SDKs emerge as key gateway to AI advertising as in-app ad market hits $400 billion

The software development kit (SDK) has emerged as the key control point in the $400 billion in-app advertising market and could give independent adtech platforms an early advantage in the next wave of advertising across AI assistants, lockscreens and agentic commerce, according to a new report by Analysys Mason.

The report, The SDK Advantage: How independent adtechs won mobile and are positioned to win AI-native advertising, argues that platforms such as AppLovin, InMobi and Liftoff, which built large SDK footprints across mobile apps, are best positioned to capture advertising on emerging AI-native consumer products.

In-app advertising reached around $400 billion in 2025, growing 10.8% year on year and reaching five times its 2017 level, according to the report. It accounted for roughly a third of the $1.18 trillion global advertising market, while users spent more than 90% of their smartphone time inside apps.


The shift is significant because traditional web advertising tools have limited applicability inside apps. Apps do not use cookies and are isolated from one another, while Apple’s ATT opt-in rate is around 35%. Safari and Firefox block third-party cookies by default, and Google retired its Privacy Sandbox in October 2025.

As a result, first-party signals collected through SDKs have become the most dependable basis for targeting, the report said.

The report argues that installed footprint, rather than simply advertising technology, has become the key competitive moat. Independent SDKs can reach up to 44% of Android and 31% of iOS app downloads.

AppLovin’s $1.05 billion acquisition of MoPub is cited as an example of deals focused on acquiring installed footprint rather than just technology.

The economics of that footprint can be significant. AppLovin generated $5.48 billion in advertising revenue in 2025, up 70%, with an adjusted EBITDA margin of around 82%, according to the report.

At the same time, advertising remains heavily concentrated among the largest online platforms. Google, Meta and Amazon account for 70-75% of global online advertising spend, even though the open internet represents around 60% of online time.

For publishers, the economics of in-app advertising remain more fragmented: of every $100 spent by an advertiser in-app, publishers receive about 50-55, the report said.

The next opportunity could come from AI-native products. The report argues that advertising will become increasingly important as AI products scale because every query carries an inference cost and subscriptions alone may not cover those costs at consumer scale.

Published pricing indicates that inference costs have fallen by more than 99% since 2023, potentially making free, ad-supported AI viable.

Unlike conventional digital advertising, however, this emerging inventory will not necessarily have a webpage or ad tag. It will instead need to be accessed through code already sitting on the device—potentially strengthening the position of adtech companies with established SDK footprints.

“Apps broke the advertising playbook built for the web,” Ujjwal Chaudhry, Partner at Analysys Mason, said. “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.”

Chaudhry said the next wave of advertising would sit across lockscreens, AI assistants and agentic checkout.

“AI products are costly to run, and advertising is the most scalable way to keep them free for consumers,” he said, adding that independent platforms with the widest SDK footprints were best placed to capture this new supply.

According to the report, each successive shift in advertising has widened the lead of independent SDK-first platforms rather than resetting the competitive landscape.