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The app industry’s expense with privacy, control and consumer influence



In the first 12 years of its existence, the app industry, like many emerging markets, pursued growth by focusing primarily on investor-friendly calculations such as user acquisition and revenue generation – often at the expense of the trust and confidence of the users who drove the growth.

But the events of 2020 have left the industry shaken and ready for change.

The year started harmlessly. In the first quarter alone, investors pumped more than $ 700 million into game launches, while a series of $ 100 million acquisitions – including one for more than half a billion dollars – made us feel stupid with confidence. Not even rumors of IDFA depreciation could pose too much concern, as alternatives such as SKAdnetwork were floated as alternatives, and the assumption was that a solution would present itself.

The first of several industry seismic shifts would hit in March, when the coronavirus pandemic sent us all into place and made us start using apps in new and sometimes unexpected ways. Total app usage increased by 40% from the previous year in the second quarter, and the consumer app app exceeded $ 27 billion, a record high. And yet certain segments ̵

1; such as travel, real estate and mobility apps – suffered huge losses in traffic and revenue. This was one of the first signs that the new norm would be dictated by consumer preferences, not the industry itself.

To their credit, many brands moved their marketing strategies under COVID-19 to focus on the message of humanity and kindness. Companies in the automotive industry, finance, healthcare, consumer packages and other sectors practically stumbled upon themselves to link their brands to hope, community, safety and support. While many of these brands increased their market share thanks to the renewed campaigns, companies that put profits in front of their customers suffered serious setbacks and even boycotts when consumers again flexed their muscles.

Meanwhile, Congress began increasing pressure on the Big Four technology companies Apple, Google, Facebook and Amazon. Among the cases concerning the Congress were the technology companies ‘mistreatment of personal data and their propensity for anti-competitive strategies – two developments that posed clear threats to consumers’ interests. These issues would move even further into the spotlight in July when Congress called CEOs of the big four into antitrust hearings so they could address concerns that they were just out of themselves, with dangerous disregard for end-user interests.

Also in July, California began enforcing a privacy law that gave consumers more control over their personal information. The California Consumer Privacy Act (CCPA) gives all consumers in the state the right to see all the information a company has stored on them, as well as a list of all third parties with whom data is shared. Similar to the EU General Data Protection Regulation (GDPR), the CCPA represented a clear shift towards giving consumers back power. Many believe that the CCPA has paved the way for a national privacy law.

Both Congress hearings and the CCPA stem from the ideals that all people deserve respect, privacy and control over their digital lives – ideals that will take the app industry on to its next growth stage. For many years, the industry’s modus operandi has been to extract the most value from users. It has built algorithms to maximize in-app pricing strategies, inserted too many ads into the app experience, and occasionally crossed the line that safeguards users’ privacy to achieve their growth goals. Some tactics were outright illegal and unethical, while others were simply bad. But in both cases a correction was inevitable.

If the events of 2020 have taught us anything, it is that individual rights matter. And the way we treat people means something. Whether it is something as important as our country’s law enforcement tactics and masking policies or as relatively insignificant as our app growth strategies, we must treat people with the same degree of respect we want for ourselves and our families.

This is also nothing more sacred than you argument. This is a very practical argument. The best way to increase profits in the new economy is not to increase prices or drive through users, but to show consumers that you care. The old adage that “consumers vote for their wallets” has never been more true: They want to invest time and money in the apps they are sure to have the best interests in mind.

Privacy and security are two good places to start. The events this year have shown that consumers care deeply about these two issues. A survey revealed that two out of three consumers are willing to uninstall an app if it collects information that is not related to the app’s core function, unless they receive real value in return. But the industry must go further than that. It must also show respect for consumers’ time, intelligence and general compassion.

This does not mean more SDKs collecting user data for unknown reasons. No more sneak subscription offers. No more misleading ads. And for Pete’s sake, no more selling user data to third parties. It means giving real value every time: in how you communicate your value proposition with honesty and transparency, in how you deliver that value, and in how you keep the promises you make.

The correction is probably too long. Innovation that focuses too narrowly on driving revenue and user growth is short-term. But when we innovate with a focus on the user experience and keep the user rights high, the possibilities are practically endless.

Social responsibility is nothing new. Throughout history, organizations that contribute to greater societal goals have reaped benefits, ranging from greater brand recognition and better reputation to increased sales and customer loyalty. But in our time – and in an industry that has lost consumer confidence for its past misdeeds – social responsibility is the only way it can regain that confidence.

The wind of change has come to the app industry. The events in 2020 have shown that consumers are in the driver’s seat. From the platforms and their metrics to app developers and all the ad networks, revenue generating companies and SDK vendors that support them, it’s time to put consumer interests ahead of their own.

Benjamin Chen is EVP & GM, global developer relations, at Tapjoy, a leading mobile advertising and app revenue generation company.


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