Master the Meta is a free newsletter focused on analysing the business strategy of the gaming industry. MTM and PG.biz have partnered on a weekly column to not only bring you industry moving news, but also short analyses on each. To check out this week’s entire meta, visit www.masterthemeta.com!
US-based ad-network-turned-publisher AppLovin announced on Wednesday that it is acquiring German marketing measurement company Adjust, reportedly for $1 billion. On one hand, it's a logical continuation to AppLovin's foray into the mobile app value chain; on the other hand, it's an unexpected marriage. AppLovin has a reputation for secretive publishing deals, charismatic salespeople, and admittedly, growing its business successfully with fearless acquisitions. Adjust, on the other hand, is known for its sharp focus into marketing measurement tech backed by quality German engineering.
Understandably, much of the buzz around the merger has been about what this means for marketing measurement. Which data will Adjust share with AppLovin? Will AppLovin the publisher gain an unfair advantage with its access to Adjust’s third-party data? Does that data even result in an enduring advantage as both Apple and Google are transitioning away from persistent identifiers?
Adjust representatives have spent the last week convincing partners nothing will change, echoing the public statements by the two companies. They may truly mean it. Abusing their position in the current ecosystem is a blatantly short-term move for AppLovin. As the success of marketing measurement companies rests on their reputation, this would destroy Adjust's existing business and thus any information advantage in a heartbeat.
Moreover, ahead of their IPO, it’s in AppLovin’s best interest to build up their reputation, and we’re already seeing the grown-up AppLovin in action. A year ago, detective work was still needed to find out the connection between Matchington Mansion's Chinese developer Magic Tavern, Cayman Islands-based publisher Firecraft, and AppLovin. By now, most AppLovin-affiliated companies are duly listed on the company's website.
Instead of a short-term data play, AppLovin's move into marketing measurement can be seen as the next step in their continued vertical integration. AppLovin started as an ad network and successfully expanded into mediation (MAX), publishing (Lion Studios) and content (Firecraft, PeopleFun, MZ among others) in the past five years. Getting into marketing measurement is a continuation of this and a definite power move to challenge big self-attributing networks such as Google and Facebook. AppLovin is not the only company holding a position in varied parts of the value chain. In addition to the aforementioned duopoly, the ubiquitous tech giants Apple and Amazon have clear interests in mobile ads, distribution, and content, as do China-based ByteDance and Tencent.
Finally, let’s take an alternative perspective: Adjust’s point of view. Both Apple and Google are preparing for a future without persistent mobile device identifiers. Mobile attribution is built on top of Apple's IDFA and Google's GAID, both set to deprecate sooner or later, with the platform owners looking towards in-house attribution solutions. Taking this into account, it might just be the perfect timing for a company such as Adjust to get acquired.
All in all, AppLovin acquiring Adjust is a textbook Silicon Valley move in a journey to the next order of magnitude in valuation. It’s easy to forget that not that many years ago AppLovin was still an aspiring ad network. After a series of bold moves, AppLovin has reached a point where it's not outlandish to claim that it now has everything in place to move towards the final and most lucrative part of the value chain: challenging Google and Apple in app distribution. It's not a bad position to be at ahead of its IPO. (written by Miikka Ahonen)
Master the Meta is a newsletter focused on analysing the business strategy of the gaming industry. It is run by Aaron Bush and Abhimanyu Kumar. To receive future editions in your inbox sign up here:
