Folks, this week I want to share some thoughts on what I would simply summarize as the Adpocalypse. Sometimes you're kind of try predicting the future and draw conclusions from that, and the topic of how we acquire users at scale is something the arguably is one of the most impactful business topics in general.
Privacy shifts business
The nucleus for this biggest shift in advertisement is the new demand for User Privacy. Facebook and Google have come under fire already publicly, in light of the Cambridge Analytica scandal -- a far reaching issue that Netflix' The Great Hack will certainly re-ignite -- and public discussion is happening almost daily involving home assistant devices, no tracking browsers, data protection legislation like GDPR in Europe, safe harbor agreements and what not.
As a result, at WWDC'19, Tim Cook vowed for more privacy in Apple products starting with the new Sing In with Apple but also completely killing third party tracking of apps in the Children category and even anonymous user level data on attribution for Apple Search Ads for those who have LAT (Limited Ad Tracking) enabled which is poised to become the majority of users. Apple is clearly positioning itself as the privacy guardian, and recent statements of Zuckerberg and Pichai indicate that Facebook and Google will scramble to follow suit after their platforms have come under scrutiny.
Publishers as User Data Refinery
That push for privacy on store platform side opens a massive opportunity for the Champion's League game publishing outfits adding another pillar of business as ad providers not just for cross-promotional marketing of own products but also as a refinery with additional data points for third party, e.g. game developers.
Look at Voodoo, the number 1 (hyper)casual game with billions of downloads. Not bound by the same public scrutiny, they can analyze users to a far greater extent and subject them to plenty of experiments when it comes to art style preference, session time and lengths, proclivity towards achievements or even payment probability. This goes far beyond of what the black box of Google's machine learning UAC or Facebooks event-oriented targeting does, it allows for actually selecting user personas for any game to be chosen, or even building games specifically for those personas.
Job descriptions match that assumption: This Senior Data Scientist role has the following challenges presented as day-to-day tasks:
- You will build state of the art recommender models to serve the right Ad to the right user. Such system would leverage massive amounts of data from multiple sources (user data, apps data, interactions, etc)
- You should be able to experiment and improve the system by measuring its performance and adding new features in each iteration
- You should have good understanding of recommender systems so that you can suggest original approaches or improve the existing ones
Why the biggest investment bank in the world, Goldman Sachs, has invested 200 million for a minority stake into a company that excels in building and licensing snack-sized games with individual budgets of lower than your average Joe's paycheck is pretty clear: This isn't about downloads and topping the charts, this is about building the gaming ad machine of the future.
King, now being a branch of Activision-Blizzard, has a similar opening. It's mission text states:
Looking ahead, we plan to launch advertising across the Activision Blizzard portfolio, including high growth areas like eSports. This is an exciting time to join this growing business.
We are seeking a Sr. Manager/Manager Publisher tools in our Ads Engineering team, empowering cutting edge mobile advertising technologies to create the next generation of our Ads Platform.
So what does that mean for regular game developers and publishers; will there be more than just another number of ad vendors?
Impact for Game Developers
First of all, I would expect Facebooks influence diminishing as they are not a device platform owner unless they bring their own range of devices. The certainly forayed into that field with Oculus, Portal and their AR equivalent to Google Glass or HoloLens which is still in development; they also have (had?) a partnership with device manufacturer HTC, but if they go all the way, it remains to be seen.
It also means that both Apple and Google will push for even more editorial content, and will drive users out of the classic top charts browsing for installs. User Search becomes more important for anything that is not editorial content, meaning understanding ASO and ASA becomes increasingly important - not just for keeping user acquisition cost under control but as a way to get visibility at all.
Relations with platform owners will get even more important for making their editorial teams aware of your game, and deliver quality cases to them - so better get that travel budget up for your BizDev! Oh, talking about platforms: Platform managers have KPI too, so better take a good look at audience conversions, onboarding, monetization to keep them and yourself happy.
Paid games might actually become a lot more viable due to privacy concerns that they are not as subjected to as F2P games are since they rely less on user data, and the current discussions about lootboxes even on political level in the US and in Germany as key markets (and Belgium banning them outright) could add more reason for a classic release plus DLC as IAP model.
The biggest losers - not just due to the shifts described - to me are the classic UA Manager employees. Google already strangled their viability with UAC, and the decreasing attribution data will do the rest, unless, of course, if the new game publishers-turned-ad providers open API access to their portfolio which I would doubt.
What's really the elephant in the room though is the impact on User Acquisition Cost, as refined data should probably carry a higher price tag, and if those new ad providers will play by the same rules or have a more selective stance towards allowing competition to thrive via their platforms.
These thoughts are quite some crystal ball reading at times, so I would really love to see your take on this. What do you make of these developments?