April 20, 2024

AI Drives User Acquisition, and Mobile Game Publishers Have the Advantage

For three decades, spending money on user acquisition (UA) was a strategy mobile game publishers could count on to gain valuable players and attract high spenders. The approach worked because the user data feeding these efficient marketing machines was abundant and actionable. Today, privacy changes from Apple and Google limit the provision of granular data, pushing marketers to fundamentally rethink how they view and pursue performance goals and the role of AI in achieving them.

Seismic shifts and enormous challenges across the entire mobile app ecosystem are driving “nearly 60% of app marketers to pursue more aggressive KPI goals compared to 12 months ago,” according to the Marketer Survey. 2024 apps published by mobile marketing platform Liftoff. But formulating these goals and measuring success without data is an uphill battle. The majority (71%) of marketers admitted that access to more data would have helped them in their decision making and 62% said their campaigns were less successful as a result.

Fortunately, according to the survey, budgets in all regions have increased, allowing marketers to experiment, adapt and diversify spending beyond the usual channel mix. Significantly, marketers plan to increase the resources they allocate to organic and social (50%), influencer marketing (50%), and community building (31%).

Taking control of data and destiny

Marketers aren’t just moving budgets to new channels. They are taking new approaches to “unite acquisition and engagement into a positive flywheel of profitable growth that relies on data at the top of the funnel and how users interact with the app in the deeper parts of the funnel to personalize a compelling and consistent user journey.” Mike Rhodes, founder and CEO of award-winning app growth consultancy ConsultMyApp (CMA), told me in an interview. “It’s about reorienting strategies away from vanity metrics and volume to delivering value.” (Disclosure: CMA has requested my services to produce a marketing guide to achieve sustainable growth in the second quarter.)

The confusion over ID deprecation tests marketers’ mettle, but it should also encourage them to find new ways to control their first-party data and its destiny in a post-privacy world, Rhodes explains. “Marketers must learn to track and interpret the digital trail of behavioral and contextual clues that users leave behind as they navigate apps.” It can be a lot of work, so he advises companies to lean on artificial intelligence, automation and external agencies to take on the load and connect the dots.

This advice also applies to mobile gaming, an oversaturated and fiercely competitive vertical where consumer spending is softening and time spent in-game has reached an all-time high. (Mobile data analytics provider data.ai reports that the time users spend on all apps, not just games, has increased 9% to 4.1 trillion hours.)

The result is an avalanche of app engagement data that publishers can leverage to inform and optimize every element of their UA campaigns, from ad creative to LiveOps. “Publishers who incorporate their data on player behavior and activity into UA campaigns can optimize and increase conversion rates by up to 10% to 15%,” Rhodes says. “For studios spending millions a month to get their game in front of high-value users, that’s a lot of cash and a lot of learnings.”

New paradigms and power games

Studios are stepping up efforts to unlock player data and improve modeling and targeting to maximize return on investment. “Today, the publisher knows the players best, and they are the ones who have all the information they need to attract and nurture them,” Gonçalo Martins, vice president of marketing at mobile game publisher BoomBit, told me in an interview.

“Publishers can only be successful if they streamline and automate the entire acquisition process,” says Martins. Publishers can set and achieve this ambitious goal, she says, thanks to proprietary data and insights that put them “one step ahead of most ad networks.”

It’s a playbook that TapNation, a Paris-based mobile game publisher, is following to combine data gleaned from working with more than 100 studios to launch its games with full ad tech to improve UA campaigns.

The company, which recently raised €15 million in a new funding round from Re-Sources Capital, Paluel-Marmont Capital and select banking partners, is best known for a platform that allows you to test games and analyze player behavior at scale. . Last September, TapNation reached more than 1 billion downloads of its popular mobile games.

Today, TapNation announced that it will acquire UA Hero, an AI-powered mobile app user acquisition platform, for an undisclosed sum. Until now, both companies had worked to develop a set of AI-powered tools that would allow TapNation to “put UA on autopilot for our titles,” TapNation CEO Hervé Montoute tells me in an interview. The merger, he explains, will allow his company to compile forecasting and prediction models using proprietary data and artificial intelligence. “Combining these strengths allows TapNation to set and achieve higher LTV goals and extend the player lifecycle.”

From software to A/B testing mobile ad creative and models that precisely optimize player value based on UA ​​channel, TapNation CMO Vincent Février says the acquisition will “enable our teams to create, run and grow games end-to-end mobile devices. .” Integrating UA Hero’s team and talent into the company will “increase campaign efficiency and result in time savings of up to 50%.” Having this insider knowledge also prepares TapNation for a “pivot toward casual gaming and increased focus on monetized gaming subgenres through a combination of in-app purchases and brand partnerships.”

“Purple oceans” of opportunities

TapNation joins the list of powerhouse publishers, including King and Zynga, that have acquired data analytics companies and in-app monetization platforms to automate UA with the help of AI. It’s part of a broader trend accelerated by changes in privacy that make targeting more difficult than ever and the broader market shift from ad-supported hyper-casual titles to casual games that monetize through in-app purchases .

“Automation has been a huge part of performance marketing, and that is accelerating as more players compete by building empires based on optimizing UA automation against first-party data and signals,” Matt tells me in an interview. Widdoes, CEO of growth agency MAVAN.

It reminds Widdoes, who previously headed marketing at King, of the dynamics that led the publisher to quietly acquire data analytics company Omniata in 2017 to maximize revenue by retaining paying users and acquiring new users. “We found success [at King] in the construction of internal advertising technology that would allow optimization,” he explains. “Doing it faster, smarter and at a larger scale than the competition was the differentiator.”

Of course, not all mobile game publishers have the luxury of building in-house tools or acquiring data companies that do so. But now that more players are leveraging AI to unlock data about what players do in the game, there may be other options.

Some companies that have mastered optimizing user acquisition and monetization may decide to sell their AI-powered models to other mobile game publishers. Others might choose to provide what Widdoes calls “analytics as a service” to studios with limited budgets or just new to AI-powered marketing automation. Either way, Widdoes says, the result will likely be a booming picks-and-shovels business that gives publishers more control over how they acquire and monetize players in a privacy-first landscape.

But Widdoes warns that it might not be a blue ocean of unbridled opportunity for long. It predicts the emergence of a “purple ocean” transformed by red-hot competition from Google, META, and data-rich platforms.

Right now, he reflects, everyone is building their boat and preparing to ride the ocean waves. “There are not many [players] there still. But the secret has come to light.”

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