I’m not sure who is trying to make what point, but as someone who works every day creating audience strategy and media recommendations for clients, I can assure you that Meta and AppLovin are competing for the same budgets, along with every other media company in a given market. Meta reaches 96% of the US audience, therefore it is reasonable to assume that someone who converts through an AppLovin ad is also reachable on Meta, in the US. Part of this is through their Audience Network which is essentially programmatic display advertising across the web. Meta Ads Audience in the USA 2025 | Affect.
But to @monkeydluffy’s point, it isn’t a zero-sum game. Media professionals will often speak to the compounding effects of a broader set of media (multiple channels and networks), and this has been proven across years of study and across industries. I have never ran across a brand that put their entire media budget into one channel, except for small businesses.
That being said, within Performance Media aka short-term advertising, it can be more cutthroat. They are essentially just selling conversions without consideration to the “who” or “where”, which is different from long-term advertising strategies where you may have strategic reasons for layering on different channels and solutions over time. So the only question in Performance Media is who can drive the best ROI at the greatest scale. In that sense, yes, it’s important that APP outperforms META. But for any investors thinking they have some sort of special access to a set of humans, it’s not true.
This isn’t to say the only route to success is beating Meta, as most advertisers don’t put all of their eggs into one basket. They usually want to test out new vendors, mitigate risk, and like having more levers to pull.
Meta is a customer of AppLovin, as is Google. I am not sure what segments of AppLovin are used by those companies (and other large businesses), but for sure they use MAX in order to place mobile ads as MAX is the instantaneous auction system for mobile ads. There is no significant competition for this function.
Adam Foroughi, AppLovin CEO has asserted more than once that he sees no need to create a large sales and marketing organization. He is intensely focused on cost control and simply does not see the need to expand this organization.
S&M was apx 4% of total revenue for the most recent quarter. S&M was apx 9% of total revenue for the same period a year ago. Adam believes that organic growth of their customer base will provide the same results they are likely to achieve from a large investment in a S&M organization, but he concedes that it will take longer. He has advised investors to be patient. In addition, the majority of their revenue comes from expanded use of their platform by existing customers. Time will tell if this attitude persists as they pursue new verticals and geographies.
Though not regularly reported, Adam uses EBITDA per employee as a KPI of their business operations. He sees HR as one of his primary responsibilities. I find this intriguing as I believe most CEOs of large companies consider HR a necessary evil. AppLovin currently employs 1,563 people. That’s an amazingly small number for a company with revenues of about $3B.
Thank you so much for sharing the insights! That’s indeed different from my previous understanding. As one of the US users, I can confirm that I do not use any app from Meta regularly, but I do sometimes play silly mobile games daily, at least I did. I may belong to the 4% minority then.
If AppLovin competes ad budget directly from Meta, then they definitely need to perform really well to win. A good news is that AppLovin’s ad is usually non-skippable while people can just ignore the ads in Facebook / Instagram feeds.
Following are the words of Adam Foroughi, Applovin CEO when asked about competition during APP’s 4Q24 quarterly report:
“Yes. So I mean, look, we don’t look at competition all that much. What I will say is that we’re not a platform that’s taking the same dollars away from someone else. So let’s compare it to social. If you’ve got a mattress manufacturer advertising on social today and driving a certain amount of business and they come on to our platform, what they’re seeing are new transactions from customers that they wouldn’t have otherwise gotten to respond to their ads.
Whether those customers who are on social or not might be an issue, but certainly, there’s a lot of overlap. But a lot of customers just won’t notice ads in one environment. Now in our environment, we have a full-screen video ad that captures attention, and they come on to our platform, and they’re driving incremental sales. So what does that mean? That means that if they were spending $5,000 a day on social, they’re not going to come to us and say we’re going to spend $5,000 a day on you in a performance manner and take the $5,000 over here down to 0, they’re now going to be spending $10,000 a day.”
P.S. I previously provided the number of APP employees. I should have qualified that number as coming from an external source returned in response to a Google inquiry. I won’t vouch for the accuracy of that incredibly small number.
@brittlerock that checks out. It’s the benefit of having a varied media mix, and why no one should think of it as a zero sum game. You want multiple touchpoints and ad formats.
APPlovin selling off today on what appears to be more regurgitated short seller allegations. The following is a link to an article appearing in the New York Post yesterday.
The channel checks and internal modeling allowed Morgan Stanley to raise their 2026 EBITDA estimates by a significant amount (around 22%), modeling $1.75 billion in net ad revenue from non-gaming by that year.
They highlight the high-margin nature of AppLovin’s ad business, noting that an incremental $100 million of non-gaming ad spend could drive $90 million of upside to 2026 EBITDA.
In short, the channel checks likely validated the early success and significant potential of the Axon AI platform in attracting and providing strong results for non-gaming advertisers, which justified the substantially higher valuation multiple they assigned to the stock.
We have had a strong price pullback with AppLovin the last 30 days almost 20% and little discussion on this board. We all know not to cry about market swings here. But the swing has made me revisit my reasons to continue holding what has grown to a large position. Sure the stock got ahead of itself so a little profit taking is expected. My primary concern has been the introduction of the Axon ad service for ecommerce. Will it knock the skin off the ball as CEO Foroughi advertises? Can APP continue YOY +60% revenue growth and +90% earnings growth rate? I have assumed (per long Saul discussions here) that their technology allows them to somehow leverage their mobile, high fidelity, consumer knowledge base/identity and apply to such things as non gaming ecommerce web sites. Thus, provide highly targeted and the most effective results for the advertisers. The CEOs enthusiasm IMO is a bit over played, but who knows. It does sound good and he has not failed us yet. In general I am not a big fan of MS stock recommendations. But I garnered some assurance from their channel checks with positive results. So I am buying a little more here at <$600.
I may belong to the 4% minority then.