Apple started a quiet tsunami with the release of iOS 14.5 (the software that runs iPhones and iPads), which revolves around the Identifier For Advertising, or IDFA. The IDFA, which debuted in iOS 6, uniquely identifies a particular device (and thus, a user), allowing mobile advertising networks to track users and serve them targeted ads. In iOS 10, Apple added a setting to allow users to limit ad tracking, and estimates show about 20% of users made the effort to adopt that setting.
But with the release of iOS 14.5 this past April, an application must explicitly ask for permission to access a phone’s IDFA. The user can then turn off their IDFA entirely, or permit it on an app-by-app basis. An app must use the “ATT prompt” (App Tracking Transparency), which has the same wording for every application: “Allow <app name> to track your activity across other companies’ apps and websites?” The prompt includes a default explanation of why you might want to do that: “Your data will be used to deliver personalized ads to you.” The user has only two choices: “Allow” or “Ask app not to track.”
The problem is that many businesses rely on the very granular information provided by tracking the IDFA to target new customers. And with people given the explicit choice of opting in or out, there will be those who choose to opt-out, making finely targeted advertising impossible.
At the time of Apple’s announcement of these forthcoming new rules in 2020, Facebook —sensing a real threat to its advertising revenue—went on the warpath against Apple. An important metric for people who advertise on Facebook is “view-through” conversion. This happens when someone sees an ad for a retailer (which notes their IDFA), but doesn’t take immediate action. Later, if someone goes to the retailer and purchases something, the IDFA from the purchase can be linked to the fact that someone saw the ad. This provides retailers with confirmation that they are seeing results from advertising efforts on Facebook.
As another example, consider a company that provides a free-to-play mobile game. To make money, they want to attract players who will spend money on purchases within the game. So, they look at their existing players who spend money in the game. By providing the IDFAs of those players to an advertising network like Facebook, they can say “target ads for our game on your network to people who behave like the players with these IDFAs.” This is referred to as targeting a “look-alike” audience and has been highly effective for a broad range of companies. It is the same technique used by Waterdrop Digital and other digital marketing agencies I wrote about last year in a series of columns on targeted digital advertising (available on the NorthBay biz website).
Branch Metrics, which tracks mobile advertising, estimates that fewer than a third of iOS users are opting into ad tracking. Facebook reported record earnings for the quarter ending in June, but Branch noted ad spending on iOS dropped by one-third in June. Facebook CFO David Wehner stated on the earnings call that the company expects to feel the full effects of IDFA changes in the third quarter, which will be reported in late October.
Apple does permit app developers to preface the ATT dialog with a screen explaining why the user should choose to allow the app to track them, though you can’t tell them which button to press, or offer an incentive of any sort. Apps with the highest opt-in rates appear to be using this to a good advantage, despite the fact that, on average, two out of three users still decline tracking.
The other (larger) advertising network is, of course, Google, which also controls the Android mobile platform. Android devices have an analog to Apple’s IDFA, the AAID (Android Advertiser ID). Google has announced plans to allow users to opt-out of AAID tracking, much as Apple did for the IDFA in iOS 10. But they have not announced any plans to make users opt-in to tracking as Apple has.
Apple has announced an alternative to IDFA (SKAdNetwork), which allows for tracking ad campaigns, but not specific users. It remains to be seen whether this will prove useful enough for the majority of advertisers.
As a user, I’m not super fond of ads (who is?), but I also understand that’s why a lot of services I enjoy are free. My company depends on finding users who are willing to spend some money on our free-to-play game. Targeted digital advertising has been a boon to smaller businesses, allowing them to compete with much larger companies for customers.
The question is: Will people value the privacy Apple offers more than the free stuff tracking provides? It will be interesting to see this quiet tsunami’s effects over the next year or two.
