Three Ways App Businesses Can Avoid Closure
More than a quarter of app developers and marketers are fearful that their businesses could shut following the introduction of new regulations and policy changes by tech giants Apple and Google.
The worrying news comes after Apple made changes to the way its IDs for Advertisers (IDFAs) are managed. Essentially, these are unique anonymised codes assigned to iOS devices and used for personalisation and targeting ads. Similarly, Google is continuing its plans to phase out third-party cookies despite opposition from marketers who claim the measures would damage the $400 billion-plus digital marketing industry.
Combined with increasing governmental pressure around data privacy, the result is that more than half of app developers claim it has “never been more difficult” to acquire new paying users for their apps. And that’s a problem for the digital economy.
Apps are digital products that exist in a digital space. If entrepreneurs are to build a business on the back of these products, they need to be able to market and sell to new customers within the digital marketplace. In an economy that relies almost entirely on downloads and active users, anything that impedes that sales funnel seriously disrupts the bottom line.
Bango’s research of some 300 app marketers and developers cautioned that the industry is facing an ‘app-ocalypse’ – an existential threat to thousands of app businesses. In fact, 27% of those surveyed said their app-based businesses may shut down as a direct result of the recent changes.
But it’s also true that if the rules change, then it’s the job of app businesses to adapt and change. After all, there isn’t a market, business sector, industry, or geography in the offline or online world that hasn’t had to react to change, which is more common in tech than perhaps any sector.
Change is part of business. And the good news is that despite the pessimism, there are alternatives on the table.
Universal IDs: Neither Private Nor Targeted
One approach is to rely on so-called ‘Universal IDs’, which are regarded as being ‘privacy-friendly’ since they only require users to give consent to having their data tracked and used via an email address. These addresses are then used to create unique IDs.
As a result, logging into apps or websites using the email address linked to a universal ID means some degree of users’ identifier(s) can be shared with a range of organisations. Unfortunately, while this approach navigates around some of the changes made by Apple and Google, there are still privacy issues tracking personal email addresses. It’s also not as targeted as it could be, since Universal IDs don’t account for the fact that one person may use a number of different emails — or that a single email (such as a family login) may be shared by multiple different people.
Contextual Targeting: Somewhat Private, But Limited Targeting Capabilities
Another option is contextual targeting, in which marketers gather data on users to build first-party audiences for advertisers. It’s an approach favoured by media, news and entertainment platforms such as NBCUniversal and News UK.
While this provides a degree of privacy, as most media apps require customers to sign up, the downside is that this tends to focus on preferences attached to the content providers — in this case, news, and other forms of media. This may only provide insights that are relevant if you’re marketing within those industries. In other words, contextual targeting can be too contextual.
Purchase Behaviour Targeting: Privacy-Friendly And Targeted
Finally, a method that’s rapidly gaining traction among marketers across disciplines is Purchase Behaviour Targeting (PBT), which takes an altogether different approach. It allows app businesses to direct campaigns toward the users that are proven ‘most likely to convert’, by basing their calculations on what users have bought before, not just what they may have viewed.
In other words, app developers and marketers, in general, can promote their apps and services based on customer purchase history — without the need for cookies or IDFA tracking. As a result, they’re able to reach new users with relevant, targeted campaigns.
Targeting audiences in this way helps app-based businesses to once again hit their KPIs, by delivering relevant ads and respecting customer privacy.
What’s clear is that digital marketing is going through a period of profound change that needs to be addressed if app businesses are going to avoid closure. Amid the understandable doom and gloom, there is also optimism that innovative targeting approaches will help bring app developers and their audiences together via meaningful and relevant ads. In any market turmoil, there are always winners and losers.
For those that continue to cling to the principles of Apple and Google’s soon-to-be-erased approaches in the hope that there may be a last-minute change of heart, the future looks uncertain. But for those app professionals that rethink their marketing tactics and opt instead for new approaches such as purchase behaviour targeting, it’s clear they have the business agility to adapt to change.
About the author: Paul Larbey is Chief Executive Officer of Bango.