In June of this year, at the Worldwide Developers Conference (WWDC), Apple announced one of the biggest changes in mobile advertising history. Following the trend towards greater user privacy, the upcoming iOS 14 update would eliminate IDFA.
At least, that’s how the world responded. The truth is a bit more complicated, and IDFA isn’t getting removed, but mobile advertisers and app publishers are panicking. It doesn’t help that the change is coming at a time where 90% of smartphone use is on apps, so many mobile advertisers had moved to in-app advertising.
The iOS 14 update rolled out September 16th, but Apple delayed the privacy change until early 2021 to give advertisers a bit more time to prepare. There’s resounding relief, but is it enough?
What Is IDFA
IDFA, the identifier for advertisers, is how advertisers track an individual’s actions taken on their phone. It’s how they attribute a person’s actions to that person, and ultimately, it’s how they assign ad spend.
The IDFA is what tells an advertiser if an ad is working, where conversions come from, who is converting and which part of the budget is responsible. It also makes it possible to boost campaign effectiveness by targeting lookalike audiences.
LAT (Limit Ad Tracking) is the feature that allows iPhone users to turn off advertiser access to their IDFA. This feature rests deep in the settings of the iPhone, where few know it exists. It’s worth noting, though, that the number of iPhone users with IDFA turned off has doubled in the last four years.
What All the Fuss Is About
While Apple isn’t killing off the IDFA, many think they might as well be. This is because users will be asked if they want to allow ad tracking for every application on their phone.
A sample of how the notification may read is “[App name] would like permission to track you across apps and websites owned by other companies. Your data will be used to deliver personalized ads to you.”
It’s hard to imagine too many consumers opting in.
In addition, the update will include a new privacy dashboard where users will be able to see the data each app is tracking them for and choose to revoke access.
Why Apple’s Turned to the Light Side
There are actions you can take to safeguard your privacy online, but it’s hard when phone providers, web browsers and applications are all looking to get their hands on your data.
Apple has been no stranger to dark patterns in the past and has faced claims of hypocrisy many times over regarding its collection and use of user data in spite of their company values. With this move, Apple is pushing consumer privacy far forward, and it makes the corporate giant look good.
No one can complain either, because it’s ultimately a good thing for business transparency and user privacy. So, why is everyone on the edge of their seats?
A Multibillion-Dollar Industry Down the Drain
Mobile advertising amounted to an $80 billion industry in 2019 and was anticipated to reach $120 billion by 2022.
While the pandemic did a number on ad spending, apps experienced rapid growth. Since the advent of COVID-19, people have spent 20% more time using apps, and spending in iPhone apps rose by 15%.
It’s worth noting that iPhone users have proven to be twice as valuable to advertisers as Android users, making the IDFA change particularly painful. In the first quarter of 2020, iOS spending in apps hit $15 billion – the highest ever recorded. In comparison, Android app spending was almost half the amount at a mere $8.3 billion.
Businesses and apps still need to advertise, but they won’t be able to measure their efforts or target consumers effectively. The result will be cut budgets, billions lost in ad spending and a damaged industry.
Lower Budgets and Bigger Layoffs
With less money coming in, companies will be unable to support the full range of employees they do now. Experts like Brian Bowman, CEO of Consumer Acquisition, anticipate that there will be large layoffs as a result of the IDFA change.
It will impact all industries involved, including mobile marketing firms, agencies, app developers and app publishers.
Greater Implications for Consumers
The chances seem slim, and it’s too early to say, but some worry about the greater implications outside of the industry itself.
Forbes points out that many of the services free to the public are free because they make money from advertising. Consider online applications and services such as Google, Gmail, Facebook, Twitter, Instagram and Snapchat – just a few examples of companies highly reliant on advertising income.
If these platforms are unable to prove the effectiveness of their advertising services due to a loss of data, they will bring in less money. As a result, smaller services may go bankrupt, while larger platforms could start charging users.
Who Will Be Impacted
As mentioned, the iOS update will impact mobile advertisers, agencies and the app developers themselves. This is because ad spending will shrink as confidence declines with a lack of data available. Apps will suffer from decreased user acquisition.
