In this article, Colm Dolan, CEO & Founder, Publift, talks about how Apple’s ATT update will fragment customer journey data. Dolan also shares tips with advertisers on how they can rebuild using other data sources.
On January 28, Apple CEO Tim Cook was in Brussels, speaking to an audience of European privacy commissioners to mark International Data Privacy Day. His speechOpens a new window resonated like a nuclear test, sending shockwaves through the tech world and ostensibly declaring the start of a Cold War against the house that Zuckerberg built.
“Technology does not need vast troves of personal data stitched together across dozens of websites and apps to succeed,†Cook said. “Advertising existed and thrived for decades without it, and we are here today because the path of least resistance is rarely the path of wisdom.â€
This comes on the heels of a long brooding disagreement between the two tech giants about how personal data is managed that culminated with Cook’s January remarks about the role Facebook Groups play in radicalizing right-wing extremism, leading up to the storming of the U.S. Capitol building on January 6.
To make matters worse, just before the riots, Facebook took out a series of full-page newspaper ads criticizing Apple for being “Anti-Business†for not letting them collect all the data they want. “We are standing up to Apple for small businesses everywhere,†wroteOpens a new window the $767 billion-dollar Menlo Park company.
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Apple fashions itself as something as a techno-utopian lifestyle brand. For the better part of a decade, Facebook products have sat comfortably within IOS devices, quietly harvesting data. Cook and Apple decided to end that with their latest device update, IOS 14, arguing that users’ personal information should not be turned into a product to be packaged and sold.
“We can no longer turn a blind eye to a theory of technology that says all engagement is good engagement, the longer the better, and all with the goal of collecting as much data as possible,†Cook said. “We cannot let a social dilemma become a social catastrophe.â€
For the adtech industry and app developers who rely on acquiring via IOS IDFA data, this clash of the titans means disruption to business as usual.
The Basics: Why Publishers and Apps Would Like To Track Their Users
Publishers want to track their users for attribution of their own costs and revenue. They want to know how many daily active users and monthly active users they have on their app, and they want to know the revenue gained from those users.
If you want to run ads on an app — particularly a game — you need a little bit of user data to trade off on to run successful ads targeting the type of user who plays your game. Without having a lot to go on, it would be hard to attract a good price for advertisements shown to your users.
Being able to track users and build a digital profile on them based on their app activity (the kind of apps they have installed on their phone, how they use them, and much more) makes them monetizable. Â
What Does Apple’s New Update Do for User Data Privacy?
Apple’s latest IOS 14 update includes a new privacy protection frameworkOpens a new window called App Tracking Transparency, or ATT. When you open an app that uses targeted ads on an iPhone running IOS 14, you are alerted by a pop-up message informing you that the app wants to track you across multiple devices and collect your personal data. It then asks if you would like to allow the app to track you or not.
Simply put, ATT means you will see no personalized ads without your consent on an Apple device. ATT will essentially limit the ability of advertisers to acquire data from individual users’ cell phones via their Identifier for Advertisers (IDFA).
As it currently works, an ad request takes place within the app, and the advertiser can see the information tied to the IDFA, plus any supplementary information. This allows them to target ads to whoever fits the ‘non-identifiable’ ledger of that person’s app interaction history.
Any kind of information they have collected based on the user’s IDFA — which includes but is not limited to: geographic location, device type, apps installed, and time spent on apps, among others — is available to advertisers.
The way it used to work, app publishers and advertisers could track a user as soon as they interacted with an ad and acquire user/device level info that could be mapped to that user’s identity graph. Under ATT, that ability disappearsOpens a new window .
What Does This Mean for Access To Data for App Publishers?
Advertisers can expect to see IDFA information disappear, as it is currently estimatedOpens a new window that 95% of people will opt out of IDFA tracking. Instead of amassing personalized snapshots to send targeted ads, advertisers and publishers will only be able to acquire campaign-level information, not device-level infoOpens a new window .
App installs adsOpens a new window will be the main area that is affected by ATT. App install ads are very specific, highly lucrative, highly effective, and yield a lot of revenue. So, not being able to track who installed your app with user IDFA information will be a bit of a shot in the dark for publishers and advertisers going forward.
With ATT, all publishers and advertisers will know that they have invested an ‘x-amount of money’ into app install ads. So, if you are trying to sell a new app using these types of ads, you will probably be less effective as the information that is inherently available about IOS users themselves diminishes.
However, in the Android world, this information is still readily available at this stage, and it does not look like it is going to disappear at any time soon.
