In the first part of this blog, Jens Lauritzson, Flexion CEO, looked at how new privacy rules in iOS and Google are reshaping the landscape for developers, making it tougher to reliably acquire paying users. Here he offers some short- and long-term strategies for adapting to the coming seismic shift
Change is already here. Apple and Google are making app tracking transparent to meet the privacy expectations both of users and regulators. This will make user acquisition tougher, particularly for games that rely on in-app purchases (IAP) for their revenue.
We’re already seeing fall-out from Apple deprecating its ID for advertisers (IDFA). Recently, Pocket Gamer attributed plummeting 30-day retention rates to the tightening of privacy regulations. Plummeting retention rates – not that it needs spelling out – are bad for revenue. Only about 5% of free-to-play game users spend money, so you want to keep them around as long as possible.
This is a sign of things to come as Google and others bring new privacy rules into force which will limit user tracking. As I mentioned in the last blog, Google’s Privacy Sandbox is likely to be more developer-friendly than Apple’s approach because Google is an advertising company.
But the truth is, without that tracking, developers can spend on user acquisition through programmatic advertising with very little idea of how many paying users they’ll see in return. They’ll have little certainty about whether they’ll get a return on their investment. In fact, the whole business of game revenue is likely to become much less reliable, at least in the short term.
Developers need new, smarter strategies
You may consider user acquisition through the alternative app stores and other new traffic sources. Using Huawei, Amazon or Samsung won’t replace your current user acquisition, but it may bolster revenue just enough to offset money you lose as privacy rules begin to bite. The approach will work particularly well if your game is also available on the same alternative stores, so that your newly acquired users can connect straight to the game (talk to Flexion if you want to know more about how to do that).
App tracking is also likely to change on the alternative stores, due to increasing privacy regulation and limitations introduced on Android 13. But our data suggests that you get a higher percentage of paying users on the alternative stores, so it may work out to be a sound strategy for the longer term.
Although it will no longer be possible to track users in the same way, statistical modelling is still possible. Analytics already offers developers a raft of information about users, but the data is anonymised. Remember, what you’re trying to identify is people who will pay and where they are coming from when they play your game.
This is going to see developers do a lot more A/B testing as they try to learn where their targets are in a noisy wash of data. But their analysis will get better and, as it does, so will the return on their user acquisition spend.
Influencers offer a new way to target
I’m advocating that developers change their marketing mix and spread their spend across a variety of channels. Influencer marketing shows a lot of promise to find the right users. The fact that users start their journey to your game with a personality they like, and trust means they are more open to your product and more likely to pay for an IAP. It is also easier to explain to users why they should go to a different app store through an influencer. If you also offer them some benefits, conversion rates will improve further.
If nothing else, spreading your marketing spend across channels will give you more data to analyse and potentially a quicker way back to a return on your investments.
At Flexion, we already have a head start on this process, because we see user response across several different app stores and traffic sources. This is starting to give us a feel for how to reach the all-important purchasers.
Going forward, smart data analysis is likely to be the deciding factor in the success or failure of a game. The market is consolidating anyway, and big developers cannot afford to see revenues slump. It’s likely they’ll spend heavily on data analysis to catch up on their financials. Those that do will have a more secure future, I would suggest.
Data analysis is going to be so important that I predict the burgeoning of a specialist sector – third parties who offer a way through the data for you, with expertise and experience in finding sources of revenue among the noise. Finding the right partner may be the key to exploiting your data, even for the biggest developers.