While each one of these industry units will struggle with the change, two advertising giants will experience extreme shifts.
Google and Facebook
Whether you’re a bigger fan of Facebook or Google advertising, both are going to witness huge losses in income and quality of advertising services provided if they don’t come up with a new solution fast.
For years, Google and Facebook have dominated the advertising market and for good reason. The two companies have been able to accumulate obscene amounts of data on billions of people. This means a far-reaching audience that makes businesses’ mouth water and the ability to provide pinpoint targeting and beneficial insight. Both are capable of finding lookalike audiences and the people most likely to spend money on or in apps. It’s why they have been able to offer the highest returns on ad spend.
According to a Facebook study, there was a 50% decline in publisher revenue when they removed the personalization they currently offer for mobile app installation campaigns. They have since released a statement informing the publishers they work with of the dire circumstances. They even mention potentially eliminating their Audience Network altogether:
“This is not a change we want to make, but unfortunately Apple’s updates to iOS 14 have forced this decision. We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14 in the future.”
As the two companies that have long commanded the market, they’re bound to get hit hard when they can no longer offer the same level of service or differentiation.
Apple’s Plans to Corner the Market
On the topic of those affected, it’s an interesting move for Apple considering their own platform Apple Search Ads. Apple Search Ads exists to boost user acquisition for apps within the Apple App Store. Thus, being unable to track campaign effectiveness would damage their profits as well.
Cue the Apple SKAdNetwork API. First revealed in 2018, Apple developed the SKAdNetwork to measure campaign success without interfering with user privacy or relying on IDFA. It works by notifying advertisers when an ad results in a conversion, but it doesn’t provide any information on the user or device behind it.
At the time, it seemed like an unnecessary and limited tool, but now it’s the only option in a market saturated with a dependency on IDFA.
It could be that Apple isn’t changing for the better after all, but continuing to participate in antitrust violations.
Why the SKAdNetwork Isn’t Enough
While the SKAdNetwork will inform mobile advertisers and apps about the success of a particular campaign (to a degree), there’s a lot still missing. As Adexchanger points out, there will be “no information on impressions, creative, remarketing, in-app events, lookback windows, user lifetime value, ROI, retention or cohort analysis.”
The goal of a campaign is to boost conversions, but the goal of a business or app is to provide value. Knowing where that value lies, how to improve it and how to use it to generate more successful campaigns requires the target audience and customer lifecycle information that comes from personalized data.
The SKAdNetwork also fails to account for retargeting – one of the most effective advertising tactics for increasing campaign Clickthrough and conversion rates.
Facebook or Google could use the identifiers they obtain from users, like their phone numbers and email addresses, to track and retarget individuals. This could result in heavy lash back, though, if users find out about such behavior after explicitly opting out.
How You Can Prepare Now
With all things scary, it’s best to face them head-on and prepare than to wait miserably for defeat. Here are a few steps you can take to get ready for the changes that the 2021 update will bring:
- Create new ad accounts for iOS 14 specific campaigns
- Maintain your campaigns for Android users and non-updated iPhones
- Consider testing campaigns among these users before implementing in iOS 14
- Think about what you’ll measure and track with fewer options available
- Brainstorm strategies to encourage users to opt in to tracking (think incentives and perks)
- Ensure all stakeholders are informed on changes
- Prepare to implement the SKAdNetwork
- Get your apps ready for the iOS 14 App Store
- Consider a cost per acquisition bidding strategy
A Beacon of Hope
A ray of hope for larger apps and advertisers exists in cross-promotion. Eric Seufert, the founder of marketing firm Heracles, has pointed out that app developers with a large portfolio and many active users will be able to use the IDFV (Identifier for Vendors), which will remain untouched, to track users across their own apps and cross-promote.
While cross-promotion is only a small piece of the marketing puzzle, Eric Seufert’s ability to look forward and generate strategic alternatives provides hope for the ability of others to do the same before the big change in 2021.
Whether Apple has made a change for the better or is just trying to look good while cornering the market, the fact still remains that mobile apps and advertisers need to start preparing now.