Navigating the Latest Data Privacy Changes: Tips for Online Gaming Leaders
The game is changing.
Online gaming sites typically enjoy a diversified revenue stream: fees and in-app purchases, advertisements, and monetization of user data.
But seismic shifts in data privacy regulations are putting pressure on this traditional business model. What’s changed – and how should P&L owners for online gaming sites respond?
The changing data privacy landscape
Like other sectors, the online gaming industry is grappling with a rapidly changing landscape of data privacy policies:
- GDPR (for EU data subjects), CCPA (for California residents), and other data privacy regulations increasingly govern how brands use, share, and sell the data that they gather on their users
- Apple’s App Tracking Transparency (ATT), first rolled out as part of the iOS 14 update in 2021, allows users to opt out of having their data shared with third-party apps. As of May 2022, over 80% of US-based users are opting out – severely limiting the ability of advertisers to target these users
These changes impact both sides of the online gaming industry’s single most important KPI: the ratio of LTV (lifetime value) to customer acquisition cost (CAC).
Online gaming’s north star: the LTV:CAC ratio
LTV. CAC. Acronym soup, right?
In reality, these are key building blocks for fast-growing online gaming sites:
Why optimize for the LTV:CAC ratio rather than simpler objectives (like maximizing immediate return on ad spend or minimizing CAC)?
The fastest-growing online gaming sites think of their users as investments. And spending a little more to acquire a high-value loyalist is the winning growth strategy. Each dollar that you put into your growth engine results in a greater return for the business over time.
How data privacy policies change the game – and what to do about it
Data privacy policies and regulations create headwinds on both sides of the LTV:CAC equation.
Fortunately, there are concrete steps for online gaming brands to right the balance – and continue driving growth.
- How it’s impacted by data privacy policies: The rollout of ATT and low consumer opt-in to cross-app device tracking has closed off a high-ROI advertising and acquisition channel to many online gaming sites. In response, dollars have poured into traditional advertising ecosystems (like Facebook and Google) – increasing the competition and cost to acquire users. (In 2021, CAC increased by 18% for online gaming sites.)
- What to do as an online gaming leader: You’re spending money to bring users to your site. Make sure that every single one of those users converts – by guaranteeing that your verification and registration process are seamless. Webeyez’s online gaming clients have seen up to a 67% increase in conversion rate when they fix age and identity verification issues during the registration stage.
- How it’s impacted by data privacy policies: Any online gaming sites have found themselves stripped of a revenue source: the monetization of user data. As a result, companies have had to focus more on auxiliary in-app revenue streams (e.g., in-app purchases and advertisements) to compensate.
- What to do as an online gaming leader: Maximize user engagement and loyalty by auditing critical stages of the conversion funnel. For online gaming sites, typical “moments of truth” include initial account deposit and placing a bet. In order to keep users engaged for longer, you need real-time visibility into points of friction.
The bottom line
Changing data privacy policies put pressure on both sides of the LTV:CAC ratio: the north star for high-growth online gaming sites.
In this shifting landscape, online games with real-time visibility into the conversion funnel – and the ability to pinpoint and quantify user friction – have the ultimate competitive edge.
Learn how Webeyez helps online gaming brands unlock growth.