SDKs control the $400B in-app ad market, and AI is next
In-app advertising hit $400 billion in 2025, up 10.8% year on year and five times its 2017 level. It now accounts for roughly a third of the $1.18 trillion global ad market. Users spend more than 90% of their smartphone time inside apps. That is the market. And according to a new report by Analysys Mason, the companies that own the SDK layer own the market.
Why the SDK became the moat
Web advertising runs on cookies. Apps don’t use them. Apps are isolated from each other. Apple’s ATT opt-in rate sits at around 35%. Safari and Firefox block third-party cookies by default. Google shut down its Privacy Sandbox in October 2025. Every tracking mechanism that made web advertising measurable is either gone or degraded inside the app ecosystem.
What replaced them is first-party signal collected through SDKs sitting inside the apps themselves. The Analysys Mason report argues that installed footprint, not ad technology, is now the primary competitive moat. Independent SDKs can reach up to 44% of Android app downloads and 31% of iOS app downloads.
What the numbers look like at scale
AppLovin is the clearest case study. The company generated $5.48 billion in advertising revenue in 2025, up 70%, with an adjusted EBITDA margin of around 82%. Its $1.05 billion acquisition of MoPub was explicitly about acquiring installed footprint, not technology. InMobi and Liftoff followed the same playbook.
For context on concentration: Google, Meta, and Amazon still account for 70-75% of global online ad spend, even though the open internet represents around 60% of online time. And of every $100 an advertiser spends in-app, publishers collect about $50-55. The intermediary layer captures the rest.
The AI advertising angle
The report’s forward-looking argument is that AI-native products (assistants, lockscreen interfaces, agentic checkout flows) will need advertising to survive at consumer scale. Every query carries an inference cost. Subscriptions alone won’t cover those costs broadly. Advertising is the scalable alternative.
Published pricing data shows inference costs have fallen more than 99% since 2023, which the report argues makes free, ad-supported AI economically viable. The catch: this new inventory won’t have a webpage or an ad tag. Accessing it will require code already on the device, which points directly back to SDK footprint as the entry point.
Ujjwal Chaudhry, Partner at Analysys Mason, put it directly:
“Apps broke the advertising playbook built for the web. Without cookies, tracking a user across apps no longer works, and the SDK has become the one place where the audience, the ad and the result can all be measured.”
The operator implication: if you’re building or monetizing in the AI product layer, the companies with the widest SDK distribution are already positioned at the chokepoint. Each shift in advertising format has widened their lead rather than reset it, according to the report.
I’m founder of BizStack at Cagri Sarigoz LLC and a passionate advocate for entrepreneurs.
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