Using first-party data: Your gold mine of insights, opportunities, and strategic potential

• "The mobile gaming industry was once almost entirely reliant on the liberal tracking of users and the sharing of their data across multiple platforms and technology providers"
• "Using first-party data both internally as it is widely employed now and externally to contextualise player value is likely the best way to future-proof any gaming business"

Cookie deprecation and tighter data and privacy controls have been on the cards for so long, that it should have been no surprise when Google confirmed earlier this year that it was happening in 2024.

Add to that Apple’s tightening of what happens on its devices, and investigations into the use of data in online advertising by various government bodies, and there are a lot of grey clouds overhead making publishers want to improve both UA and ad monetisation.

Fernando Pernica, co-founder and Chief Customer Officer of Nefta thinks it is time to ditch the fatalism, and get optimistic about the opportunities and control that using your first party data creates. In this piece, we will cover the challenge of getting first-party data ready and how it can help.

The unstoppable and inevitable advance of online privacy has been extensively and tiresomely documented over the years. The mobile gaming industry, in particular, was once almost entirely reliant on the liberal tracking of users and the sharing of their data across multiple platforms and technology providers.

Those signals fed perfectly calibrated models with the single purpose of finding the users that would generate the best return on investment with scary mathematical precision. More importantly, it brought internal business intelligence and market intelligence together.

The fallout of lost signals

Losing those signals has meant higher marketing and development costs and diminishing returns. This is especially, but not exclusively, seen in ad monetisation. In fact, the whole ecosystem has felt the pressure, even those that are not reliant on ad monetisation. Without those signals, studios have had to spend more time and money to find the right users for their games.

This also impacted game development: where before it was easier, cheaper, and faster to test out new ideas in search of the right elements, the opposite is now true. These compounding effects on marketing, game development, and ad monetisation translated into lower in-app purchase revenues. Appsflyer reported that in June 2021, there was a drop of 35% for In-App Purchasing (IAP) revenue directly from the growing adoption of iOS 14.5. This only shows how intertwined mobile advertising and mobile game development are.

Coupled with other pressuring factors, such as higher consumer expectations and increased competition from other games and media, the mobile gaming industry has been remade in the last few years. The boom times of the early 2020s, marked by COVID-19 and the rollout of App Tracking Transparency (ATT), have now come to an end. Looking out the window, we see an industry that is more consolidated than ever, where the entry barriers are higher than ever, and there is a constant fear of redundancies and recalibrations.

Transformation of the industry with ATT

Arguably, ATT set in motion pressures that compounded the industry's transformation or at least accelerated their effect. No longer can business and market intelligence about your players be tapped into in the way that it used to be.

The need to manifest signals led to the vertical consolidation of the advertising model, which brought game development, publishing, and advertising under one banner in ways we hadn’t seen before. Now, besides the dominance of the platforms, which have been struggling to make breakthroughs in how they enable better discovery, the industry now has to contend with another duopoly, that of the ad tech empires.

Roll in the ad tech empires

With the supremacy of the platforms and ad tech empires over the creative and entrepreneurial imperatives of game builders, it is no wonder that those in this industry are feeling a certain fatalism about its future. At least as far as the “everyday” game developer is concerned, there is no clear solution in sight, and the only option is to play ball.

Now, the best minds amongst us have been asking for the last few years: “How do we get out of this quagmire?” and I admit, 2024 has so far been a really busy year for ideas. Gen AI, new types of advertising media, such as audio, alternative stores, and the “‘tiktokification’ of mobile gaming” have all been offered as solutions that will bring about a new golden age of mobile games. Will these have the same effect as having great signals?

Recent data from Konvoy on VC gaming deals point to a moderate optimism. However, the fact that investments are still at 2021 levels, to me, indicates that no one – not game developers and not investors – is entirely convinced that these new trends will plug the hole left by the absence of hard advertising signals.

In my view, this is because these solutions, while addressing the shortcomings of the platforms or finding cheaper ways to build games, do not hit at the heart of the problem hamstringing the gaming industry: mobile game developers, addicted as they are to data and precision, have been flying blind. This has a business cost and, unfortunately, as we can see, a human one too.

The power of first-party data

Yes, the mobile gaming industry is facing tough times, causing a lot of uncertainty and a negative, fatalistic attitude. However, developers, contrary to the above narrative, already have access to the most valuable type of signals they need - their first-party data. This data, a veritable gold mine of insights, opportunities, and strategic potential, has been within reach and, of course, already used in a concentrated manner.

Nevertheless, experiments in using first-party data to optimise advertising campaigns and ad monetisation after ATT have become akin to astrology. Without venturing out of your silo, you are limited in what you can learn about the value of your players in an open marketplace.

Bigger publishers, to an extent, have successfully harnessed their first-party data for the purpose above. And, of course, data aggregation was a big drive for some of the consolidation moves of the last few years.

What these publishers and our ad tech overlords have shown through their experience is that beyond tapping into it for the usual objectives of game development, monetisation and engagement optimisations, first-party data can be a treasure trove when also revealing player value externally. Of course, this was what the IDentity for Advertisers (IDFA) enables to a large extent.

When first-party data is effectively prepared, analysed, and applied, it can unlock a multitude of benefits that can directly impact the bottom line, the user experience, and the overall growth trajectory of games. This is as true now as it was pre-ATT, and those businesses that could do it have done so. Some by building their own data silos powered by complex machine-learning algorithms, and some by going as far as building their own ad network. No mean feat, even for the earliest of risers!

However, applied in the right way and enabled by the right technologies, first-party data can generate valuable insights that, once contextualised in a marketplace, can be a powerful tool in defining success metrics for a game. For example, cohorting players according to how they spend time (and money) in the game means that even without the precise identifiers that were once available, we can still observe patterns of behaviour. These patterns of behaviour, clumped together, can tell us a story about those players and what they like.

More importantly, combined with advertising and creative data, they can tell us the likelihood of those players converting later in the funnel. Considering the inextricable interdependency of advertising and game building, this is not something to be ignored.

Contextual data’s part to play

For marketing teams, contextualising player value means improved ad performance, click-through rates, and, ultimately, conversion rates. For monetisation teams, this means higher eCPMs and higher ad revenues. In addition to that, publisher first-party data in advertising can help ensure user and developer privacy while also delivering the above results. In an age where privacy regulations are becoming increasingly stringent, first-party data allows publishers to sell their supply in an anonymous and yet highly effective way. This combination means that publishers can also sell the supply of players that opt out of ATT at a premium.

Using first-party data both internally - as it is widely employed now - and externally to contextualise player value - as I discussed above - is likely the best way to future-proof any gaming business. This is perhaps its biggest superpower. The platforms and ad tech empires know that which is why they are very comfortable sitting at the top of Data Mountain. For the everyday game developer, the story is different. It must rely on striking the right partnerships and experimenting with the latest offerings in the market.

Use the tools and shift from fatalism to post-ATT optimism

Naturally, the shift in perspective from fatalism to optimism isn't just about adopting a more positive outlook but about practical, strategic change that can help a studio navigate the current challenges and uncertainties of the industry. It's about focusing on what they can control – their first-party data – and leveraging that to its fullest potential. Only by thinking differently about how to tap into the opportunities that first-party data brings  can we carve out a path forward. Shaping the future of the mobile gaming industry in a post-ATT world will be about turning the current challenges of using first-party data in a marketplace context into stepping stones for unprecedented growth and success.

Edited by Paige Cook