A strategy for app publishers to minimize ad revenue loss with GDPR compliance.
Over the past two weeks, I’ve spoken with twenty mobile publishers, advertisers, and SDK-partners to gauge where the industry is on GDPR as the rollout is now less than three weeks away. Our conversations focused primarily on Article 8 which prohibits collecting and processing data on users below the age of consent (typically 13) without verified parental consent — a very similar regulation to COPPA. This is especially important to me as at UncleWilliam.org we develop products and solutions to ensure kids are kept safe, healthy, and productive when engaging with technology. I’m very interested to hear feedback from the industry on my key takeaways and recommendations to minimize exposure and maximize revenues, so please contact me here or look out for me at the Mobile Growth Summit on June 7 in NYC.
- Advertisers acquiring users through in-app ads strongly prefer that publishers comply with Article 8 and COPPA. Why? If an advertisement reaches a child, not only is the advertiser inadvertently acquiring children users which then requires them to be compliant, but also children are not valuable users as they spend just a fraction on in-app purchases due to their limited income and locking of in-app purchases by parents.
- Publishers are cautious to implement a strategy for Article 8. Why? Once age is determined, the publisher gains “actual knowledge” of children users which also requires COPPA compliance, and publishers dependent on ad revenue are concerned about impactful revenue loss.
- The majority of the big players in analytics, attribution, mediation, and monetization have updated their SDKs to support their publisher partners’ GDPR compliance. However, they are only able to support if the publisher sends a ‘flag’ indicating sessions or devices with children users.
Because concern of revenue loss is the primary reason publishers are reluctant to comply with Article 8, I decided to crunch some numbers to see if there is any way to actually increase revenues with compliance, or at least to minimize the loss in revenue with full GDPR compliance i.e. users not opting-in to data collection/processing. I learned it is actually possible to increase revenues, especially for publishers with:
- Majority of revenues from-app purchases or subscriptions
- User base with 20%+ users below-13
- Sizeable UA budget
How can revenues increase?
Step 1: Create cohort of under-13 & 13+: Once you split users into cohorts with an Age Gate or another method, you’re able to better optimize monetization — ad formats/sources and economy balance to maximize LTV.
Note: For publishers concerned about losing revenue when users do not opt-in to data collection/processing, when an Age Gate or another method is used at app-open and only serves the opt-in option to those 13+, the publisher is able to infer that users not opting-in are 13+ which provides additional valuable targeting capability than contextual targeting, which is currently what publishers need to rely on.
Step 2: Revenues from ads targeting 13+: By creating a segment of users that are guaranteed to be 13+, you increase the quality of you traffic which actually can result in more ad revenue than with a mixed audience.
How? Advertisers optimize their CPIs for ‘return on ad spend’ (ROAS), meaning once fully efficient, they are not paying for any traffic or interactions with users that do not provide value, therefore, not paying for the majority of under-13 traffic.
Note to very casual games — oftentimes your games are blacklisted by advertisers due to their perception of low quality traffic. Once you’re able to guarantee a segment of 13+, advertisers previously shy will begin buying your traffic.
Step 3: Revenues from ads targeting below-13: Being able to target users below-13 with COPPA-compliant advertisement spurs the growth of an already quickly growing vertical of family-focused ad spend, will pay more for your under-13 users than they were previously able to be monetized. Also, I’m bullish that the CPM for this traffic will surpass ‘mixed audience’ CPMs within a year after monetization SDKs better understand the preferred ad experiences for children. Remember, children have always been able to convince parents to purchase their desired products.
In continuing to carry out our Mission of keeping kids safe, healthy, and productive when interacting with technology, we are making headway into developing new solutions to help publishers, advertisers, and SDK partners to not only comply with Article 8 and COPPA, but minimize exposure and maximize revenues.
On May 23, we plan to announce our first cohort of publisher, advertiser and SDK partners in this initiative. If you want to learn more, reach out to me.