iOS 14 & IDFA. Mobile Advertising Industry meets global changes

iOS 14 & IDFA. Mobile Advertising Industry meets global changes

The mobile industry meets one of the most global changes in recent years. On the wave of the privacy trend, Apple has made a significant decision for the whole market. With the release of iOS 14 in September 2020, advertisers will meet some changes which they should be ready for from now.

So what's going on?

The main thing is that Apple expanded privacy protection in iOS 14. According to forecasts, it could seriously affect mobile advertising and make it much more difficult for advertisers to track users. The key reason: Apps will have to ask users if they are willing to share information about themselves with third parties.

This feature concerns the Advertiser Identifier (IDFA), a random device identifier tag that Apple assigns to a user's device. Advertisers have long used this feature to track aggregated data without revealing personally identifiable information.

What is IDFA?

IDFA is a unique device identifier that is used for ad attribution, retargeting, visual audience creation, analytics, and more. 

The IDFA cloaks the user’s personal information, a privacy measure that still allows for integral data to be extracted on users such as the channel they have been acquired from or certain user behaviors tracked via in-app events. Users can turn off tracking through their settings via ‘limited ad tracking’ but this function is deep within the settings of the device and often goes amiss. iOS 14 will change all that. 

Apple's iOS 14 makes IDFA enabled for all apps. This means that apps will need to ask users for permission before they can use the tracking ID. A new pop-up window asks users if they want to permit tracking them through third-party apps and websites to deliver personalized ads. 

According to various estimates, the share of users who will give access to IDFA is about 10-30%.

Alternatively, Apple has provided its privacy-safe attribution system, but it does not cover even a small fraction of the tasks that mobile developing and promoting teams face. This means that mobile marketing and as a result, the mobile industry will change dramatically. 

Key changes and consequences of the release of iOS 14 and restrictions of IDFA access

1. IDFA will only be available after receiving permission from the user

2. Lack of IDFA access will lead to mobile traffic attribution decreasing and increasing the customer acquisition cost (CAC) 

3. Apple has offered the market its attribution system, but it does not cover the tasks of mobile developers

4. Implications of the iOS 14 changes: higher user acquisition costs, accelerated consolidation of the mobile market, impact on large ad systems and attribution services

What changes to expect next in the mobile advertising and ad traffic attribution market?

The mobile advertising market is nearly $ 80 billion, so you shouldn't expect it to die or shrink. Companies will continue to buy traffic for mobile applications, but the question is how effectively they will do this. Firstly, it will be much more difficult to measure performance. Secondly, look-a-like audiences and retargeting will almost stop working. At this stage, it is not clear what will happen to the ad traffic attribution market.

iOS 14 and restricting IDFA access has also a big impact on major ad systems. In fact, the mobile market is a duopoly dominated by Facebook and Google - they are the ones to be hit hardest by the changes, and we can expect faster growth in CAC and consolidation of the mobile market.

Apple is losing their market?

The release of iOS 14 leads to a lack of clarity around measurement. The challenge is that performance marketers need to justify their spending. Restricted access for tracking begs lots of questions. An increasing number of app developers are considering switching to Android as their primary OS. 

In turn, this is a serious matter making app advertisers shift budgets to Android (which seems safer in the light of recent). In general, innovation will have an impact on four areas for mobile advertisers:

- Advertisers will still be able to serve in-app ads on iOS, but will not be able to target, which will significantly affect the effectiveness of such ads.

- Companies will not be able to set frequency capping and will spend budgets on showing the same message to one person.

- Advertisers will no longer be able to calculate the ROI for iOS (advertisers will not be able to track if ad impressions turn to conversions)

- Brands will lose the ability to personalize and optimize creatives for a specific user. It will also become impossible to conduct A / B splits and all kinds of testing.

Final Thoughts

In general, we assume that the mobile industry is increasingly moving towards consolidation. In the context of data privacy concerns, industry leaders receive additional tools to strengthen their positions. In turn, mobile marketing and development companies will look for new approaches and working scenarios to stay connected with iPhone users. In any case, Apple with iOS 14 will take the entire mobile industry to a new, higher level.

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