first advertising environment. This means structuring companies in such a way that less data is shared with fewer partners. By merging, ad tech companies can store user data in a more secure way, while also combining their technology innovations to create faster and more efficient products. 

For example, the recent acquisition of YouAppi by Affle represents a strategic partnership that aims to support YouAppi's core business while benefiting from the resources and expertise of Affle. This collaboration enables YouAppi to continue operating independently, with the added advantage of being backed by the Affle team.

The Rise in Super Apps

It’s estimated that the top 15 most popular super apps have been downloaded more than 4.6 billion times around the world, with 2.68 billion monthly active users. By 2027, Gartner predicts that more than 50% of the global population will be daily active users of multiple super apps. 

Super apps can be compared to the Swiss army knives of mobile apps. They carry many tools that serve multiple purposes, but ultimately all create an overall better, more tailored user experience. A super app is a single app that offers multiple diversified services for everyday personal or commercial life. These services range from social media and messaging to bookings for transportation, travel, and doctors’ appointments to food delivery to wealth management to e-commerce marketplaces to video games and countless other products and services.

These apps deliver a mobile-first experience that truly caters to a growing digital-native generation. Organizing multiple offerings within a consolidated customer journey can boost user engagement, as well as create strong network effects and switching costs that lock in users, sellers, and advertisers.

Super Apps in 2023

This shift towards super apps has revolutionized the mobile app industry and brought convenience to users' fingertips. By creating a super app, brands can significantly boost their company’s data collection possibilities as consumers interact with products across a wider range of contexts. Although super apps are mainly adopted in Asia, a 2022 consumer survey found that 72% of U.S. respondents would be interested in using a super-app.

Successful companies such as Walmart are already working on building super apps for their workforce, consolidating and replacing previously clunky processes. Rather than having employees use multiple vendor-supplied applications, which often have poor user adoption and are complex to manage, superapps create a single, streamlined experience for employees and managers alike.

Super apps demonstrate the way mobile consolidation can take on many different forms. Leveraging personalization and tailored experiences engages users and creates loyalty. With super apps, these concepts can be taken to a whole new level. Mobile marketers need to be aware of how these powerful tools can streamline and customize user experiences.

Takeaways of Mobile Industry Consolidation in 2023 

The mobile marketing industry has gone through periods of consolidation for over a decade. Consolidation can come in many different forms and has been a trend not only with ad tech companies, but with apps as well.

Why do Industries Consolidate? Consolidation is a stage in the industry life cycle where competitors merge. Some of the primary reasons for this include cost savings, technological advancements, and elimination of competition.

Mobile Consolidation in 2023: The Rise of Super Apps: 

  • Super apps can be compared to the swiss army knives of mobile apps. They carry many tools that serve multiple purposes, but ultimately all create an overall better, more tailored user experience. 
  • The top 15 most popular super apps have been downloaded more than 4.6 billion times around the world, with 2.68 billion monthly active users. 
  • By 2027, more than 50% of the global population will be daily active users of multiple super apps.