Cost Per Acquisition...Unknown? The Lottery industry must get ready for Apple’s next major change.

Changes to Ad Attribution due to come into effect in March 2021 will have a profound impact on lottery mobile apps, and marketing spend.


The way marketers have promoted and advertised mobile apps for the past decade is about to change in March 2021. And the lottery industry should begin preparations now.

The user privacy-geared changes due to be implemented by Apple, that will affect all iOS mobile app users, are one of the many new features being introduced with iOS 14, the latest version of the operating system that industry analysts estimate more than 70% of iPhone users have already upgraded to. 

Most lotteries with mobile apps, be they transactional or not, get data on where an ad was placed which caused a user to download. 

In most cases, we also pass back certain activities back to the ad network such as whether a user registered or logged in following the initial download, as well as successfully played a game or scanned a ticket. 

This allows us to gauge an ads overall effectiveness, and is the bedrock from which all marketing plans, and budgets, are built. But there is change in the air.

The changes Apple are making, in effect, severely limit the ability of marketing teams to understand precisely what is driving successful conversions – i.e. which of our campaigns resulted in players using our app? 

Data from Apple will be limited to raw numbers of users sent to the lottery from each source, and of course the overall number of downloads or registrations. Lotteries won’t know who sent us those registrations – say facebook or google – or even if they are related at all to the ads we’re spending good money on.

This has significant implications for the industry, and the efficiency of marketing spend. 

Without addressing these forthcoming changes, Cost Per Acquisition (CPA) costs for each new mobile user could go from ¢.50 to $5, or to simply ‘unknown’. 

 

Digital Advertising is a constantly changing ecosystem.

At present it is undergoing a major change as phone/browser companies (Firefox, Microsoft, Google & Apple) make a shift to greater privacy for their users.

Firefox and Safari have phased out 3rd party cookies, and Google are planning on doing the same in the next couple of years, which is reflective of the current privacy and data climate thanks largely to the introduction of the EU’s GDPR and the US Privacy Act.

It’s vital to the continued success of the lottery industry’s mobile apps that we embrace these changes, and that we prepare early to maximise any advantage they can bring.

 

Paid acquisition powers the economic engine of the App Store. 

It’s not the only way people find apps, but all of these channels (e.g. search, App Store/Play Store editorial, press, word of mouth, and more) are driven by the feedback loop of attention; the most reliable way to feed that loop is to buy attention.

Much of the tooling that currently powers paid acquisition on mobile relies heavily on the Identifier for Advertisers (IDFA), which allows developers (and the libraries  they install within the app) to uniquely identify individual users. 

Since its creation IDFA has made paid user acquisition become more reliable, easier to scale, and easier to measure than other forms of marketing.

However, Apple users who are running iOS 14 in early 2021 will notice a new pop-up when they open an app for the first time – an IDFA opt-in prompt. 

Every app will have to display this prompt if it wants to get access to the IDFA, and how many users will agree to this now-overt tracking of personal data is nothing more than speculation at this stage with estimates across the mobile ad industry ranging from just 1% of users to 50%. I suspect it will be towards the lower ends of that scale.

If users do not opt-in to data tracking via the IDFA prompt, then no tracking data will be passed on to the ad networks.

 

Flying blind and paying the price.

Without tracking data, it won’t be possible for Lotteries to fully understand which user downloaded their app following a click on an ad on Facebook or Google. Marketing teams will simply be flying blind, with CPAs ranging from best guess to unknown.

Without being able to know which ads work, and which don’t, optimising becomes impossible. The result will be less effective ads, that result in fewer app downloads. And fewer app downloads, especially for those lotteries with transactional mobile apps, will mean a significant hit to the bottom line of the business.

 

What every lottery can do right now – prepare.

There are many unknowns that surround this forthcoming change from Apple, but what is certain is that this won’t be the last significant change to the status quo that the Lottery industry will need to grapple with.

What lotteries can do right now is assess their current mobile apps, as well as associated marketing and spending, and prepare to operate in a world that is less far rich in user data. 

It’s worth remembering that the Lottery industry, and our cousins within the wider gaming sector, are not being singled out by Apple with these changes. Large percentages of the public will likely be thrilled with the changes Apple are making to the use of their personal data, so it’s probably not in the best interest of the lottery brand to noisily complain.

The data taps will indeed be turned off soon, and most lotteries have just a handful of options:

      1. Leave everything as it is, and accept that they are going to struggle with the iOS App

The benefits of this approach are, of course, immediate in that no additional time or money needs to be spent to fix a problem. In this scenario, Lotteries might choose to upweight their spending into additional channels that are not reliant on IDFA in an effort to grow them ahead of the Apple change.

However, the risks to this approach are significant. Other channels will almost certainly not be as profitable per user, so more spend will be required to get the same return. And, of course, as time goes on less actionable and rich user data will be coming back through iOS channels, leaving a large and expensive data gap.

      2. Mitigate with internal data – Attempt to predict ad attribution data by overlaying with 3rd party data sources

This approach buys more time, and would allow lotteries to utilise their own internal data to try to fill the data gap caused by Apple switching off IDFA in March.

The data would never be as perfect as before, however, and the effort and cost to maintain this would likely be significantly increasing on current spending for most lotteries – with permanent resources required too. In the short term, I expect this to be where most lotteries focus their energy as they look to cover the data loss and attempt to keep CPA down. But this is still a short term solution.

      3. Make your app compliant – and update tracking

While Apple is planning to eliminate a current feature with the end of IDFA, it will inevitably stand up new features to replace it, and likely ones that give Apple even more power over user data. 

If your app is not yet compliant to Apple Guideline 4.7, this now becomes critical to having a fully compliant app. It is the best way to ensure a lottery can take advantage of those new features & critical changes. As for the large initial investment in putting this right, it would likely result in lower running costs once live too. What’s more, given the loss of growth through ads, the return on investment on creating a new app will be paid back very quickly.

Of course, some lottery apps will already be compliant to Apple Guideline 4.7. Even if that is the case, they will need to update their SDK/3rd party media tracking library to take the new conversion API, and also the IDFA opt in, if they want a chance to gain additional data.

The drawbacks to the approach of building a new compliant app, will be the large initial investment for lotteries, and the time it takes to create a world-class lottery app. 

Yet the biggest drawback of all will be in not making an app compliant, and suffering a ‘death by a thousand cuts’ as change after change to digital advertising networks are brought in over the next months and years.

We may never again enjoy the detail and level of user data that we as marketers and product people currently do now.

But it is far better for lotteries to operate in a world that is less data rich, than in one that is data non-existent.

Lotteries should act now.


Matt Davis is a Senior Product Manager at Camelot Lottery Solutions, working closely with lotteries in the US and Europe on their digital channels, including BI/CRM and iLottery.

Camelot Lottery Solutions recently built one of the first fully native mobile apps in the global lottery industry for the Irish National Lottery, in addition to helping to drive player engagement and incremental sales growth on behalf of lotteries around the world.

To find out more about Camelot Lottery Solutions, click here.