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The ‘dramatic differences’ Apple’s iOS 14.5 privacy framework brings to ad measurement & targeting

AppTrackingTransparency, Apple's new privacy framework, will create new challenges for ad measurement

The time has come. Apple will begin enforcing its new privacy framework this month. Developers and advertisers are worried about how effectively – and compliantly – they will be able capture user data and connect with consumers. Here’s what you need to know...

As promised in January, Apple is releasing AppTrackingTransparency (ATT), its latest privacy framework, this month alongside the imminent iOS 14.5 update. While the changes will give Apple users with greater agency over their own data, for advertisers, ATT poses a range of new and somewhat unknown challenges.

In combination with Google’s Privacy Sandbox updates, the impending death of the third-party cookie and sea changes across the regulatory landscape, Apple’s ATT is a massive variable set to upend the way digital advertising, identification and attribution works.

But what is ATT anyway?

As it stands, apps attach a unique identifier to each user — which, on Apple operating systems is known as an identifier for advertisers, or IDFA. Using this identifier, brands can then serve users ads across different platforms. According to data from Apple, apps have, on average, six trackers. ATT’s purpose is to give Apple users more say over how apps use user data.

In iOS 14, iPadOS 14 and tvOS 14, when a user opens an app that uses third-party cross-app tracking, they’ll be met with a pop-up notification asking if they want their activity to be tracked across third-party websites and apps. The pop-up enables users to understand – and control – which apps track them across other apps. If a user does not opt-in, the operating system will prohibit the app from cross-tracking that user across other third-party apps. So in essence, the buck stops there.

This is causing major headaches for developers. “Every mobile app will have to prompt users into accepting the use of the IDFA,” says Hugo Loriot, partner at data consulting firm Fifty-Five. ”So app developers will have to resubmit their software development kits (SDKs) to Apple and will have to show that they either prompted users into accepting the IDFA or that the user did not collect the IDFA at all.” Loriot believes the new framework has broad implications not only for advertisers, but also for how apps are developed in the first place.

Apple did not respond to requests for comment.

Low opt-in rates may mean trouble for advertisers

While ATT offers consumers newfound control and speaks to the rising global demand for data privacy, low opt-in rates may put advertisers in a tough spot. They'll be able to reach fewer people — and will have more difficulty measuring the impacts of their efforts.

Amanda Martin, vice-president of enterprise partnerships at performance ad agency Goodway Group, says the changes are likely to “make dramatic differences to our ability to measure,” because “multi-touch attribution is basically taken apart by ATT”.

“If, as expected, most consumers opt out of IDFA tracking on each app they use, this essentially deprecates the ability to target and track advertising at an individual level without the use of logged in email addresses,” says John Lee, corporate chief strategy officer at performance marketing agency Merkle.

“Further, for apps that deliver ‘audience extension’ targeting and tracking beyond their apps to content and e-commerce websites, this loss of IDFAs will significantly impact the scale and completeness of the dataset, leaving holes in the data that will have to be plugged with ’probabilistic’ or modeled approaches.”

Estimates vary greatly, though a new survey from AppsFlyer found that only 41% of users opted in for targeting. And just half of the apps saw an opt-in rate over 32%.

However, the research also indicates a number of disparities: more popular apps (in the top 10% of downloads) witnessed a 50% higher opt-in rate than the least popular apps, while gaming apps outperformed non-gaming apps by an impressive 12%.

And while more stable trends are likely to emerge with the official roll-out of iOS 14.5, it’s still clear at this point that opt-in rates will vary significantly across apps. In order to maintain the level of targeting and the accuracy of attribution they enjoy now, advertisers will need to evolve their strategies.

Apple’s new privacy framework, according to Loriot, “will make it almost impossible to attribute mobile app installs or mobile app events to add exposure”. For example, he says: “The information on the vast majority of app installs that are attributed to Facebook exposure will pretty much disappear for a large fraction of users. So that’s a pretty big challenge to evaluate how your marketing spend works.”

Many apps are already rebuilding in the hopes of getting around some of Apple’s new policies, but Apple is not having it. Per an April 1 tweet by Mobile Dev Memo analyst Eric Seufert and other reports, the company has rejected a number of app updates from developers using an SDK from Adjust. The SDK was barred because it reportedly sought to create a unique user identifier by collecting user data, which Apple viewed as an attempt to bypass the new privacy policies. The decision serves as a warning sign to developers: rebuild as you please, so long as proposed solutions don’t attempt to penetrate any supposed ATT loopholes.

“Apple is not seeking to keep marketers and app operators from using IDFAs from tracking without direct consumer opt-in,” Lee says. “They are seeking to end the practice altogether – including using other non-device ID signals such as IP addresses.”

A significant blow to Facebook

Apple isn’t the only player seeking to limit advertisers’ ability to track and target users. The biggest concern for marketers should be how they choose to work with Facebook, says Loriot. In response to Apple’s updates, the social media giant has made a few key changes of its own.

First of all, the company asked all of its advertisers to review how they structure their campaigns and how they target the Facebook site and app. “Now, when you want to do a campaign on Facebook, you have to create an iOS-specific campaign with a limited number of items,” says Loriot. “Even for a traditional Facebook campaign that aims to redirect people to a brand's website, you have to overhaul your tagging framework on the website to have a maximum of eight conversion events. So the byproduct of ATT is that Facebook is revisiting how they track users and the kind of granularity of their reporting.” As a result, brands will be forced to reevaluate their tagging strategies.

In another key move, Facebook announced it will begin phasing out some of its products, including Facebook Analytics. The move will further complicate measurement for advertisers, who will be forced to identify new solutions for tracking the effectiveness of their campaigns. This may prove to be a significant blow to Facebook-first advertisers.

The privacy-value trade-off remains intact

Where some early projections pegged opt-in rates for Apple’s new framework in the low single-digit range, AppsFlyer’s recent numbers may offer a silver lining to advertisers: users are still somewhat willing to offer up their data in exchange for utility and value. If consumers feel that sharing their data will lead to personalized, seamless communication that adds value to their digital experiences, they are likely to view the trade-off as worthwhile.

This is why securing first-party data has become a priority for many marketers looking to get ahead of the curve. As it relates to mobile applications, Lee says: “The world of addressable advertising will become wholly dependent on apps having logged-in users who have provided their email address as part of their registration. The good news for mobile app operators is it is common practice to require registration for the app even when it is free.”

This enables apps to capture valuable data while providing users with transparency regarding how their data is being used. The challenge will then be creating app-specific addressable IDs that marketers can use for matching purposes. “This will work well for in-app ads being served against the app owners’ owned and operated ad inventory, but will not work well for apps such as Facebook, which offer targeting against their user base ‘off network’”, Lee adds.

No matter how it plays out, it’s safe to say marketers and their agency partners will be working quickly to navigate the new landscape once the iOS 14.5 update drops.

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