When global advertising giant Google starts frequently discussing an obscure little company in internal meetings, you know things are getting interesting. This ad tech company named AppLovin is using "taboo" methods — tracking consumers' online behavior with IP addresses — to make inroads in the mobile app advertising market, forcing the search giant to make exceptions and change its privacy policy.
$Alphabet-C (GOOG.US)$ The alarm bells are ringing for the core advertising Business - Alphabet-C's mobile app advertising Business growth has suddenly stalled, with internal attribution pointing directly at. $Applovin (APP.US)$ 。
According to The Information on June 3, 2023, Google advertising executives noticed a concerning trend: the formerly hot mobile app advertising revenue was slowing down. As this multi-billion dollar business faced setbacks, internal employees reached a consensus — the small advertising technology company AppLovin was eating into Google's market share.
AppLovin specializes in placing ads within game applications, and its growth secret lies in ignoring the privacy constraints followed by Google. The company continues to use IP address tracking of consumers' online behaviors, which is precisely what Google voluntarily abandoned in 2019. This means AppLovin can offer advertisers precise targeting capabilities that Google cannot match.
According to former Google employees, the key to AppLovin's soaring market share lies in breaking the 'privacy taboo': while Google strictly adhered to industry guidelines prohibiting IP address tracking across websites, AppLovin leveraged this to accurately identify user devices. This 'cheating tool' allows advertisers to achieve targeting precision that Google cannot match, directly resulting in inverted advertising conversion rates. Consulting expert Felix Braberg observed, 'When game developers switch from Google to AppLovin, their daily revenue can increase by 8%.'
The astonishing rise of a small company.
Data is the best indicator of the issue. According to reports, from 2022 to 2024, AppLovin's advertising revenue doubled, reaching 3.2 billion USD. Although it still seems negligible compared to Alphabet-C's 264.6 billion USD in revenue, AppLovin's soaring momentum has shocked the market—its stock price surged 712% last year and has risen another 24% this year to date. Currently, the company's Market Cap has reached about 136 billion USD, exceeding $Pinterest (PINS.US)$ 、$Reddit (RDDT.US)$and $Snap Inc (SNAP.US)$ twice the total Market Cap.
AppLovin was founded by Adam Foroughi in 2012 and remained relatively unknown for the first few years. The real turning point came in 2018 with the acquisition of Max, a company specializing in in-app bidding technology, and in 2022, it acquired MoPub from Twitter for $1.05 billion. According to consultant Felix Braberg, AppLovin then shut down MoPub and transitioned its clients to its own platform, also offering cash incentives to sweeten the conversion.
Google's forced counterattacks.
In response to AppLovin's challenge, Google began to take countermeasures. Last December, Google reversed a 2019 policy that prohibited advertisers from using IP addresses to track users. At the same time, Google also started offering cash and cloud service credits to game publishers to entice them to use Google's in-app advertising sales tools.
Google stated that the change in the IP address policy was due to the availability of new privacy-enhancing technologies, which created new ways for the responsible use of IP and other data.
The new battlefield in the e-commerce field.
AppLovin did not stop at the gaming advertising sector. In the past year, the company began to venture into the e-commerce advertising market, directly competing with Google and Meta. Reportedly, some advertising executives involved in AppLovin's invite-only testing program stated that the effectiveness of ad placements purchased through AppLovin on gaming apps is comparable to that of Meta platforms.
However, not everyone is bullish on AppLovin's expansion prospects. Aditi Joshi, CEO of advertising agency Bamboo, questioned:
I do not know how many AppLovin users do not use Google or do not have an Instagram account.
Editor/rice
