Vungle has acquired mobile ad marketing intelligence firm AlgoLift for an undisclosed price. The move is a sign of the predicted consolidation in the mobile ad industry which is facing uncertainty over Apple’s changes to targeting marketing in the name of user privacy.
San Francisco-based Vungle said the deal would give it contextual, machine learning-powered recommendations so that advertisers — including game developers and app makers — can maximize the return on advertising spend (ROAS) and lifetime user value (LTV), or the amount of money generated by a user during the lifetime in which the user uses the app.
Apple has stirred the pot, causing forecasts of revenue losses of as much as 50% for mobile free-to-play game makers and layoffs among game studios and mobile marketing firms. It has done so by offering a prominent opt-in question for users on iOS 14, asking if they want to be tracked for advertising purposes. Most users — as much as 80% — are expected to say no. That means advertisers won’t be able to use the Identifier for Advertisers (IDFA) to target ads at users.
In an email to GamesBeat, Vungle CEO Jeremy Bondy said that the decreased access to the IDFA will “absolutely disrupt the mobile app industry and many current platforms and developers will need to adapt.”
He added, “At Vungle, we have been preparing for a world without device IDs as user privacy has become an increasingly important trend – GDPR (Europe’s privacy law), CCPA (California’s privacy law), increasing LAT (limited ad tracking) rates, etc. We have built a platform that leverages contextual signals and we’ve invested in technology that performs in a privacy-friendly environment. Vungle’s acquisition of Algolift extends our contextual product suite. The Algolift team has developed probabilistic solutions that will allow marketers to continue acquiring high-quality users at scale with minimal impact.”
AlgoLift offers a path around this problem. Rather than collect precise details about an anonymized user, AlgoLift builds a context-related profile of a person that is a “probabilistic” picture, using the best available information. This is a “privacy-friendly” way to recover some of the lost ability to target users in the post-IDFA world, which is expected to take effect early next year, based on Apple’s latest comments.
Vungle said Algolift’s probabilistic approach to attributing a connection between an ad and a user’s action — such as buying something in a game or downloading it — gives it a privacy-friendly way to target and optimize campaigns in a way that is compliant with Apple’s changes.
AlgoLift is the automated ROAS optimization engine for gaming and non-gaming app developers such as Jam City, Take-Two Interactive, Digit, and Headspace. Using AlgoLift’s predictive LTV modeling and automation tools, customers are able to scale user acquisition spend significantly while increasing ROAS by up to 150%. The combined offering will provide advertisers an automated solution using contextual data to buy against their downstream metrics. AlgoLift relies on anonymized data.
Eric Seufert, founder of mobile ad blog MobileDevMemo, said in an interview with GamesBeat that contextual information is going to be important going forward in user acquisition. And he sees this deal as the most intriguing development in the mobile ad space in the aftermath of Apple’s decision to deprecate the IDFA. He said AlgoLift is one of the companies best poised to deal with the shift away from device identifiers and toward probabilistic targeting.
AlgoLift cofounders Andre Tutundjian and Dmitry Yudovsky, as well as the entire AlgoLift team, will join Vungle. The team will continue to operate out of the company’s offices in Los Angeles. Blackstone acquired Vungle in 2019 for $750 million after settling a lawsuit with its founder.
Vungle has 250 employees and AlgoLift has 20. Vungle’s data-optimized ads run on over a billion unique devices to drive engagement and increase returns for publishers and advertisers ranging from indie studios to brands, including Rovio, Wooga, TikTok, Pandora, and Microsoft.
Asked how AlgoLift helps, Bondy said, “Effective user acquisition has become a core function for every app developer who strives to profitably grow their user base,” Bondy said. “Managing and optimizing performance marketing budgets across channels continues to be time-consuming and resource intensive. AlgoLift provides automated buying technology for user acquisition teams who want to leverage best in class LTV models and machine learning through their platform. AlgoLift’s technology enables performance buyers to maximize ROAS and minimize time spent doing so.”
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