We recently spoke with seven AppLovin and Unity industry experts and gathered updates on several key topics
AppLovin quarterly channel checks
APP e-commerce progress
META’s entry into the gaming ad market and its impact on AppLovin
Unity quarterly channel checks
APP Budget TrendsWe recently interviewed two gaming company experts and four advertising agency experts on recent AppLovin budget trends.
Advertising Agency A
AppLovin Budget Growth
1Q2025–4Q2025 YoY growth: 56% / 30.4% / 97% / 68.6%
1Q2026–2Q2026 YoY growth: 132.8% / 65.5%
At year-end 2025, the agency was forecasting 2026 YoY growth of 44%; actual results have come in well above expectations.
Drivers of 1Q26 Outperformance
Gaming ads: ROAS for gaming clients improved meaningfully, particularly for high-ARPU hardcore gaming clients. 1Q26 demonstrated a notably stronger seasonal growth trend versus 1Q25.
E-commerce ads: Approximately 32% of total agency budget on AppLovin in 1Q26 came from e-commerce advertisers running campaigns through the AXON Ad Manager.
CTV: For the first time, the agency observed a meaningful CTV contribution. Web-based gaming advertisers and DTC advertisers began deploying CTV inventory on the web side; importantly, this traffic is not gaming ad traffic.
Drivers of 1Q26 Gaming Outperformance
There is a direct linkage to gaming advertisers beginning to adopt Apple Link-out.
“We estimate that since December, Apple Link-out has driven a ~5.5% incremental lift to the overall iOS gaming ad market, with the vast majority of the incremental dollars flowing to GOOG and APP, and Unity also benefiting partially.”
“We calculate that Link-out offsets gaming company costs by ~2% in Japan and ~9% in the US. However, advertisers do not redeploy 100% of these savings into ad spend; a portion is reinvested into game development.”
Gaming real-time bidding (RTB) capabilities have also improved meaningfully.
AppLovin’s new AI algorithms have lowered user acquisition costs through highly effective bid shading. Whereas previously AppLovin needed to bid 50% above Unity or 30% above other bidders to win an impression, this year it is winning at premiums of just 5–7%.
The direct result is that AI-enabled dynamic bid prediction has compressed the ultimate cost of acquisition.
AXON’s CPA has declined 19% YoY, and D28 retention has improved 12.8% YoY.
CTV — A First-Time Datapoint
This quarter marks the first time in our two years of covering AppLovin that an agency has cited CTV as a contributor to upside. Notably, more than one agency mentioned this.
CTV here refers primarily to traffic from internet-connected smart TVs, used mostly to address advertisers’ web-side ad placement needs. CTV is not a standalone product; rather, CTV inventory is integrated into the AXON platform for real-time bidding, with the resulting performance lift flowing through.
CTV traffic has existed for some time and can be traced back to roughly late 2024. However, the productization that maximizes inventory aggregation and improves overall fill rate has only ramped from 4Q25 into 2026.
The current core customer base consists of web-based gaming advertisers and DTC advertisers, and this could pressure ad budgets at other CTV platforms.
How the agency persuades advertisers to allocate to CTV:
“We start by showing them performance data. Within the AppLovin ecosystem, all traffic — whether CTV or other web placements — is powered by AppLovin’s own AXON data engine. So the core infrastructure capability, including AI-driven efficiency gains, benefits not only mobile but also broader PC traffic.”
“We are now optimizing campaigns toward web traffic acquisition, allowing advertisers to see a meaningful CAC advantage when driving users to their web properties via marketing. Compared to legacy products such as Mintegral, the cost can come in at roughly 1/5 to 1/3 of competing platforms.”
“After testing, advertisers have found the performance solid and have naturally scaled up web-side spend.”
“Beginning this year, AppLovin has rolled out AI-based interactive creative products on the web, extending its SparkLabs AI capabilities to the web. This enables advertisers to generate more cost-efficient creatives in real time, which has further lifted ultimate ad performance.”
Advertising Agency B
AppLovin Budget Growth
2Q2025 QoQ +7%; 3Q2025 QoQ +10%; 4Q2025 QoQ +9–9.5%
1Q2026 QoQ +1%; 2Q2026 QoQ +5–8%
Reasons 1Q2026 QoQ Growth Was Below Expectations
AppLovin has clearly become more aggressive in direct sales, taking share from agencies. Agencies do not enjoy a strong moat versus AppLovin in gaming. In 1Q2026, AppLovin rolled out additional incentives aimed at acquiring advertisers directly.
E-commerce ad growth was below expectations. Many e-commerce clients hit a ceiling during Black Friday and pulled back e-commerce ad budgets in 1Q26.
AppLovin’s AI creative optimization tools have not yet shown clear improvement for e-commerce clients.
2Q2026 QoQ growth has reaccelerated. The most important driver is e-commerce advertisers reaccelerating in 2Q2026.
AppLovin has made meaningful AI progress over the past six months, and the agency remains very constructive on the company.
The SparkLabs creative self-serve platform has reasonable appeal among smaller and mid-size clients. Large clients, however, are largely indifferent, as they already spend significantly on creative through other platforms or independent vendors.
The Self Service product has improved continuously since 2H2025. Functionally, it still feels somewhat Excel-like compared with META and Google, but the underlying capability is genuinely improving. The agency notes strong AI vertical-fit in categories like consumer electronics and DTC.
AppLovin has been testing prospecting (new-user acquisition) campaigns for SMB DTC advertisers. While slightly more expensive than the major platforms, it can help budget-constrained SMBs identify net-new users, generate opportunity cost, and convert via data-driven targeting. Hit rates in SMB DTC are reasonable and continue to improve.
