Inside mobile gaming’s struggle to navigate Apple’s privacy policies
For mobile gaming apps and gaming advertisers, the debut of new Apple privacy policies in the spring of 2021 spelled trouble. Now, a year down the line, industry players are still firing on all cylinders to determine how to attract user opt-ins and maintain revenues. We dig in as part of The Drum’s Gaming Advertising Deep Dive.
Apple’s privacy policies are proving a tough pill to swallow for gaming app developers and advertisers / Adobe Stock
When Apple rolled out its AppTrackingTransparency (ATT) feature with iOS 14.5 just over a year ago, publishers and advertisers panicked. The privacy feature enables users to choose whether they want specific apps to be able to track their activity across other apps and websites – in essence, it’s designed to inhibit app makers from following users’ behavior online and selling that information to advertisers. When a user opts out of tracking, Apple’s user-level ID, the Identifier for Advertisers (IDFA), is blocked on the app level.
Of course blocking IDFA through ATT doesn’t bar advertisers from tracking a user via other means, but as third-party cookies deplete, it certainly creates new hurdles for mobile advertisers. At the time of its launch, Facebook and other major publishers rallied against the policy (with Facebook launching a campaign telling users that the data it gathers on users helps keep its platforms free).
And though ATT opt-in rates are not as low as were originally predicted – data from mobile marketing firm Adjust indicates that the total opt-in rate currently stands at around 26%, despite some experts’ original estimates being as low as 5% – mobile apps and their advertisers have still lost large swaths of user data to which they would have once had access.
While all mobile apps are bearing the brunt of ATT, gaming apps are especially impacted, considering mobile is now the biggest channel for gaming, with gaming consumer spend on mobile now accounting for 52% of all gaming spend globally.
Game over for mobile game advertising?
For gaming apps and mobile gaming advertisers, the revenue streams enabled by data sharing and targeted advertising are central components of business success. ATT has thrown a major spanner in the works. “Since the introduction of ... ATT, mobile developers have had to invest resources allocated for development in modeling a situation in obscurity,” explains a spokesperson for one major mobile gaming company, who agreed to speak with The Drum on the condition of anonymity. “Many developers now do not know how to buy on iOS or work with the extremely complicated SKAdNetwork [Apple’s privacy-centric ad measurement API].”
In response, some developers and advertisers have fled from Apple. In fact, per a new report by AppsFlyer, 10% of gaming app budgets shifted from iOS to Android post-ATT rollout. For the anonymous gaming company in question, however, it can feel like a lose-lose situation. “On Android, competition and the price of advertising have increased, making for a nearly unprofitable situation,” they explain.
Many advertisers will remain on iOS. But the long-term impact of ATT is only now becoming clear, per the spokesperson. “The pandemic and high interest in the games during lockdown made it possible to get through that period relatively painlessly.” They’re right – Adjust’s data indicates that mobile gaming app revenues spiked during Covid and that eight major mobile games saw their best year yet in 2021, generating over $1bn each. Mobile gaming ad spend and ad revenues also rose. But now, as the pandemic-related gaming activity spike peters off, gaming apps are facing a more difficult reality. “Only in 2022 did the market begin to feel the actual effect of the ATT,” says the spokesperson.
With tracking – and therefore targeting – impeded by ATT, the spokesperson predicts that ad dollars that previously went to mobile gaming will be redistributed across channels. And ad platforms that have been utilizing SKAdNetwork for some time – such as Google, Meta, TikTok and Snap – will be at a major advantage. Smaller publishers including most gaming apps will be left to compete for crumbs.
Pushing ‘play’ on innovation
Despite the pessimism of some, the most recent data from Adjust indicates that mobile gaming has fared much better than other verticals when it comes to user opt-ins: whereas the cross-industry ATT opt-in rate hovers around 26%, gaming apps are at 31% as of Q1 2022. Within specific subsegments of gaming, many numbers are even higher: hyper-casual and action gaming apps are at 39% opt-in, while racing apps are garnering up to 40%.
