SensorTowerQ1 2025 Digital Market Index: The Digital Economy Starts 2025 with Strong Growth Across Advertising and Mobile
Summary
Sensor Tower's Q1 2025 report highlights strong momentum in mobile and digital advertising. Global mobile IAP revenue surpassed $40B for the first time (+11% YoY), driven by non-game apps (+24% YoY) which are on track to overtake gaming revenue. Generative AI apps like ChatGPT (#6 IAP, $330M) and short drama apps (e.g., DramaBox, ReelShort) are key growth drivers.
US digital ad spend grew 12% YoY to $31B with 3.9T impressions. Video ads outperformed other formats, with 18% growth vs. 6% decline.
European markets (France, Italy, Spain, UK) saw strong ad spend growth (15-17% YoY), while APAC markets like Japan and South Korea also grew. Retail media ad impressions in the US climbed 31% YoY to 56B. For ad ops decision-makers, actionable takeaways include: (1) shift budget toward video and OTT channels, (2) invest in AI-related app advertising for high engagement, (3) explore short drama apps as emerging inventory, (4) target high-growth European and APAC markets, and (5) leverage retail media for incremental reach.
The report also notes new ad channels (TikTok, YouTube in South Korea; LINE in Japan) becoming available, offering early-mover advantages.
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SensorTowerState of Short Drama Apps 2025
Global in-app revenue from short drama apps reached ~$700M in Q1 2025, nearly 4x YoY. ReelShort and DramaBox lead, but newcomers like DramaWave surged via localised ads and TikTok. Latin America and Southeast Asia drove download growth. For ad ops, targeting emerging markets and leveraging video ads on social platforms are key.
SensorTowerState of Short Drama Apps 2026
Short drama apps are reshaping mobile entertainment, surpassing 850M downloads in Q1 2026 (up 140% YoY) with IAP revenue reaching $750M. Growth is concentrated in Southeast Asia, Latin America, and India, where these apps outpace traditional OTT in user acquisition. Engagement is surging: daily time spent grew 85% to 25 minutes globally, nearing OTT levels in Southeast Asia. For ad ops, the shift toward ad monetization in addition to IAP opens new inventory opportunities. Key players like FreeReels, NetShort, and Melolo are scaling via localized content and paid acquisition, creating competitive ad markets.
SensorTowerState of AI Apps 2026: APAC Edition – Gen AI Enters an Exponential Growth Era, with Revenue Soaring 232% YoY to US$6.1 Billion
Gen AI apps have become the primary growth engine of the non-gaming market, with revenue surging 232% YoY to $6.1 billion between Q2 2025 and Q1 2026. The US leads with 38% of global revenue, while Japan and Korea emerge as key growth markets. AI Assistants are increasingly concentrated, with ChatGPT dominating, but vertical segments like AI Companions, AI Agents, and AI Image & Video offer fragmented, high-growth opportunities. Lessons from Plaud highlight success through vertical focus, deep localization, and precision advertising. For ad ops, targeting vertical AI segments and localized user acquisition strategies present significant opportunities.
AdjustHow are LLMs transforming mobile user acquisition? | Adjust
LLMs like ChatGPT and Gemini are reshaping mobile app discovery, with traditional search volume expected to decline 25% by 2026. These AI platforms act as answer engines, delivering direct app recommendations to users. For ad ops, this shift requires optimizing for LLM visibility through structured content and reputation management. While native ad formats are in early testing on platforms like Perplexity and Gemini, early adoption can secure high-intent placements. Marketers should track AI-driven traffic and align discovery strategies across ASO, SEO, and LLMs to stay competitive in an AI-first environment.
AppsFlyerUnlock the value of web-to-app
Web-to-app strategies boost conversions by 77% and achieve 13.6% average paying user rate. Brands like adidas saw 2.4x higher ROAS from deep-linked users, while AirAsia improved bookings by 19%. Key challenges include measurement gaps, siloed teams, and onboarding friction. Solutions involve Google Ads Web-to-App Install and Web to App Connect with AppsFlyer Smart Banners and deep linking. Actionable steps: set tracking, import conversions, activate smart bidding, and deep link users.
SensorTowerState of Digital Banking 2026
Digital banking ad impressions surpassed 50B quarterly with spend above $350M by Q1 2026, driven by mobile-first adoption. Neobanks like Nubank lead downloads, while traditional banks modernize apps. SeaBank's integration with Shopee exemplifies ecosystem-driven acquisition. For ad ops, key takeaways: prioritize mobile channels, leverage partnerships for scale, and balance reach with trust-building to sustain engagement.
SensorTowerState of eCommerce 2026: Mobile User Growth Stabilises While Website Traffic Reaches New Highs
Global eCommerce web traffic hit record highs in Q4 2025, with visits up 9% YoY and unique visitors up 21%. Mobile growth stabilizes, making web a critical acquisition channel. India leads with 58B visits (+28% YoY). Temu ranks #2 cross-platform; SHEIN's web visitors surged 70% YoY. Fashion eCommerce web visits rose 54% YoY. Nykaa's net profit surged 183% as it shifts ad spend from Tier-1 to Tier-2/3 cities and leverages content-driven referrals. Ad ops should prioritize web channel optimization and emerging market expansion.
Liftoff(Vungle)Must-Know Highlights From the 2025 Casual Gaming Apps Report
Mobile game downloads hit a 5-year low, but casual games see high revenue potential on iOS with 47% D30 ROAS vs. 15% on Android. Hypercasual and puzzle games drive half of installs. Audio ads, temporary ad removal, and customizable IAPs are emerging monetization trends. Ad ops should prioritize iOS for ROAS, leverage non-gaming app inventory, and consider hybrid puzzle genres for broad reach.
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