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Vungle has acquired mobile ad marketing intelligence firm AlgoLift for an undisclosed price. The move is a confirmation of predicted consolidation in the mobile ad industry, which is facing uncertainty after Apple decided to limit targeted marketing in the name of user privacy.
San Francisco-based Vungle said the deal would give it contextual machine learning-powered recommendations so advertisers — including game developers and app makers — can maximize their return on advertising spend (ROAS) and lifetime user value (LTV).
Apple rocked the industry by announcing it would add a prominent opt-in question to iOS 14 that asks users if they want to be tracked for advertising purposes. Most users — as many as 80% — are expected to say no. This means advertisers will no longer be able to use Apple’s Identifier for Advertisers (IDFA) to target ads at users. Revenue losses are predicted to reach as high as 50% for mobile free-to-play game makers, with layoffs among game studios and mobile marketing firms.
In an email to GamesBeat, Vungle COO Jeremy Bondy said decreased access to the IDFA will “absolutely disrupt the mobile app industry, and many current platforms and developers will need to adapt.”
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While Apple’s move brings the problem into focus, Bondy said the writing has been on the wall for a while. “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.”
AlgoLift, which relies on anonymized data, offers a path around the privacy problem. Rather than collecting precise details about an anonymized user, it builds a context-related profile of a person that forms a “probabilistic” picture, using the best available information. This offers a “privacy-friendly” way to target users in a post-IDFA world. Apple’s move is expected to happen early next year, based on the company’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 — allows it to target and optimize campaigns in a way that will be compliant with Apple’s proposed changes.
“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,” Bondy said.
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, the company says customers are able to scale user acquisition spend significantly while increasing ROAS by up to 150%. The combined offering will give advertisers an automated solution using contextual data to buy against their downstream metrics.
Eric Seufert, who founded mobile ad blog MobileDevMemo, said in an interview with GamesBeat that contextual information is going to be important to user acquisition going forward. 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. Seufert also 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 will join Vungle, along with the entire AlgoLift team. The team will continue to operate out of the company’s offices in Los Angeles. Vungle has 250 employees, while 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 such as Rovio, Wooga, TikTok, Pandora, and Microsoft. Blackstone acquired Vungle in 2019 for $750 million after settling a lawsuit with its founder.
Asked how AlgoLift helps developers, Bondy said, “Effective user acquisition has become a core function for every app developer who strives to profitably grow their user base.” He added, “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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