Analysis: ID that binds the industry: Impact of iOS 14 privacy efforts on brands

Facebook recently said it expects the changes on Apple's iOS 14 to "disproportionately affect" Audience Network given its heavy dependence on app advertising. Like all ad networks on iOS 14, Facebook pointed out that advertiser ability to accurately target and measure their campaigns on Audience Network will be impacted. This might result in some iOS 14 users not seeing any ads from Audience Network, while others may still see ads but they will be less relevant. Due to advertisers’ reduced ability to accurately target and measure their campaigns, Facebook said app developers and publishers should expect lower cost per mile on Audience Network and likely other ad networks on iOS.

While Facebook said it is difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing the company seen more than a 50% drop in Audience Network publisher revenue when personalisation was removed from mobile app ad install campaigns.

"In reality, the impact to Audience Network on iOS 14 may be much more, so we are working on short-and long-term strategies to support publishers through these changes," the company added. The Facebook Audience Network enables advertisers to place ads on third-party apps that have integrated Facebook's software development kit (SDK), and uses the same targeting, auction, delivery and measurement systems as Facebook ads. The Audience Network works with more than 19,000 developers and publishers worldwide. 

The latest announcement by Facebook comes two months after Apple first announced that developers will be required to get users' permission before tracking them via the identity for advertisers (IDFA) and users can change permission preferences in their settings. Developers will also self-report their privacy practices, including data collected by the developer and used to track consumers across companies. IDFA is the individual and random identifier used by Apple to identify and measure iOS user devices and according to AppsFlyer, is one of the cookie replacements in mobile advertising.

According to Facebook, it will not collect the IDFA on its own apps on iOS 14 devices. Reason being it believes this approach provides as much certainty and stability that it can offer its partners at this time, and that it may revisit this decision as Apple offers more guidance.

The company will also remind users that they have a choice about how their information is used on Facebook and about its Off-Facebook Activity feature, which allows them to see a summary of the off-Facebook app and website activity businesses send to Facebook and disconnect it from their accounts. It is also releasing an updated version of the Facebook SDK to support iOS 14. The new SDK will provide support for Apple’s SKAdNetwork API, which limits the data available to businesses for running and measuring campaigns.

In light of these limitations, and in an effort to mitigate the impact on the efficacy of app install campaign measurement, we will also ask businesses to create a new ad account dedicated to running app install ad campaigns for iOS 14 users.

Aside from these, the new iOS will also allow consumers to share only their approximate location rather than their exact location, and can choose to share only selected items with a developer who asks for access to photos, or give access to their entire library. As part of the update, a recording indicator will also appear at the top of users' screens whenever an app is using their microphone or camera.  In the phone's Control Centre, users can also see if an app has used those functions recently.

On the topic of Facebook warning publishers that they may see more than a 50% drop in Audience Network revenue from the disappearance of the IDFA, Lotame's VP, product management, Pierre Diennet, said this shows that publishers betting on first-party only, or the identity-less future such as the one proposed by some companies, are "walking into the best laid trap in a decade".

"They think they are reclaiming the value of their first-party data but, according to Harvard Professor John Deighton of Harvard Business School, tens of billions of dollars are at stake if third-party tracking ends without mitigation," he said. Diennet added that the US open web's independent publishers and companies reliant on open web tech would lose between US$32 billion and US$39 billion in annual revenue by 2025.

"Where will it go? About US$24 billion to US$29 billion in annual publisher revenues would likely be absorbed by walled gardens such as Google and Facebook," Diennet said. He added that Lotame is building solutions that will strengthen its publishers' future "through true innovation not regression to an over-hyped ad network". 

Join us on a three-week journey at Digital Marketing Asia 2020 as we delve into the realm of digital transformation, data and analytics, and mobile and eCommerce from 10 to 26 November. Sign up for early bird tickets here!

Impact on the industry

The move by Apple in June to respect user privacy is not a new one, for the company has been doing so over the last few years, beginning with the option to allow users to limit ad tracking. Kabeer Chaudhary, managing partner, APAC, M&C Saatchi Performance told Marketing that the IDFA is a welcome move from the point of view from users as this will allow users to take the decision whether they would like to see targeted ads from a certain publisher or not. He added that it is expected that most users would choose to opt-out, which would be harmful for the app marketing ecosystem in its current form. 

IDFA is the unique ID that binds the industry. It is the oil that greases all moving parts of the app marketing engine. 

From a macro point of view, Chaudhary said the two areas that would be adversely affected would be adverting measurement and targeting. He explained that IDFA is used for deterministic attribution for app installs and events. As a result, the deprecation would lead to advertisers depending on more probabilistic forms of attribution such as digital fingerprinting.

"To counter this problem, Apple has also opened an API for measurement called the SKAdnetwork. However in its current form, it is a few years away from the reaching the value that has been provided by app attribution platforms," he added.

