For those who know it, has Applovin commented at all on any Olympic or political spending effects on its ad revenues? I know it’s more mobile based than The Trade Desk but am curious if it is expected to see a similar dynamic.
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Nearly all the revenue comes from apps which are free to play phone games or tablet games. It’s possible though that Olympics advertisers could be targeting the market especially if the game itself is a sports game for example, but that’s probably a small portion.
The main unknown right now is how their web and CTV pilot programs have gone in the quarter. Management sounded enthusiastic about the programs on the last conference saying they are ahead of internal expectations. Also possible some of those pilots saw some Olympics related spend, but I’m not sure it would be at scale yet to have meaningful revenue. I’m looking forward to this next call though to see the progress on these new pilot programs and what markets they may be targetting.
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I’ve read a lot of the financial and business oriented documents so far released by APP over the previous four quarters. I do not recall any mention of advertising specifically related to the Olympics or politics. Of course, that doesn’t mean there hasn’t been any, but if so, it’s insufficient to call out as a noticeable contributor to revenue.
As @wpr101 noted, the bulk of their business at this point is derived from mobile gaming placements. From what the CEO specifically mentioned during the most recent CC, that advertising seems to be coming from game makers seeking to increase their engaged customer base. “Engaged” means game players prone to purchasing in-app items that enhance their game playing ability. Examples of such items might be a clue in a treasure hunt game, or a weapon in an invasion game, etc. In that in app games tend to be free to play, it is this sort of engagement that produces revenue for the game makers.
Per statements made by the CEO during the most recent CC, AppLovin is able to predict with 99% precision how much a game maker can expect to receive from their advertising spend and they refuse to sell more than they know they can produce. This puts them a place such that there’s an unlimited appetite for their service. AppLovin’s revenue is constrained by how much they can deliver, not by customer demand.
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I have been trying to wrap my head around App’s business for a while, and such statements as “they refuse to sell more than they know they can produce” leave me perplexed. What in very precise and everyday language is Applovin ‘producing’? How can they ‘sell’ it if they have not produced it?
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I also have not seen any news regarding Olympic or political spend. I did trim my APP position today by about 4%. APP is up 100% from the stock price lows in early August. The stock seemed to pop on the news that their web and connected TV pilot programs are going better than expected which would open up a new and significant revenue stream for them.
I remain excited about APP and feel it’s a great company but I’m not sure the news about web and connected TV opportunities justifies a 100% runup without more specfics from management. I’m trying to become smarter about taking some profits along the way. A 100% run up in about 2 months seems like a good point to capture some profits.
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Primarily, they produce engaged customers for makers of mobile games. Engaged customers spend money on in app offers. I am not entirely clear about exactly what the customers (game players) spend their money on. At the very least, game players by digital products that enhance their game playing ability.
What I don’t know is if customers might also respond financially to offers external to the game, such as a political donation or even a physical product that gets delivered.
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I forgot to mention a couple of things. AppLovin has a product called MAX. This product provides instantaneous auctions between advertisers and content providers. This application handles billions of dollars in transaction volume of which AppLovin takes small percentage. Even Google and Meta, erstwhile competitors use Max to place mobile adds. They pretty much have a monopoly, but the revenue derived from MAX is not broken out. In addition, they have a product called Adjust with is an analytics application used by mobile app makers. Adjust provides visibility regarding performance and insights used to scale marketing efforts. As with MAX, there is no separate revenue and cost accounting.
They also have a creative studio that is used by advertisers to create adds and not long ago they bought a company called Wurl which is CTV platform that distributes streaming video and other related services. However, the primary reason they acquired Wurl was for the massive database they have accumulated which they plan to exploit when they enter the CTV vertical.
As @stewaj1 mentioned, they currently have a pilot running in the ecommerce space which they reported as exceeding their expectations. They reported that they will accelerate their plan to monetize the pilot. However, I don’t recall any mention of a current CTV pilot. I believe that is still a future for them. The CEO declared that AppLovin is much different than The Trade Desk, but I didn’t fully understand his explanation as why they are so. At a high level anyway, it appears to me that they will be in competition with TTD when they enter the CTV vertical.
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