IDFA Armageddon Roundup!
- by Brian Bowman | July 14, 2020
- Creative Is King
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In June, Apple announced the depreciation of the iOS Users’ Identifier for Advertisers (IDFA). This is the biggest change in the mobile app advertising ecosystem in the past 10 years. For some in our industry, IDFA removal will be company crushing while for others it will create a tremendous opportunity.
Instead of my normal rants and personal opinion on the direction of the industry, given the magnitude of this change, I thought it would be more helpful to do a roundup and share the thinking of some of our industry’s brightest minds.
In iOS 14, users will be asked if they want to be tracked by the app. That’s a major change that will likely have a ripple effect. 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.
Apple hit the reset button on app marketing in iOS. The IDFA powers basically the entire iOS advertising industry: user tracking, marketing measurement, attribution, ad targeting, ad monetization, programmatic advertising (DSPs, Exchanges, SSPs), device graphs, retargeting, and audiences. Advertisers are faced with a higher level of complexity created by partial IDFA views, fingerprinting, SKAdNetwork, deeplinks, Android, and more.
The biggest challenge of providing IDFA-based attribution under iOS 14 is that you would need the IDFA for every device that installs an advertiser’s app, as soon as the app opens. There is no logical way to get users’ permission this early on, especially for apps that don’t even show ads and monetize instead through subscriptions and in-app purchases. This is the central problem and one of the main reasons why some in the industry have proclaimed it as the “death of the IDFA”.
… iOS users are close to twice as valuable to advertisers and publishers compared to Android users. And that means that iOS accounts for a disproportionate share of that almost $80 billion in user acquisition spend. We are talking tens of billions of dollars here, most of which Facebook and Google hoover up into their ad ecosystems. Now big chunks of those billions are at risk.
… it will be harder to advertise if they don’t believe they can effectively measure the results of their ads. Perhaps most critically, this impacts spend on the two biggest platforms for mobile user acquisition: Google and Facebook … It’s going to be a lot harder for Facebook to run [AEO and VO] campaigns if Apple refuses to let Facebook know what people do in an app after they install it.
Similarly, Google Ads can be set to find new users for your mobile app based on “tROAS,” or target return on ad spend. To know that its ads are working, Google needs post-install data from users you acquire via Google Ads: data which will be harder to get now, if not impossible. Google and Facebook are now just like any other ad network: lining up to get a smidgen of privacy-safe information from Apple.
“Apple’s decision to essentially kill off the IDFA, while expected, is fundamentally changing how measurement is handled in mobile advertising… It’s impossible to overstate how impactful this change is: almost every large mobile-first business is completely dependent on performance marketing on mobile for revenue growth. Mobile app developers across every vertical are now scrambling to come up with a strategy for continuing operations as iOS 14 rolls out.”
The first issue is that user-level data is necessary in today’s world of user acquisition – not to profile users or serve them targeted ads – but to analyze how campaigns are performing on a granular level. SKA’s proposed 6-bit of downstream metrics with a fixed 24-hour timer does not offer nearly enough insights to manage the highly competitive performance-focused UA campaigns of today. Marketers will no longer receive retention data, revenue tracking, or granular event tracking, meaning they will no longer be able to run their current campaigns. Indeed, the data tracked with SKA and the granular, in-app events tracked by MMP SDKs cannot be tied together, which limits any kind of campaign analysis to the install metrics only.
The second issue revolves around the level of granularity SKA allows for its aggregated data, where only 100 different campaigns will be visible per network. Looking at our clients who run an average 15 campaigns per network you might think this isn’t such a big problem. But beneath each of these campaigns, there are often countless sub-levels for different geographies, device types, or creatives. With SKA, using 10 creatives in five countries, for example, would only allow you two distinct campaigns per network. Coupled with the random delay of data from each device, this means making granular real-time decisions is near impossible.
