Apple and IDFAs: the beginning of the end for ad-funded apps?
Spring is a time of renewal and rebirth. Here in the Northern Hemisphere we can look forward to longer and warmer days. The sun will start to shine. Optimism will return.
However, if you happen to be an app publisher or one of the Supply Side Platforms (SSPs) that support them, you may be forgiven for thinking that winter is only just beginning. Any day now, Apple will make its Identifier for Advertisers (IDFA) opt-in rather than opt-out, a move intended to enhance the privacy features of its operating system in line with the spirit of regulations such as GDPR and CCPA.
The move could prove disastrous for the digital advertising ecosystem. IDFAs is the tool by which the digital advertising industry can identify users across apps and other websites, and is used for audience addressability, targeting, retargeting and matching, as well as for measurement and attribution. Without IDFAs in sufficient volume, app publishers will lack the data needed to monetise through advertising. Ad budgets will shift elsewhere, and it’s likely that app developers will need to change their business models – perhaps by charging a subscription – or go bust.
Of course, it’s possible that enough people will opt-in to IDFAs for all this brouhaha to be a storm in a teacup. But the signs are not promising. Experts believe that only around 20% of IOS users will opt-in to the identifiers. And industry research suggests most marketers are pessimistic. The majority of respondents to one survey thought that most core functions critical to programmatic advertising would be impacted including cross device management (71%), multitouch attribution (62%), conversion measurement (66%) and impression measurement and verification (56%).
So, is this the end of ad-funded apps? The truth is that while the industry will have to change, a future of strong advertising revenues is still possible. Just as Spring marks the end of one cycle and the start of another, so too could this Spring mark the start of a new cycle for app publishers and SSPs and a welcome return of the bounty of advertising.
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Where next for in-app advertising?
One reason for optimism is that the martech ecosystem is highly innovative and adaptable. Already solutions are presenting themselves. As argued in the Economist, companies that own several apps with high volumes of users could combine these into super-apps, similar to China’s Wechat, and identify users across these super-apps using authenticated log-in. However, even with this approach the addressable audience will still be significantly smaller than today, as there would be no way to identify users across the open web and other publishers’ apps.
What app publishers and SSPs really need is a replacement identifier that can offer similar features as IDFA but in a GDPR, privacy-first manner. Our own telco-verified user ID is a case in point. In our approach the app publisher “owns” the ID and and using privacy-centric, first-party data from a telco partner the publisher can see the users of their app and can identify the same user on return visits, irrespective of the device used.
This approach will mean that publishers don’t just survive the depreciation of IDFAs, they will thrive beyond it, expanding their first-party data, understanding and building their audience profiles, generating better campaign performance for clients and commanding premium pricing for their ad inventory.
Telco data can also be used to create a second identifier: a dynamic ID for audience activation. Here the first-party data from the app provider can be used to create authenticated audience segments for use in real-time adressibility, targeting and matching. And potentially this rich source of data can be augmented by single-source, deterministic telco data, audience segments as well. All the requirements for personalised programmatic advertising are met, and in a privacy-first way: in this model no data leaves either the app provider or the telco partner’s network, only anonymised tokens (Novatiq’s patented, non-persistent Snowflake ID).
There’s no doubt that Apple has given the app ecosystem a shake. But app publishers and SSPs need not fear unduly. There will be change, but there is also a huge opportunity here to create a new approach to programmatic advertising that consumers can trust more than the current arrangements. Things may seem tough now, but Spring really is on its way.