At WWDC this year, Apple announced the depreciation of the iOS Users’ Identifier for Advertisers (IDFA) with the release of iOS 14. Without a doubt, this is the biggest change in the mobile app advertising ecosystem in the past 10 years. For the advertising industry, IDFA removal will upend and potentially close companies, while creating a tremendous opportunity for others.
Given the magnitude of this change, I thought it would be helpful to create a roundup and share the thinking of some of our industry’s brightest minds.
What’s Changing With iOS 14?
Going forward with iOS 14, users will be asked if they want to be tracked by the app. That’s a major change that will impact all areas of app advertising. By allowing users to reject tracking, it will reduce the amount of data that’s collected, preserving user privacy.
Apple also said it will also require app developers to self-report the kinds of permissions that their apps request. This will improve transparency. Allowing the user to know what kind of data they may have to give over in order to use the app. It also will explain how that collected data could be tracked outside of the app.
Here's What Other Industry Leaders Had To Say About The Impact
We’re still trying to understand what these [iOS 14 privacy update] changes will look like and how they will impact us and the rest of the industry, but at the very least, it’s going to make it harder for app developers and others to grow using ads on Facebook and elsewhere… Our view is that Facebook and targeted ads are a lifeline for small businesses, especially in the time of COVID, and we are concerned that aggressive platform policies will cut at that lifeline at a time when it is so essential to small business growth and recovery.
David Wehner, CFO Facebook
We don’t think fingerprinting is going to pass the Apple test. By the way, just to clarify, every time I’m saying something about a method that is unlikely, it doesn’t mean I don’t like that method. I wish it would work, but I just don’t think it would pass the Apple sniff test… Apple said, ‘If you do any form of tracking and fingerprinting is part of it, you have to use our pop up…
Gadi Eliashiv, CEO, Singular
A lot of parties in the advertising ecosystem will need to find new ways to provide value. Be it attribution, retargeting, programmatic advertising, ROAS based automation – this will all become incredibly vague and you can already see the attempts of some of these providers to find new sexy slogans and test the interest on the advertiser’s side for new incredibly risky ways of doing business as if nothing has happened.
Personally, I do expect that in the short term we will see a drop in top-line revenues for hyper-casual games, but I don’t see their death. They will be able to buy even cheaper and as their focus is to buy untargeted, they will adjust their bids against their expected revenues. As CPMs drop, this volume game might be able to work, though at smaller top-line revenues. If the revenues are then big enough is to be seen. For core, mid-core, and social casino games, we might see tough times: No more retargeting of whales, no more ROAS based media-buying. But let’s face it: the way we were buying media was always probabilistic. Unfortunately, now the risk will increase significantly and we will have much fewer signals to react quickly. Some will take that risk, others will be cautious. Sounds like a lottery?
Oliver Kern, Chief Commercial Officer at Nottingham-based Lockwood Publishing
We’ll probably get only 10% of people to give consent, but if we get the right 10%, maybe we don’t need more. I mean, by day 7 you lost 80-90% of users anyways. What you need to learn is where that 10% are coming from … if you could get consent from all the people who pay, then you’d be able to map where they come from and optimize towards those placements.
Publishers might go after hyper-casual games or build hub apps. The strategy is to acquire highly converting apps (conversion to install), drive users there cheaply, and then send those users to the better monetizing products. What is possible is that you could use IDFV to target those users… It’s a pretty good strategy to retarget users. You could use an in-house DSP to do that, especially if you have multiple apps in the same category, like casino apps. In fact, it doesn’t have to be a gaming app: any app or a utility app could work as long as you have a valid IDFV.
Nebo Radovic, Growth Lead, N3TWORK
Apple introduced the AppTrackingTransparency (ATT) framework that manages access to the IDFA with required user consent. Apple also outlined exemptions for this framework that might provide the ability for attribution as it exists today. We believe that focusing on this framework and creating tools within these rules is the best way forward – but before diving into this further, let’s have a look at the other potential solution. Often mentioned in the same breath, SKAdNetwork (SKA) is an entirely different approach to attribution that removes user-level data entirely. Not only that, but it also puts the burden of attribution on the platform itself.
