Apple’s new major iOS change lets you decide if you want brands to track you across apps.
It's been just two weeks since Apple rolled out its iPhone privacy changes, and already chaos has ensued for many mobile advertisers and app developers, who are bracing for the full impact as more users update to the latest version of its software.
Apple's iOS 14.5 update, which began rolling out on April 26, requires apps to serve a permission pop-up to users to gain permission to track them for advertising purposes. If a person clicks "Ask App Not to Track," Apple will no longer grant access to that user's Identifier for Advertisers, or IDFA, which allows advertisers to track users and build profiles on them as they hop between other apps and websites.
Already, some companies in the space are reporting low user opt-in rates, falling ad prices, and increased opacity around advertising measurement as a result of the App Tracking Transparency changes.
About 96% of iOS 14.5 users in the US who have been presented with the privacy pop-ups opted out of ad tracking, according to the mobile-analytics service Flurry's daily tracker on May 7. Worldwide, that figure was a little lower, at 88%. Social apps have seen the lowest opt-in rates, with utilities, weather, and gaming apps having some of the highest, Ben Holmes, the senior vice president of performance and exchange at the mobile-ad firm AdColony, said during a panel on the Clubhouse app Thursday. (Some users' settings prevent them from being served the pop-ups at all.)
It's early days, but ad prices for iPhone users are also dropping, which could reflect a diminished trackable audience, though ad prices can often fluctuate over any given day or week. The location-focused adtech company Blis said the cost to reach 1,000 iOS 14.5 users — CPMs, in ad industry parlance — were 14% lower than the rates to reach users on the earlier version of iOS over the past week. Verve, a fellow location-focused mobile-ad platform, said CPMs across all versions of iOS had fallen 3% on average between the App Tracking Transparency rollout and May 6.
That's bad news for developers who monetize their apps through advertising. The mobile-game publisher Tilting Point told Digiday earlier this week it had a 30% drop in CPMs between users with the IDFA and those without.
One of the biggest frustrations advertisers have expressed around the changes is the hampering of their ability to analyze which of their ad campaigns are working. Apple's privacy-focused measurement solution, SKAdNetwork, lacks many of the real-time reporting bells and whistles that sophisticated mobile marketers are used to.
The biggest spenders on app advertising are often app owners themselves, which look to find users most likely to download their games, fitness, and delivery apps. Marketers in this field are adept at precision-targeting ads to people most likely to buy a product or download an app and accurately measuring which ads drove which actions.
Jenny Crook, the vice president of mobile product at the digital-ad agency Jellyfish, compared the disruption to these marketers to the retirement of the high-speed Concorde aircraft.
"Everything is regressing. You saw what was possible: I can target that person from an ad, to what they install, track it to the analytics, know they saw an ad of a dog, then personalize the app to being dog-related," Crook said.
To be sure, many of the mobile-advertising experts Insider spoke with for this article said they hadn't seen a marked decline in the performance of their Apple app-advertising campaigns since the App Tracking Transparency rollout. One media buyer even said they'd noticed an improvement in their iOS campaign performance over the past two weeks.
But with only about 8% of users on iOS 14.5 so far, according data from the mobile-measurement service AppsFlyer, the true influence of Apple's privacy update may not be felt for some months to come. And even by May 4, only 13% of developers had rolled out their privacy pop-ups, according to AppsFlyer.
Apple did not respond to a request for comment.
There's a big question mark over measurement and retargeting
Without carte-blanche access to the IDFA, accurate measurement of campaigns has become a tricky puzzle to solve for advertisers and their vendors.
Apple's SKAdNetwork offers a more limited view, based on much larger cohorts of users than some advertisers are used to. Those cohorts are intentionally broad-based so advertisers, vendors, and data brokers can't reverse-engineer the data and build user profiles. Apple hasn't made public its "privacy threshold" — the minimum number of users required to create such a cohort — which Crook said could hurt smaller advertisers running smaller campaigns.
Another limitation of the SKAdNetwork, experts say, is that Apple allows advertisers to measure only 100 campaigns at any given time.
Retargeting, an advertising technique where advertisers hit users with ads who have already browsed their site, is also proving more difficult. The audience segments available to advertisers are getting smaller, presumably because of low opt-in rates, Madan Bharadwaj, the chief technology officer at the measurement agency Measured, said.
As is often the case with major disruptions in the digital-ad industry, bigger platforms are in a better position to adapt to the changes.
Apple's definition of tracking makes a clear distinction between the sharing of data between companies — or third-party data — or the sharing of data within a single company, first-party data, even if that company owns several apps. Despite vocally protesting the App Tracking Transparency changes, Facebook recently said it could be a tailwind for its business.
That's the reason Apple's privacy changes are thought to have sparked a wave of mergers and acquisitions between companies in the gaming and mobile-adtech space as companies look to build large networks of highly trafficked apps and in-house measurement capabilities. This week, the mobile-game giant Zynga said it planned to acquire the advertising firm Chartboost, one of the companies on this original list, for $250 million in cash.
Advertisers and app developers have no choice but to adapt
Apple's App Tracking Transparency rollout isn't the only privacy shift in digital advertising that marketers and publishers are making preparations for. Google last year announced plans to remove third-party tracking cookies from its Chrome browser. And new privacy regulations and enforcement of existing laws like Europe's General Data Protection Regulation are coming to fruition around the globe.
As the industry adapts to more privacy-focused advertising methods, experts predict advertisers will need to place less focus on the hypertargeting of ads and more on the content of the ads and the context surrounding where those ads are placed.
On a Clubhouse panel on Thursday, Angelina Eng, the vice president of measurement and attribution, at the Interactive Advertising Bureau, predicted a rise in "shoppable ads." In this type of format, a user completes a transaction inside the app, rather than being sent off to another website, which Apple would deem to be "tracking" if the advertiser wanted to measure that sale.
"The increase in the adoption of shoppable ads is going to be critical to help them at least be able to measure," Eng said, pointing to recent developments by platforms including YouTube, TikTok, and Twitter to create shoppable ads and tools to keep users within their own platforms.
Some experts have predicted that if in-app advertising proves ineffective as the influence of the privacy changes shakes out, advertisers will shift their spending to other platforms. Those could include Android — which hasn't made a similar move with its mobile-ad identifier — platforms with sophisticated data and targeting options like Facebook and Amazon, and traditional media.
Apple also recently, and perhaps by no coincidence, launched its own new ad product within the App Store, designed to help developers get their ads discovered.
As the dust settles on Apple's privacy update, developers are looking to the next beat of the issue: enforcement and how hard Apple's hammer will come down on companies who attempt to skirt its rules. The Financial Times reported Apple issued cease-and-desist letters to developers hoping to use a workaround in China called the China Advertising ID, and it has rejected other apps for using other adtech that flouts its rules.
"I think Apple has shown their hand in this — they are very, very, very serious about it," said Dan Beasley, a cofounder of Viker, a developer that produces mobile games such as "Who Wants to Be a Millionaire" and "Word Puzzles." "I think it's going to be a constant game of cat and mouse."