While we expect that the specifics of the [iOS 14 privacy-related] announcements will evolve with the beta versions of iOS14, we believe that the announcement in its current form will create meaningful challenges for partners, customers, and the app economy at large. Lack of, or inaccurate attribution also means that app developers can’t monetize their work; iOS developers are generating tens of billions of dollars in revenue from advertising, which are at risk of disappearing without proper measurement.
I can’t imagine a single user that would ever agree to let themselves be “tracked around the internet”. There’s no way this will see anything but accidental adoption. Therefore, we must assume that IDFA is no longer usable… this is a fundamental elimination of basic capabilities like user-level attribution, retargeting audiences, look-alike audiences and so much more.
With Google’s recent announcement to remove 3rd party cookies from Chrome, the writing is on the wall for GAID to follow suit, especially with Apple setting the industry precedent.
…[the] industry is reliant on fingerprinting technology with accuracy rates of 60-70%. We will no longer be able to deliver deterministic matches on iOS without a user logged in across your properties but are confident in this alternative approach. Apple has proposed usage of the SKAdNetwork framework, which completely anonymizes the attribution and eliminates user-level data. This will certainly break most marketing processes.[The] most likely outcome is the traditional tracking link methodology, which is widely used today outside of the self-attributing networks like Google and Facebook. Generally, the industry-standard method leverages IP-based fingerprinting to attribute in-app actions back to advertising clicks. This is the most tried and true method, since it has existed for some time, and we expect most will shift to this at least in the short term.
All current MMP and self-attributing ad networks (Google, Facebook, Snap, Twitter, etc.) integrations … use the IDFA to confirm device-level attribution on iOS. This allows us to make the attribution decision at the device level. When the IDFA goes away, all of these integrations will break.
Safari was the first to block 3rd-party cookies, but nobody substantially changed how they operated until Chrome with its 60%+ market-share announced it would discontinue support for 3rd-party cookies in 2021. In-app accounts for 87%+ time spent on mobile and nearly 50% of all digital commerce.
Apple clearly has stated its company-level willingness to favor privacy over consumer experience, website security, and other unintended impacts. For example, Apple has explicitly said it would break single sign-in services across multiple websites owned by the same company in favor of privacy.
Assuming 15% LAT and 90% Ephemeral matching accuracy the best case entails a loss of 1.5% attributions. … on CPI or CPA campaigns, media sources that do not support Ephemeral matching may contribute up to 20% free installs to app owners. Audience-targeted Apple Search ads campaigns don’t serve ads to LAT users … non-targeted campaigns on Apple Search Ads may bring a high percentage of non-attributed users.
As demonstrated, although Apple’s LAT is good for app owners, it has the potential to harm ad networks’ bottom line by forcing them to expose mobile app ads to more users than previously needed. The good news is that when mobile installs are recorded by an attribution company with a good Ephemeral matching solution, the effect of LAT is rather marginal.
“We will continue to enable our clients to not only view their data for all their campaigns across both iOS and Android but also to ensure that this data is actionable.”
Apple is cutting off the flow of data to advertisers at the source. If between 10 and 20% of the ad impression pool on both Facebook and Google vanishes, the price of attributable impressions will go up. As iOS 10 is adopted en masse (it was released to the public on the 12th), if Facebook and Google (and, surely, others) have stopped exposing ads to users with LAT turned on, then the supply of impressions will consistently shrink until adoption rates level out, as they invariably do. Since the number of advertisers won’t shrink concurrently, inventory prices will increase.
So the deprecation of mobile advertising IDs will really just accelerate a trend that has existed for the past few years: despite clear attribution and unit economic metrics, advertisers can’t trust that their spend on any given channel is totally incremental, and thus their measurement is really only valid at the broadest level of granularity.
The move is Apple’s latest assault against the ad industry. As far back as 2015, Apple CEO Tim Cook said its Silicon Valley rivals are “gobbling up everything they can learn about you and trying to monetize it.”
Without being able to attribute revenue to campaigns (because all IDFAs are zeroed, and SKAdNetwork transmits no identifiable user information), the traffic sources of monetizing users are unknowable;– Most of the infrastructure currently supporting mobile advertising will soon become obsolete.
