Beating the street and its own guidance, Zynga reported record third-quarter revenue of $705 million, up 40% from the same period last year and reaching its largest mobile audience ever of 183 million monthly active users, up 120% year over year.
Despite warning in the second quarter of a material impact from Apple’s privacy policy changes that caused a dramatic 30% sell off in its stock from August 5 through November 4, Zynga’s share price jumped today on news that it had better than expected user-acquisition performance and is back on track to finish the year strong.
Zynga CEO Frank Gibeau. Image Credits: Zynga
TechCrunch spoke with Zynga CEO Frank Gibeau on how the mobile game giant has been able to navigate the advertising crisis while making moves to expand cross-platform and onto the blockchain.
Weathering the storm
On April 26, when Apple changed its IDFA (Identifier For Advertisers) and required developers to use its ATT (App Tracking Transparency) tool to allow users to opt out of being tracked across iOS apps, it shook the mobile ad ecosystem. New users gained during the lockdown dropped off in droves as pandemic restrictions lifted but as targeting became more difficult, acquisition costs soared. Companies began to report a 15%-20% hit to revenue according to marketing firm Consumer Acquisition. Among those most affected were ad platforms like Snapchat, advertisers like Peloton and Zynga, which is both an ad platform and advertiser.
“The midpoint of this year was tough,” Gibeau told TechCrunch. “We were one of the first ones out of the chute with the combination of IDFA and the great reopening demand issues. To navigate, we pulled back on our ad spend and began to experiment with new tools and techniques, and by September, we started to see yields come back to normal.”
Gibeau said they waited to launch FarmVille 3 until growth rates returned, and he was excited to see the game shoot to the No. 1 and No. 2 spots on the top free iPad and iPhone app store, respectively, after its November 4 launch.
“I’m happy to report that we feel the worst is behind us and we are scaling up our spending for new games as we head into the fourth quarter. The key to navigating this period has been how we use our first-party data with the Chartboost platform,” he said, referencing the ad network Zynga acquired earlier this year.
“We have a lot of data about what happens when players come into our games, the events they play and what advertisers are doing in our existing supply. First-party data allows us to build models that make predictions about the types of returns or auctions that would be beneficial to us,” he said.
Zynga is also partnering with Unity, Google and Iron Source, among others, to find ways to better target players.
“There are a lot of smart people attacking this problem. It’s more a function of time than there’s not going to be a solution,” he said. “Over the long term, Apple is building a capable platform to support a healthy advertising market while protecting player privacy, and we’re happy to work with them on this,” he said.
Rocking hypercasual
Although 80% of Zynga’s business is subscriptions and microtransactions from in-app purchases, a fifth of the company’s revenue is from advertising, a fast-growing segment being driven by the popularity of hypercasual games, which are …….
Source: https://techcrunch.com/2021/11/09/zynga-ceo-on-navigating-the-advertising-crisis-blockchain-gaming/