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App publishers: Here’s a way to minimize ad revenue loss from GDPR

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The mobile apps industry, especially companies based in the EU, have watched General Data Protection Regulation (GDPR) draw closer over the last two years. With such lead time, did the industry meet Friday’s deadline? Based on my conversations over the past month with 30-plus mobile publishers, advertisers, and SDK partners, it appears that they’ve implemented solutions to the most complicated requirements i.e. enabling a user to obtain all personal data collected by the service and its partners. However, many of these publishers have not been proactive with Article 8. This requirement, which is in fact quite similar to COPPA, prohibits collecting and processing data on users below the age of consent (typically 13) without verified parental consent.

Here, just as with COPPA, it seems that the majority of publishers are going to rely on the reasoning “we’re not sure if we have any users that are minors as we have no reliable way to determine user age.” A solution is especially important to me, as my social enterprise focuses on quality and safe kids screen time.

Without a doubt, there is a way to comply with the entirety of GDPR and even COPPA, while increasing ROI for advertisers and increasing monetization capabilities for publishers. I’ll first share what I learned in my conversations and then provide my recommended strategy.

Key takeaways

  1. 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 provides the company more legal exposure, 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.
  2. 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.
  3. 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 in-app purchases or subscriptions
  • User base with 20 percent-plus users below-13
  • Sizeable UA budget

How can revenues increase?

  1. Create cohort of under-13 & 13-plus: 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-plus, the publisher is able to infer that users not opting-in are 13-plus which provides additional valuable targeting capability than contextual targeting, which is currently what publishers would need to rely on.
  2. Revenues from ads targeting 13-plus: By creating a segment of users that are guaranteed to be over-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.
    • 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.
  3. Revenues from ads targeting below-13: Being able to target user 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 be similar to today’s ‘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 comply with Article 8 and COPPA. Note, because I’ve spent several years in mobile publishing and UA, I understand that compliance is most likely to only happen when folks are confidently able to minimize exposure and increase opportunities, which we are certainly optimizing toward. If you want to learn more about what we’re working toward, reach out to me.

William Heathershaw’s decade in tech has primarily focused on mobile, within both startups and public companies based in Beijing and the Bay Area, and currently serves as CEO of UncleWilliam.org.