The notion that measurability is exclusively a function of attributable clicks has been evaporating for years, hastening for the aforementioned reasons, and yet user acquisition teams have persisted. The demise of advertising IDs won’t precipitate the demise of user acquisition on mobile since the deprecation of advertising IDs will simply take a trend that already exists — of decreased reliance on click attribution in a shift toward more holistic, macro-level measurement — to its logical conclusion.
These changes represent a seismic shift in the mobile advertising ecosystem. Mobile advertising, and specifically app install advertising, will fundamentally change with iOS 14. ROAS and CPE campaigns will only be possible via the SANs that are able to do any form of fingerprinting via their proprietary SDK data and the revenue data they collect.
With the new limitations of IDFA, it will be much harder for programmatic platforms to build user segments that would be then used to build higher-performing campaigns. We must now rely more on probabilistic data segments, which I believe will cause many companies who use programmatic, to scratch CPA offerings altogether and go back to standard CPI campaigns. Our in-house programmatic platform, for example, already has over 5 billion device IDs/user segments, but going forward we will need to rely more heavily on apps sharing user data than ever before.
I think the Apple IDFA change is a seminal event for the entire mobile industry. There are many companies whose business models are going to get completely obliterated, and others whose lofty valuations are going to get severely cut down. Anyone who thinks otherwise is either foolhardy or indulging in wishful thinking… My crystal ball predictions: Retargeting, device graphs, buying models like VO & tROAS, and companies that depend on real-time data are dead in the water. Given the mainstream focus on privacy, Google will likely follow suit and the Android device ID will suffer the same fate soon. While SAN’s and MMP’s have suffered a huge punch to the gut, they are pervasive and resourceful enough and will figure out some solutions that the industry will eventually converge towards.
We were all afraid of the European ePrivacy law that would block the app publishers from collecting User data. Well, Apple did it without a law, giving the Users power to share or not share the IDFA. Apple basically gives all Users the option to opt-out of tracking. The worst enemy of the marketing department is optimizing campaigns in the dark (with no data, or limited data) in hopes they wish to grow.
The new change from Apple regarding the IDFA actually means we will have even more Users deciding not to share their information. This raises serious challenges in setting retargeting campaign budgets and driving decisions on if an Advertiser should (or not) invest more or less money in their campaigns. This change will push more companies to build in-house algorithm solutions to decide how to optimize a campaign. As time goes on, this might increase the costs of acquiring and retaining each User. Get Your Copy of “Data is Like a Plate of Hummus” by Lior Barak.
The IDFA “opt-in” functionality in iOS 14 represents the biggest shift in the mobile advertising industry to date. It’s going to fundamentally change how apps spend money and make money. The future belongs to apps and companies that provide real value to users because the value exchange we’ve always talked about with consumers will now be front and center.
I do believe that the most significant fundamental change will be about how we think of user acquisition as it is. It has shifted (especially with some niche genres) to really targeted Whale hunting, where the importance of event optimization has a lot more in play than it used to. Now that the whole industry loses the opportunity to do this, and practically all the retargeting, it will lead to advertisers focusing more on the only thing they can still effectively optimize creatives. The whole industry will shift back from the payback curve, data-focused marketing towards more creative advertisements with the actual creatives.
Apple has given the ecosystem two choices for attribution in the future. The AppTrackingTransparency Framework and SKAdNetwork. ATT allows for user-level attribution and post-install analytics per campaign. Thanks to the opportunity of on-device attribution, MMPs will still be able to offer accurate and actionable data for the modern marketer. Our industry is innovative and has adapted to a lot of changes over the past years without losing steam. Adopting ATT is the next logical step to continue building on this unprecedented growth while respecting user privacy. Read Adjust’s Article on The Future of the Ad Ecosystem on iOS 14
Opacity has always been a characteristic of the digital advertising ecosystem. Unfortunately, the removal of IDFA is going to exacerbate that, to the detriment of the advertiser. Attribution is going to be harder, obviously frequency capping, and retargeting as we know them will be off the table. With less transparency, fraud is likely to flourish, compounding the challenges of attribution and optimization… The removal of IDFA is going to take this to the next level.
