Apple’s user privacy crusade is once again shaking up the ad ecosystem – this time, in-app.
IDFA (ID For Advertising), Apple’s proprietary advertising identifier, performs a similar function in-app that third-party cookies do in-browser. Tied semi-permanently to user devices, IDFA has facilitated in-app user targeting and data attribution for eight years and has therefore been extremely valuable to a $77bn app advertising industry.
At Apple’s recent WWDC conference, the news broke that IDFA access would change with iOS14, due in September 2020. (Apple has since delayed this change until early 2021.) An updated AppTrackingTransparency framework will require all apps wanting to utilize the IDFA to request that the user explicitly opts-in to IDFA sharing upon install. If they don’t, or the user declines, the app won’t have access to the identifier for the entire duration of its installation. This development is a significant step-change in Apple’s approach to in-app user privacy, which gives the user the upper hand for the first time. (For more on this and its representation of industry change, read our other post “A history of IDFA – Apple’s privacy U-turn“).
Understandably, the news wasn’t warmly welcomed by the publishers, advertisers, and ad networks who have already been stretched while navigating a tumultuous 2020, and now face the fallout of Apple’s decision.
As soon as IDFA requires consent in early 2021, we’ll see an anonymous app ecosystem start to emerge, much like an anonymous web ecosystem has been growing since ITP’s release in 2017. The effects will be far-reaching – Facebook is currently uncertain of the viability of its Audience Network on iOS14, following a study that saw approximately 50% decrease in publisher revenue without personalization. Facebook warns that “publishers should expect lower CPMs on Audience Network and likely other ad networks on iOS”. These concerns (among others) led Apple to delay the changes to IDFA from September 2020 until “early next year” (2021), giving the industry a little more time to prepare. Unfortunately, a few additional months of preparation is unlikely to yield a solution to the loss of in-app identifiers and the disruption that will cause.
While some app publishers can take advantage of slightly higher login and subscription rates to facilitate personalization, a lack of IDFAs means identity-based attribution, measurement, and targeting will break for the majority and this will directly affect where advertisers choose to spend their money.
We’ve seen this before; when Apple blocked third-party cookies in-browser, advertisers moved ad spend away from Safari’s anonymous web and into the app ecosystem. Now that safe haven threatens to become equally anonymous, advertisers are again looking to shift spend to another channel – this time the Android app ecosystem which still allows consent-free user tracking via AAID (Google’s equivalent to IDFA).
Shifting spend to Google Play Store isn’t a sustainable solution, unfortunately. Firstly, even though Play Store’s app installs far outstrip those in the Apple App Store’s, Apple iOS device users are disproportionately responsible for app spend, make more ad-related purchases, and have a higher lifetime value. (In Q1 2020, Apple users spent $15bn in the App Store, while Android users spent $8.3bn in Google’s Play Store). Losing the ability to target those more valuable users on iOS will therefore have a similarly disproportionate impact on total app ad revenue which can’t be recouped in the Android app space.
Secondly and more importantly, moving spend to another channel is only a short-term fix that doesn’t deal with the real issue at hand; the industry is following a privacy trend which doesn’t show signs of slowing. It’s not about the IDFA, or the third-party cookie – it’s about all third party identifiers, which rely on personal data and are questionable under laws like GDPR and CCPA.
These third-party identifiers are starting to be dismantled in every space. It started with third-party cookies on web, and IDFA is next – both in-app and in connected TV. The tide is turning and there’ll be limited success in moving spend from one channel to another, chasing diminishing third-party data and a concept of identity that is being erased.
People are spending more and more time in apps (+20% YoY) and in-app consumer spend is also increasing steadily. Rather than writing off a large chunk of ad revenue and trying to outrun a privacy trend which is actually beneficial to users and a fairer ecosystem, it’s time for the industry to face the issue head-on.
Without IDFA, a third-party identity gap will form and advertisers will find it increasingly difficult to attribute their own identity or third-party identity to bid requests. At the same time, a lack of identifiers in Apple’s app ecosystem will make each and every publisher a walled garden, with sole access to valuable users and information about user activity within their own app.
Publishers are facing an opportunity to drive revenue by working more closely with advertisers to provide unique data alternatives that fill the data gap. However, this will require a strong data strategy and the means to target these valuable in-app users in a privacy-safe way that respects user rights and data, and won’t fall foul of privacy trends or legislation.
Permutive was built for this new world. We empower publishers to target users without third-party identifiers like IDFA, or third-party cookies.
Our Edge DMP creates a privacy-safe description of the user on their device, where data is safe – and then passes this description, rather than an identifier, into activation platforms. Without cookie/IDFA-matching in the cloud, there’s no need to share user IDs across the ecosystem and publishers can therefore operate in line with the stringent privacy standards being set by browsers, mobile operating systems, and regulators.
As well as privacy-safe technology, we provide support for our publishers in building their first-party strategies and providing relevant audiences that fulfil brand requirements.
The infrastructure we have built and continue to expand upon provides the tools publishers need to gain freedom from third-party IDs, build closer relationships with advertisers, and make first-party data the new currency of the advertising ecosystem.