How Can Videos Be a Good Alternative?
Video is highly engaging — you are going to have a higher impact even with less data by virtue that video is video. In the case that a person opts out of personalized ads, they will still see video ads, and that could be a good way for publishers and advertisers to build engagement.
But, no matter what ad style you use, you are still going to be subject to whatever data is available. There is an inherent tech cost of running a video ad — more information to download, display, render, etc. Videos are exponentially larger than images in size and require more effort from the device rendered to and from the network.
Nevertheless, users tend to like interacting with video — so long as they see an immediate trade-off or are ‘rewarded’ for their interaction. An industry overview of adsOpens a new window in games by Facebook shows that 71% of gamers “like†or are “okay†with rewarded video. The same infographic reveals that there is a 26% year-on-year revenue growth for ads in mobile games.
Rewarded Video
Rewarded videos give users access to a premium service within an app for a limited time in exchange for their viewership of a short (usually two-minute) video. A prime example is how Spotify’s 2014 plan to reward usersOpens a new window with half an hour of ad-free music in exchange for watching one short video or listening to a short audio ad.
Other applications include gamified apps where a free user has a certain amount of lives or resources that regenerate automatically after a set amount of time (typically three or four hours). Or, they can opt into watching a video to replenish lives faster. This strategy is implemented by the free language learning app Duolingo. Under ATT, publishers will probably look into implementing creative strategies like these to get more rewarded video ads into their apps.
Gamified apps and streaming service apps have adapted well to this model. Publishers need to figure out how to create a “middle tier†user experience around rewarded video for their app.
Building a Middle-Market Through Value-Driven Advertisements
There are three types of users:
- People who have never paid for something,
- People who have paid for something, and
- People who are on the fence.
Use value-driven advertisements to try to get those people off the fence (through in-app purchases or subscriptions); if they are not going to do that, show them more high-value ads.
To do that, figure out the lay of the land for your users: provide a premium (paid) solution and provide a free (ads-based) solution and provide a third option that allows users to watch videos in exchange for time-limited access to premium services or content.
For instance, let us say a weather tracking app wanted to adopt this strategy. They might run the traditional banner ads for free users who just want to know if it is going to rain later today and offer a premium version of their service that you have to pay for each month.
The paid-for premium version might include advanced features, such as sending out push notifications about inbound weather events or providing access to an advanced weather radar feature. For the middle-of-the-road user, the app developer would want to implement a rewarded-video-based system that unlocks one hour of the advanced radar, for example. This strategy is already gaining tractionOpens a new window within the world of digital advertising.
Why Creating an Android App Is a Good Option
Android devices are significantly cheaper to purchase. With a lower entry barrier, you can target the sizeable Android device owner market with an Android app. IOS does not have a middle or lower market offering, so Samsung and Google will eat up most of the market.
The value of the IOS user to an app developer may decrease significantly over time because of ATT. The privacy-by-default strategy may get people to buy more iPhones, but it also may make developers switch to Android apps because, over time, Android apps may have greater returns than iPhones.
How Will IOS Developers Acquire Data?
IOS developers will have to consider collecting email addresses and phone numbers by creating a strong sign-in option for their app. Publishers who have built appealing sign-ins can amass good market penetration. They can access names, phone numbers, email addresses, and other forms of requested data provided by users when they create an account.
Some game developers try to create apps designed to get to play for as long as possible — Angry Birds or Candy Crush, for instance. With these popular games designed to keep users playing for as long as possible, a sign-in option could definitely work.
However, there are some publishers that will place ads between different pages of the app to make as much money as possible. Users tend not to stay for super long in these ‘Hyper-CasualOpens a new window ‘ (easy to play/free to play) gaming apps, so the overall lifetime of the app drops off.
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This model of cramming apps full of app-tracking ads will prove problematic to hyper-casual game publishers trying to attract users on IOS. This is because nobody wants to sign away their personal information to play “Flappy Bird†for a few minutes a month. My prediction is that these types of apps will probably migrate to Android, and publishers who stay with IOS will be challenged to create more engaging apps that people are willing to supply login data to use.
The adtech industry and publishers have to adapt to Apple’s new privacy frameworks, and there are several ways of doing so. Ultimately, as Android takes an even bigger portion of the market share, it may become more cost-effective and more lucrative to run targeted ads on that operating system instead.
Hyper-casual apps may be witnessing their final days on the IOS platform. App developers need to think of ways to build a middle-market for IOS users by utilizing rewarded video in creative ways if they want to be able to collect data from their users and see greater retention across their user base.Â