We were already expecting something in this direction since the rumors were increasing a lot in the last few weeks. IDFAs being the oil of the user acquisition industry, it’s clear it will have a severe impact on the Ad Tech industry. In a return to a probabilistic marketing approach, maybe with PMP Deals and Contextual targeting coming back. From a publisher’s perspective, it means we have to work on our 1st party data more so we can leverage it effectively. For UA the big players will probably find some way to remain as deterministic as possible. But for the smaller players, it will probably get tougher. Retargeting remains an open question, we hope to see some solutions coming up in the near future.
Assuming Apple firmly polices the spirit of its new stance, rooting out workarounds like fingerprinting or hard app usage gates forcing IDFA permissions, it’s back to targeting basics for mobile marketing and adieu addiction to incredible ROAS as ad networks’ hyper-efficient algorithmic targeting is nerfed by the sudden loss of massive user-ROI map. While abrupt and overwhelming change is scary, let us also realize that this time inevitably will prove once more the ingenuity of the mobile marketing industry and yield a wealth of innovation – in advertising and beyond.
Expect innovations in statistical modeling to maintain advertising ROI like organic uplift, channel incrementality and optimal channel mixes (which were already needed due to the proliferation of impression attribution, LAT and Google’s new untrackable iOS UAC search inventory), more thoughtful creative strategy (rather than the current modus operandi of churning creative out which doesn’t work with Apple’s 100 campaign limitations), and growth in organic, referral and influencer marketing.
Here’s My Take!
ConsumerAcquisition shares Apple’s values when it comes to protecting user privacy. As an industry, we must embrace the new rules of iOS14 and create a sustainable future for both app developers and advertisers. I believe we can all agree that user consent is important for any app that monetizes through advertising. Also, there are options to provide user-level attribution and necessary data for performance advertising within Apple’s acceptable framework.
If I had to guess about the future:
- Short term:
- We encourage all publishers to talk to Apple and seek clarification on process and end-user consent along with the use of IDFVs & SKAdNetwork product road map, etc.
- We believe publishers will aggressively move to optimize their sign up funnels to maximize consent or live with campaign only level metrics and lose end-user targeting. If you’d like to continue to optimize towards ROAS, we encourage you to think of privacy consent as a step in the UA conversion funnel necessary to show targeted ads to consumers.
- Here’s Twitter’s Solution
- 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 remarketing.
- 1st Step: Publishers optimize user consent flows
- 2nd Step: User “opt-in” sharing increases
- 3rd Step: Fingerprinting users rapidly expands in an attempt to maintain the status quo.
- A publisher’s internal fingerprinting, IDFV, (which or may not leverage fingerprinting) may not create a privacy problem if it is not used for re-marketing/re-targeting. If abused, Apple is sure to shut it down quickly.
- While fingerprinting is outside of Apple’s control, it appears highly likely to fragment the ecosystem. It will create more barriers for entry to building competitive measurement solutions.
- If a publisher or MMP sends their fingerprinting to a 3rd party network, this may be a violation of Apple’s policy. This may result in getting an app rejected by Apple’s App Store.
- Open questions remain on how audiences comprised of apps + down funnel user actions (purchases, etc) without user consent will be created/used.
- Mid Term:
- 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.
- SKAdNetwork must be enhanced with Campaign/AdSet/Ad level information to keep the mobile ad network functioning.
- Long Term:
- User consent optimization becomes a core competency.
- 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. We are looking forward to working with our clients, Apple, Facebook, Google, and MMPs to participate in shaping the future of our mobile app industry.
Look out for more updates from us regarding IDFA changes.
Oh yeah, and now a word from our lawyers: Nothing stated here is legal advice. Please work closely with legal and other professional advisors. Determine how IDFA changes, GDPR, CCPA, or any other laws may or may not apply to you.
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