- According to a recent report by AC Nielsen, 5 of 10 most popular mobile apps belong to Google.
- Facebook still owns the most popular mobile apps.
- What are the implications of these findings for Google's mobile growth?
A recent Nielsen study on the popularity of mobile apps in the country came up with some interesting findings. According to the study, Facebook (NASDAQ:FB) smartphone apps are still the most popular in the country, taking two of the three top slots. Facebook’s core app is perched at the #1 slot, with an estimated 126.7M monthly unique users, an 8%Y/Y increase. The app is the only mobile app in the U.S. with more than 100M monthly unique users. Facebook Messenger is #3 with 96.4M users. Facebook Messenger, however, could soon catch up with the core app since its number of users had increased 31%Y/Y, the fastest growth among the 10 most popular smartphone apps.
It hardly comes as a surprise that Facebook’s mobile apps are so popular given the company’s strength in mobile apps. But, Alphabet Inc-C (NASDAQ:GOOG) is not far behind, and in fact has more mobile users than FB despite all that talk about the company badly lagging behind in the world of mobile. Google's YouTube ranks as the second most popular mobile app in the U.S. with 97.6M users while Google Search is #4 with 95M users. Google Play follows closely behind with 89.7M monthly unique users. Overall, out of the top 10 mobile apps, Google has a combined total of 445.3M users compared with Facebook’s 278.6M.
Having big numbers for a mobile platform is good for an ad company like Google because marketers love networks with more eyeballs to watch their ads. With Google having many dominant mobile apps with gazillions of users, the company can command higher CPM, better advertising rates, and ultimately more mobile ad dollars.
These findings by Nielsen are pretty encouraging since 47% of Google’s revenue comes from the U.S. Analysts estimate that about $12B of Google’s $66B in 2014 revenue came from mobile ads. That figure is expected to jump to almost double in the current year, demonstrating the immense importance of mobile platforms in Google’s growth. Also, one should keep in mind that Google will gain from its partnership with Facebook, wherein the search giant will index content on Facebook. The partnership implies that Google could potentially leverage to some extent Facebook's unbridled growth.
Focus On YouTube
Keen investors might point out that YouTube, Google’s most popular mobile app, saw its users increase just 5% Y/Y, slower than FB’s core app. But the good thing about YouTube is that the platform has been seeing an impressive increase in engagement rates. Google said during its latest earnings call that watch time on YouTube had increased 60%. That’s great because it means people are spending much more time on the platform than they used to. Marketers are willing to pay more for ads on a platform with high engagement rates. This is important for Google because YouTube is one of the company’s most important growth frontiers along with Google Play.
Unfortunately, YouTube has been having a hard time turning a profit ostensibly because of low CPM rates due to poor quality content on the platform. The fact that YouTube watch time is now sharply up probably means that the quality of content on the platform is improving. Higher quality content attracts better CPM rates by marketers.
When it comes to smartphone operating systems, Android is still king in the U.S. with 52.6% of smartphone OS market share compared with 42.7% for iOS. There has been speculations that Apple (NASDAQ:AAPL) might ditch Google as its search engine on the Safari mobile browser and instead switch to Yahoo or Bing, or even launch its own search engine. This won’t come as a surprise after Apple famously removed YouTube and Google Maps from its devices in the past.
Analysts estimate that about 75% of Google’s mobile ad revenue comes from Apple devices. Google could therefore find its gravy train cut off, if Apple decided to develop. Mozilla did switch from Google to Yahoo (NASDAQ:YHOO) as its default search engine.
It does not appear very likely that Apple would take such a decision. However, even if it did, the blow for Google would be lessened by the fact that Safari browser and Android+ Chrome browsers are almost evenly matched in U.S. mobile browser market with about 48% share apiece.
After years of lagging behind Facebook, Google appears to have finally gotten its mobile game together and now has more mobile users than FB. This is important for Google as its core desktop Google search ad revenue stream continues slowing down, forcing Google to rely more on mobile for growth.