AppLovin is also testing creative libraries and site-building capabilities. On one side, this includes external ad creative editing and landing page builders; on the other side, it includes landing-page heatmap analytics and user conversion path analysis. These moves essentially mirror META’s and Google’s playbooks. While AppLovin’s depth does not match these incumbents, the company is investing meaningful capital and R&D resources in this area.
Advertising Agency C
AppLovin Budget Growth and Advertiser Count
September: 24 advertisers; December: 45 advertisers; 3Q2025 monthly spend: $2.38mn; 4Q2025 monthly spend: $3.8mn.
1Q2026: 52 advertisers, in line with growth expectations. Monthly spend came in at $4.52mn, ahead of the $4.28mn forecast.
2Q2026: 59 advertisers expected, with monthly spend revised upward to $5.47mn.
3Q2026: 65 advertisers expected, with monthly spend revised upward to $6.51mn.
Gaming and E-Commerce Ad Trends
AppLovin gaming ad growth came in below expectations, with gaming acquisition costs rising rapidly.
“We believe part of AppLovin’s strong e-commerce growth is coming from cannibalizing share from gaming advertisers.”
“From AppLovin’s perspective, this may not matter, because their take rate from non-gaming is materially higher than gaming, so they earn more dollars overall. But I’m flagging this because the e-commerce uplift is not 100% accretive for AppLovin; some portion is cannibalizing their own gaming ad revenue.”
Advertising Agency D
AppLovin Budget Growth
1Q2026 growth came in above expectations. While e-commerce declined QoQ in 1Q2026, gaming was very strong.
2Q2026 growth is not expected to decelerate from 1Q2026; gaming remains robust, and e-commerce is reaccelerating QoQ.
The agency saw a CTV contribution to AppLovin for the first time.
The agency has not seen advertisers shifting toward META; instead, it sees more META budget rotating into AppLovin.
For most advertisers with gaming exposure, AppLovin has now become the third-largest ad platform. This implies advertisers must allocate more dedicated resources, and the industry will see a growing number of media buyers/optimizers focused specifically on AppLovin. New gaming companies are also adopting AppLovin as a must-have channel.
Gaming Company A
AppLovin’s budget share has continued to rise over recent quarters.
Current budget allocation is split into GOOG, META, and Others, at 40% / 30% / 30% respectively. Within Others, AppLovin accounts for ~40%.
For each game title, META is used predominantly during the testing phase, with GOOG and Others added later. AppLovin’s share rises as games move into a more mature lifecycle phase.
AppLovin allocation varies by game lifecycle stage:
Year 1 to 1.5 post-launch: Others typically ~20%
Year 1.5 to year 3: Others gradually increases to ~35%
New expansion or new season: Others share dips slightly
As legacy games take a larger share of total bookings, the Others bucket — and AppLovin within it — continues to gain share. AppLovin has a more material impact on META than on GOOG.
Versus META, AppLovin shows extremely high CTR but low CVR, with overall CPM roughly in line. There was little change in this dynamic in 1Q26.
Apple Link-out Impact
Russia has fully prohibited iOS payments effective April 1, with all flows now required to route through third parties.
In the US, ~10% of iOS bookings have shifted to Link-out from December through today.
In China, effective March 15, the iOS payment take rate has been reduced from 30% to 25%, and from 15% to 12% for small developers.
In Southeast Asia, 25–30% of iOS bookings have shifted to Link-out.
US Link-out adoption has been slower than expected, primarily due to high third-party costs.
Bypassing the Apple in-app payment still requires payment to third-party payment processors. The third-party payment take rate averages 10–15%.
This affects the in-game promotional bundles game companies can offer users. If third-party payment costs decline, game companies can offer richer promotional bundles.
Additionally, third-party payment requires a 3-step conversion funnel (official site → page → payment), which is far less seamless than Apple Pay’s double-click flow.
Gaming Company B
Third-Party Payment Costs
Combined third-party payment processing plus tax costs are close to 10%, certainly not as high as 15%. In the US, for example, sales tax adds 5–6%.
Apple Pay’s 30% take rate also excludes tax, which game companies must bear separately.
Third-party payment costs vary by region.
Following the EPIC court ruling in December, the expert’s company began testing Link-out and now estimates that 15–20% of iOS bookings have shifted to Link-out.
“We’ve only heard of Apple pressuring very small game companies on link-out behavior; we have not heard of any large game company facing meaningful pushback from Apple during this period.”
Share Shifts Within MAX
The expert’s company is also a MAX customer and has observed that AppLovin’s DSP share within MAX declined slightly this quarter.
“This makes me even more constructive on AppLovin. AppLovin’s DSP share within MAX declining means MAX’s overall efficiency has improved and gaming ad demand has strengthened. AppLovin no longer needs to lift its own DSP share within MAX to sustain current growth rates.”
E-Commerce Platform Expert
Following the start of data collaboration with AppLovin, AppLovin’s share of total ad budget has continued to rise and has now approached TikTok’s share.
No meaningful CTV contribution observed.
APP E-Commerce ProgressIn our note published in mid-December following Black Friday, we described AppLovin’s Black Friday performance as very strong. However, in our 4Q25 Preview, we noted that e-commerce ad spend declined post-Black Friday, falling back to roughly pre-Black Friday levels. Beginning in late February, following an e-commerce algorithm update, we have observed sustained growth in e-commerce ad budgets.
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