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WWDC 2020 (Apple’s annual developer conference) was held in mid-June. Apple released lots of fun app-related bells and whistles, but the big shot across the bow for app marketers focused on data privacy:

Starting with iOS 14, apps will need to gain permission from users in order to use their IDFA (advertising ID). In other words, users will need to opt-in to being tracked, on an app-by-app basis. iOS 14 changes are expected to increase Limit Ad Tracking (LAT) adoption for some apps up to an estimated 90%.

The iOS 14 release date has not yet been announced, but the industry expects it to come mid-late September, 2020. In the meantime, let’s break down the IDFA announcement, what it means, what comes next, and questions that the industry will have to answer going forward.

This is a strong move toward increased user privacy from Apple. There is increasing concern among consumers around how, where, and why their data is being used, and this is one way to help address it. For marketers, on the other hand, mobile attribution and targeting will become much, much more difficult and complicated.

How does this affect advertising? 

The IDFA (Apple’s Identifier for Advertisers) is the key to helping mobile marketers attribute and measure their advertising efforts on iOS. When an advertiser runs campaigns, an MMP (mobile measurement partner) will attribute app installs and resulting post-install event activity to ads from paid media channels (Google, Facebook, Apple Search Ads, etc.), typically based on IDFA (there are alternative attribution methods, but this is the primary one). 

This allows marketers to measure and optimize performance and spend accordingly, across channels and campaigns. If a user opts out of ad tracking, their IDFA is zeroed out, meaning it is not available for a mobile measurement tool to capture, and therefore leaves marketers with less definitive options when it comes to measuring the results of their advertising campaigns. 

Many paid media channels are successful because of their advanced targeting capabilities, which are built on user data (interest, demographic, behavioral, etc.). Additionally, their algorithms rely on post-install event activity from the MMPs in order to know what an app’s most valuable users look like (in order to find more similar users). If the majority of users opt out of being tracked, this data becomes less robust and therefore less valuable and scalable. We predict an increased reliance on other types of targeting, such as contextual or keyword (at least in the short to medium term).

What’s next?

According to App Annie, advertising spend on iOS was nearly double spend on Android during Q1 of this year. This suggests that iOS users are viewed as more valuable and the majority of app marketers’ budgets are going toward this platform. This also means the industry needs a solution, soon. While this topic is still extremely new and all the key players and platforms are still determining their response, the good news for marketers is a few potential solutions have already surfaced.

The most discussed potential solution so far has been pushing app attribution to SKAdNetwork. SKAdNetwork was discussed at WWDC and is Apple’s framework for mobile attribution, eliminating user-level data. There are some limitations to this – no configurable attribution settings, no view-through or multi-touch attribution, and challenges to down-funnel event tracking, among others. Support for ad fraud prevention is also still a question mark.

Other potential methods include:

  • Fingerprinting: This is a currently available attribution method, typically used as a fallback method when advertising ID isn’t available. It is based on other identifiers such as OS and OS version, IP address, and device type. Because it lacks the IDFA, it is less accurate. However, in a world where IDFA isn’t readily available, it may become a more attractive option. A major limitation here is that self-attributing networks such as Google and Facebook don’t currently support fingerprinting, leaving this method only viable for ad networks and exchanges.
  • Opt-in IDFA: Another potential solution is for app publishers to incentivize (or even require) users to opt in for tracking. It’s TBD what Apple may say to this approach. For this approach to work, most apps in the App Store would have to be on board to approximate pre-iOS 14 tracking capabilities.
  • iOS Referrer: If this API-based approach (similar to Google PlayStore Referrer) were to be introduced, it would be privacy-compliant and still offer transparency to advertisers. It wouldn’t solve every problem, but is a solution worth exploration.
  • SANs: Self-attributing networks (Google, Facebook, etc.) may ask advertisers to trust their internal data to attribute conversions (similar to what happened with UAC iOS Search); the main limitation here is that the conversions wouldn’t be trackable in their MMP. If the advertiser uses the Firebase or Facebook SDK for attribution on Google and Facebook campaigns, they will experience the same issue where IDFA opt-in will decrease the % of trackable users. 

Privacy-related predictions

  • Advertisers will be forced to rely less on last-click, deterministic mobile attribution and shift toward more holistic, macro-level measurement. 
  • Probabilistic fingerprint attribution will become far more attractive in an essentially IDFA-less world.
  • Media companies will learn to target audiences in new ways while more permanent solutions are in development. Reliance on audience and behavioral data will shift to contextual, keyword, and other types of targeting .
  • If SKAdNetwork is widely adopted, mobile ad fraud on iOS will decrease as Apple is essentially verifying each install. If alternative methods (like fingerprinting) are adopted instead, forms of ad fraud may potentially increase, and advertisers will need to ensure they have a sophisticated fraud detection and prevention program in place.
  • Apple Search Ads will take significant budget from Google and Facebook. If Apple grows their ads platform outside of solely Search Ads in the App Store (which they have been hinting at), they will be positioned to be the #1 place to advertise on iOS. They have the unique advantage of owning both the operating system as well as the ads platform.
  • Google will follow suit and takes similar measures with the Android-equivalent GAID (Google Advertising ID).
  • Platforms that use email addresses for lookalike audiences and retargeting will see success in the medium-term, but just as the IDFA conversation is happening today, it’s likely that email targeting will come under question eventually.

Outstanding privacy questions

  • What will Facebook and Google respond with?
  • Can SKAdNetwork provide enough data to make effective decisions?
  • How will post-install event attribution work, and how robust will it be?
  • How will re-engagement and suppression audiences work?
  • How will fraud detection and prevention work?
  • What will user opt-in rates look like?
  • How will MMP roles and responsibilities need to shift?

The one thing we do know is that the specifics will continue to evolve as iOS 14 continues in development, and as the various impacted parties develop POVs and solutions. 3Q is actively working with all of our tech partners on this topic to ensure user privacy is preserved while still allowing advertisers to make effective marketing decisions. 

It will take work from all sides – agencies, app developers, Apple, Google, Facebook, MMPs, ad networks, and DSPs. Even though it won’t be easy, we are excited to further support our clients through this new era of mobile marketing.