MMM: Apple EU App Store Changes; Mondelez International Leads Peers in Snack Food Ad Spend

Key Takeaways:

• Apple’s 1Q FY24 results exceeded street estimates, with strength in its reported iPhone sales and services revenue propelling top line growth. Although services revenue includes everything from advertising to cloud services, a material portion arrives from fees on in-app transactions. Per Sensor Tower data, which assumes a ~30% take rate, Apple brought in almost $27bn in App Store fees in CY23, up 6% YoY, and directionally in line with growth in Apple’s reported services revenue (+10% YoY)

• Under Apple’s move to comply with the recent digital markets act in the EU, the company has provided developers with the option to list their apps on alternative marketplaces and process payment outside of the App Store. ST data can be used to estimate the effect of these changes on an app like BeReal. ST data shows that BeReal doesn’t monetize via in-app purchases and garnered more than 8mn installs on iOS in the EU in 2023, suggesting that it wouldn’t pay any App Store fees under the current EU terms and capabilities

  • Under Apple’s new capabilities and terms, which entail a core technology fee (€0.50/install over 1mn), BeReal would be subject to almost $4mn in annual fees. These lofty core technology fees will likely prompt developers to shy away from publishing their apps via alternative marketplaces and processing payment outside of the App Store in the EU

• Mondelez International continues to invest heavily in digital advertising, with US ad spend up 24% YoY in 4Q23 while spend across the snack food CPG cohort increased nominally, up 7% YoY

  • Ferrero saw the largest jump in US spend in 4Q23, up 90% YoY as the company looked to drive sales during the holiday season with its “Celebrate the Moment” campaign

• The snack foods category outpaced US ad spend growth across all categories in 2023, up 42% YoY compared to only 15% for spend across all categories during the same time frame

For more information, request the full report from reports@sensortower.com.