Adjust and other MMPs are currently working on cryptographic solutions using practices such as zero-knowledge theorems that might allow us to attribute without having to transfer the IDFA off the device. While this may be challenging if we have to use on-device for source and target app, it is easier to imagine a solution if we are allowed to receive the IDFA from the source app and only have to perform the matching on-device in the target app… We believe that obtaining consent in the source app and on-device attribution in the target app might be the most viable path for user-level attribution on iOS14.”
Paul H. Müller, Co-Founder & CTO Adjust
My Takeaways on the IDFA Change
We share Apple’s values when it comes to protecting user privacy. As an industry, we must embrace the new rules of iOS14. We need to create a sustainable future for both app developers and advertisers. Please check out part I of our IDFA Armageddon roundup. But, if I had to guess about the future:
Short Term IDFA Impact
- Publishers should talk to Apple and seek clarification on process and end-user consent along with the use of IDFVs & SKAdNetwork product road map, etc.
- Publishers will aggressively optimize sign-up funnels and onboarding processes. This is to maximize consent and privacy opt-ins or live with the campaign only level metrics and lose end-user targeting.
- If you would like to continue to optimize towards ROAS, we encourage them to think of privacy consent as a step in the UA conversion funnel necessary to show targeted ads to consumers.
- Companies will aggressively experiment with flow optimization and user messaging.
- They will get creative testing web-based user flows for registration to preserve IDFA. Then, cross-selling into the AppStore for pay off.
- We believe phase 1 of iOS 14 rollout could look like this:
- In the first month of iOS rollout, the supply chain for performance advertising will experience a short-term hit. Especially for DSP remarketing.
- Suggestion: Mobile app advertisers may benefit by preparing early for iOS 14 rollout. They do this by front-loading the creation of unique/new custom audiences (starting around 9/10 – 9/14). This will provide a month or two of breathing room while financial impacts can be determined.
- 1st Step: Mobile App advertisers heavily invest in creative optimization of their ads as their primary lever to drive performance.
- 2nd Step: Publishers will start to optimize user consent flows
- 3rd Step: UA Teams & Agencies will be forced to rebuild campaign structures.
- 4th Step: User opt-in sharing increases but is estimated to only hit a max of 20%.
- 5th Step: Fingerprinting users rapidly expands in an attempt to maintain the status quo.
Note: Hyper casual advertisers leveraging broad targeting may be able to initially benefit as the high-end whale hunters are pull back causing a temporary CPM deflation. We expect the high cost per subscriber and niche or hard-core games to be most impacted. Front-load incremental creative testing now to bank wins.
Mid Term IDFA Impact
- Fingerprinting will be an 18-24 month solution and entered into everyone’s internal algorithm/optimization black box. As SKAdNetwork matures, Apple is likely to shut down fingerprinting or reject apps that violate its App Store policy.
- There will be sustained challenges for programmatic/exchanges / DSP solutions.
- The usage of Facebook login may increase as a way to increase the identification of high-value consumers. This is to preserve revenue used in AEO / VO optimization. Facebook’s first-party data enhanced with user’s email address and phone numbers, provides them an advantage for remarketing and retargeting.
- Growth teams find a new religion with “mixed media modeling.” They take lessons from brand marketers. At the same time, they seek to broaden last-click attribution to open new sources of traffic. Success will be based on deep experimentation and alignment of data science and growth teams. Those companies that get their first will have a significant strategic advantage to achieve and sustain scale
- SKAdNetwork must be enhanced with Campaign/AdSet/Ad level information to keep the mobile ad network functioning.
- Mobile apps that monetize with mostly ads will pull back. There is likely to be decreased revenue with lower targeting but should normalize over the next 3-6 months.
Long Term IDFA Impact
- User consent optimization becomes a core competency.
- Google deprecates GAID (google ad id) – Summer of 2021.
- Human-driven, creative ideation, and optimization is the primary lever for user acquisition profitability across networks.
- Incrementality and optimal channel mix become critical.
We’re all in this boat together and we are looking forward to working with Apple, Facebook, Google, and MMPs to participate in shaping the future of our mobile app industry.