This is all to say that there’s still lots of opportunity for gaming apps and mobile game advertisers to make one-to-one connections with users. “Consent rates this high give marketers a lot of data to work with when building their conversion value strategies,” says Simon Dussart, Adjust’s chief executive officer.
Still, he admits that innovation is not a ‘nice-to-have’ but a requirement at this point if apps are to maintain and build their user bases (and therefore ad revenues). “While user acquisition has always been a central pillar in mobile marketing, the user privacy-driven shake-up has meant that old ways of doing things needed to be completely revisited, and that remaining agile and flexible are more essential than ever. We can no longer solely rely on automation to shift the percentage points in our favor.”
Dussart suggests that the best solution is for gaming app developers to focus on gaining ATT opt-ins and then test new strategies to drive conversion values. “The key is identifying events that occur within the first 24 hours post-[app] install that are either the key events you track or are indicative of future events outside of this window. This could also be a string of events.” As an example, he says: “Does a user who completes three tutorials in the first 24 hours almost always end up converting on a subscription?” Setting up these models is a relatively simple task, he says, and allows developers to assess a range of factors to help optimize outcomes for advertisers.
Beyond working within the constraints of ATT and similar restrictive privacy frameworks, an approach gaining significant momentum is the introduction of new value-exchange frameworks that enable apps to build up their own stores of first-party data. If gaming apps can’t simply scrape up user data for free by following users around the internet, they can incentivize them to fork over their information in exchange for some perk or benefit. “One of the main trends we’ve seen in gaming is apps trying to get more data in exchange for free services or features,” explains Mathieu Roche, co-founder and chief executive officer at ID5, a privacy-focused universal ID solution company. “With IDFAs becoming more and more scarce, apps relying on advertising revenue have started asking users for more information about themselves to be able to profile them and to enable their advertising partners to reach them across various devices.”
And while this strategy can ensure that apps have valuable, high-quality user data, it can still put off users and shrink an app’s user base. In an attempt to remedy this problem, apps – in a similar move to many other publishers in the media space – are moving away from ad-supported free models and toward paid subscription models.
Ultimately, Roche argues, this hurts gaming apps, advertisers and consumers too. “As a result of Apple’s policies, and in particular ATT, which prevents applications from accessing the device ID they need to properly monetize their ads, many game developers can’t sustain their operations with advertising and have to move to pay-to-play models – or close down shop altogether. In the end, this also has a negative impact on consumers who cannot enjoy content and services for free any more.”
Ultimately, the dilemma for many gaming apps will boil down to the question of whether to innovate around ATT and other restrictions to continue to fuel its ad business – or to switch to pay-to-play models. Roche believes the solution lies in the former. “The balance between privacy and access to free content and services is achievable,” he says. “Both app developers and publishers should seek and support the use of solutions that enable them to monetize their business through advertising while complying with data privacy regulations.” He adds: “It would be incredibly undemocratic to move to a world where consumers have to pay for all the services that the internet offers to avoid dealing with privacy requirements.”
He suggests that with a new kind of ID, developers can preserve their ad businesses and keep offering free tiers to users. Of course, he has a personal stake in the matter, as his company sells its own ID solution. Other experts endorse contextual targeting or argue that first-party data models are the only truly privacy-safe way to achieve one-to-one targeting in the new paradigm.
If one thing is clear, it’s that the future of mobile game advertising is at a critical juncture – it’s shifting away from exploitative tracking and toward privacy-centric modes of connecting with consumers. Though much remains unclear, Dussart, for his part, remains confident in the industry’s abilities. “We, and everyone in the mobile advertising industry, have to remain agile, put user privacy first and provide clients with solutions that work – just like we’ve done with iOS 14 and all of the changes that came before that.”
For more on all the different ways brands can advertise in gaming, from virtual billboards to product placements, social lenses and even games of their own, check out The Drum’s Gaming Advertising Deep Dive.