Once an iPhone user installs iOS 14.5, any app that wants to collect device data in order to link it to data from other apps for advertising purposes, is required to show the user a prompt asking for their permission.
Unlike self-managed consent gathering mechanisms on the web applicable for cookie data, publishers cannot customise the overall appearance of the prompt. However, they can choose when it is triggered, edit text in the prompt that adds context on how the data is being used and provide additional pre-permission prompts to encourage users to allow tracking.
Despite efforts by app developers to optimise the delivery of the prompt, the unavoidable outcome is that a significant share of users will not provide permission, with the main casualty being Apple’s Identifier for Advertisers (IDFA). This is the ID marketers use to identify devices for targeting and measurement. In short, if users don’t give permission on both publisher and advertiser apps, Apple doesn’t make the IDFA available and marketers can’t link their advertising to outcomes on their app as they are accustomed to.
Of course this much-anticipated release from Apple has a mobile advertising industry, worth in the region of $350 billion globally, on tenterhooks. With much at stake for the app ecosystem, how can we assess its impact?
Prepare for change
The true impact will take some time to play out, as operating systems update and individual apps update their workflows. This will likely have a wider effect across various sectors of the mobile ad ecosystem in the short, medium and long term.
The predominant challenges this industry will be grappling with are:
● Maintaining yield for publishers: IDFAs allow advertisers to identify their most valuable users and measure performance. Removing this capability prevents advertisers from bidding more aggressively on these users which will have a worrying impact on publisher yields, particularly those who can boast high value audiences. In the age of programmatic advertising where media dollars flow towards the most addressable and measurable environments, app publishers are waiting with bated breath on the impact to their ad revenue.
● Cost effectiveness for advertisers: lower CPMs may sound beneficial for advertisers. However, a decrease in IDFAs, which have allowed for the precision and optimisation that fuels the marketing performance brands are able to achieve, presents a great challenge. Without alternative solutions, brands face a reduction in ROI from their media investment.
Of course there will be developments in reaction to ATT, some of which will help address the situation for advertising on iOS devices:
● Increase in spend across Android devices: with the impact of ATT limited to Apple devices, it seems inevitable that the value of identifiable users across Android devices will increase and with it a shift in media spend to apps in the Google Play store.
● Probabilistic attribution: a controversial topic across mobile measurement providers around using non identifying signals from devices to probabilistically match impressions and clicks to app events. In essence, this can be construed as fingerprinting, which is not allowed in Apple’s privacy rules. However, those promoting the technique would argue that as long as an identifier is not being created and the process is only used for measurement, it is not. Time will tell as we see how Apple reacts as they step up enforcement of ATT.
● Attribution through SKAdNetwork: expect to see widespread adoption of the SKAdNetwork framework going forward, a measurement solution from Apple that provides aggregated attribution data for advertising served to users on iOS without anything being able to be tied back to individual devices. This means advertisers can still measure the effectiveness of their media spend across users who have opted out of tracking, although in a more limited manner.
While SKAdNetwork is still in the early stages and only provides post-click attribution, it is set to restore more capabilities to marketers as successive versions are released over time. At MiQ we are working closely with our partners and clients to transition app download measurement to SKAdNetwork.
● Smart contextual strategies: as attention moves to alternative targeting strategies to replace previous reliance on third party data, expect more innovative solutions to come to the fore around contextual categorisation. By focusing more on the relevance of the environment a user is in, such as the content of the app and employing advanced practices including natural language processing and other machine learning techniques, marketers can identify the most valuable inventory for their brand.
● Cohort based advertising: the technique of defining an audience based on a first party data set and then targeting that audience in an aggregated manner. An example of this could be where a publisher creates audiences based on user behaviour on their app and then surfacing these users to a buyer through a private marketplace. Cohort solutions can be provided by a range of players in the app space that have their own datasets. MiQ has partnered with Skyrise Intelligence for example, who can build cohorts based on data from telecommunications companies, such as app usage, which MiQ will then translate into aggregated targeting strategies.
By requiring user opt in before IDFAs are made available, Apple is making a bold move in the name of increased choice and transparency to end users on how they are tracked for the purpose of personalised advertising. While this erosion of addressability will not be easy to stomach for many in the app advertising ecosystem, as well as very valid questions being raised around Apple’s true intent beyond providing greater choice for their customers, we should welcome developments that increase user trust and ensure a more sustainable digital advertising ecosystem.
A new era of privacy
The industry is capable of adapting to change. While the picture in app has become more fragmented, with marketers now not only having to tackle different app operating systems but also opted in and opted out users on iOS, those that are able to employ a diversified approach to their targeting and measurement will see the most success. This connected approach is the path for a brand to reach their maximum addressable audience and deliver the high reach, high ROI campaigns in this new era of privacy.
Apple’s developments also come at a time where Google’s own changes are bringing the impending ‘death of the third-party cookie’. As such, our industry is still very much in the midst of changing from the old system to the new one, with no clear vision of what that new system will be. However, it’s clear that for consumer privacy to be truly respected, the industry needs to come together, embrace the changes that consumers and regulators are demanding and develop solutions and ways of working that address the challenges at hand.