SKAdnetwork was launched in May 2018 that allows mobile app install attribution while preserving privacy. According to Chaudhary, SKAdnetwork, which is the default measurement framework that Apple provides only allows last click attribution. "If advertisers choose to adopt Apple’s default framework over other probabilistic models, it would take the app marketing industry a few years back to the era of last click," he said.

Additionally, IDFA is used to match user behaviour across apps and target users based on their online behaviour. The deprecation of it would have a harmful effect on both advertising efficiency as well as monetisation for publishers.

"The value of an impression without the overlay of behavioural data, is usually significantly lower than the one with behavioural data. Decrease in ad monetisation could be disastrous for publishers who have anyway been struggling to keep their business afloat with the meager ad revenue," he explained.

Agreeing with Chaudhary's point about behavioural targeting will become more difficult for marketers is Integral Ad Science's (IAS ) SVP APAC, Laura Quigley, who explained that there will be increased scrutiny on data that is collected for the purposes of advertising, and the usefulness of data will get limited with the death of cookies.

Advertisers would argue that user level data is necessary in today’s world of user acquisition - not to profile users or serve them targeted ads - but to analyse how campaigns are performing on a granular level. According to Quigley, users are understandably wary of sharing more data than necessary - especially if the pop up provides little context on how this data will be used.

"Whether or not IDFA is eventually eliminated, mobile advertising will need to adapt, and this will require a fundamental change in the way iOS targets are addressed in mobile marketing. The introduction of ad blockades should be seen as a positive change for the mobile industry, but it is also a step toward building a context-based advertising approach," she explained.

Moving forward, app developers will now need to think about how they appropriately motivate consumers to opt in and how they help protect user privacy overall. Instead of eliminating the availability of IDFA altogether, Quigley said Apple is making the availability of IDFA a user choice, providing additional transparency around data collection and tracking practices of companies and apps, among others. 

Will Facebook and Google become stronger?

The more troubling part of this update, according to M&C Saatchi's Chaudhary, is that it could potentially make Facebook and Google stronger because they might be the least affected by the IDFA deprecation. While the duopoly uses the IDFA for tracking, Chaudhary explained that they have other unique identifiers such as email addresses and phone numbers to create user personas not only across their own apps but also across app that allow users to use the Facebook and Google login widget.

The immediate impact to advertisers in Southeast asia, especially in Android heavy markets is going to be much smaller than other markets such as US and Europe. However, there is a possibility that Google might follow suit with their identifier, Google advertising ID, and that would have a significant impact to digital advertising in the region.

Meanwhile, according to the recent IAS consumer privacy survey, eight out of 10 consumers in Singapore and Indonesia say they are aware that websites and apps collect and share their data for advertising purposes. The report added that 56% of Singapore consumers and 49% of Indonesia consumers hold themselves most accountable for keeping their personal information secure and are starting to take action to help limit online data collection.

Quigley reiterated that the advantage of the iOS 14 is becoming more transparent about how user data gets used, putting the control back in the hands of the users and getting less intrusive about online activities. By requiring app developers to self-report the kinds of permissions that their apps request, it will also help improve transparency, allowing the user to know what kind of data they may have to give over in order to use the app.

Marketers will have to get innovative about their marketing, which will lead to a better connection, personalised, contextual offerings, and overall engaged consumers. 

On the other hand, it is possible that a big part of publishers, which currently offer free content in exchange for displaying ads, will turn to paywalls. Publishers could also switch from the web into their own mobile apps, where ads will not be blocked or transferred to social media apps such as Facebook. "While the industry comes together to discover a solution that defends user privacy, focus will be on a sustainable future for advertisers and developers," she added.

Meanwhile, AdColony's senior product manager, Alasdair Pressney told Marketing that its new SDK is already available for developers to update and enable network IDs and enable demand from its advertising partners. According to him, the adtech firm has been doing contextual targeting and optimisation since before universal mobile device identifiers were available. Combined with non-personally identifiable data and creative optimisation, AdColony is confident in its ability to ensure business continuity for its partners within Apple's guidelines. 

Echoing Quigley and Chaudhary, Pressney also expects the number of specifically addressable Apple devices to decrease when iOS 14 launches. However, he pointed out that it is unknown what percentage of Apple users will choose to opt-in to sharing their data via the new process. "Contextual targeting and an understanding of where a target audience will be spending time will be more important than ever, as will selecting partners that can act and optimise on that understanding," he added.

Join us on a three-week journey at Digital Marketing Asia 2020 as we delve into the realm of digital transformation, data and analytics, and mobile and eCommerce from 10 to 26 November. Sign up for early bird tickets here!

Related articles:
Analysis: Apple blows it out of the water with new floating store and bright red logo in SG
NYT, WSJ and BBC among publishers joining Fortnite's fight against Apple
Fortnite mocks Apple's '1984' ad after being removed from app store
Analysis: Apple swipes past price point talk in Malaysia to target Android-ers