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Identity AppSumer Data & Privacy

Mobile advertising: The key privacy-first challenges and the strategies to solve them

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July 27, 2022 | 8 min read

By Navin Madhavan, VP & GM – growth marketing platform, InMobi

By Navin Madhavan, VP & GM – growth marketing platform, InMobi

The onset of online data privacy reformation has refined both consumer expectations and regulatory requirements all over the world. In the mobile ad space, this has meant more focus on building a user consent-driven advertising ecosystem.

It’s been more than a year since Apple enforced App Tracking Transparency (ATT) framework for iOS, which included remarkable changes in how Apple’s unique user Identifier for Advertisers (IDFA) is shared with mobile advertisers. This is soon to be followed by the deprecation of third-party cookies on Chrome and advertising ID (AdID) by Google. Advertisers and marketers are facing a new set of challenges to collect and utilize consumer data, and consumer privacy practices in the Asia Pacific (APAC) still aren’t strong enough.

Here are the insights on key challenges mobile advertising industry is dealing with in a privacy-first world, drawn from our experiences and relationships in the industry along with highlights from the e-book, Apple’s privacy changes one year on: The good, the bad and the solutions by InMobi’s Appsumer.

Impact of technology regulations on the advertising industry

Apple’s ATT along with Google’s mobile privacy plans are intended to give users the option of not sharing their personal data in a convenient way, by introducing an opt-in system for each app they install. This has a direct impact on the performance of mobile marketing, by stripping marketers of the ability to track consumers’ mobile habits and precisely target them with personalized offers and retargeted ads. As a first response to these fundamental changes in how mobile ads have been served to the consumers so far, small scale platforms providing consent management and performance marketing solutions for advertisers have started mushrooming within the advertising ecosystem. Simultaneously, compliance with the regulatory requirements can often be cumbersome for smaller independent players to navigate.

It’s not only the advertisers who have been impacted by these changes. The walled gardens (like Facebook and Snapchat) that run ads on first-party data and act as a Self Attributing Network (SAN) now have conflicting metrics with other third-party measurement solutions (MMPs) used by advertisers to gauge performance.

But consumers are becoming aware of the control they have over their privacy at a slow pace, which hasn’t led to a catastrophic change as some had expected. All this has delayed the realization of advertisers to develop new and privacy-first mobile advertising practices. Brands, agencies and publishers do not seem to be ready for what lies ahead.

Key challenges in the privacy-first advertising world

For advertisers and marketers who have realized the urgency to build privacy-first mobile marketing practices in the post-ID and depreciated third-party cookies world, it is important to understand the challenges at hand. The key problem areas that the advertising industry needs solve are:

1. Reach
A study by Epsilons shows that 80% of advertisers depend on third-party cookies to reach the right users. Similarly, device identifiers give access to user-level data that is at the forefront of targeted app marketing. Without identity and third-party cookies from users, advertisers will now have a harder time reaching their target audience.

2. Behavioral targeting
Advertisers heavily depend on behavioral data from users for targeting. The absence of user-level behavioral data makes it extremely difficult. Also, without a unique ID, advertisers cannot retarget users who do not complete the intended consumer journey.

3. Personalization

Limited access to behavioral, in-app, and browsing data will make it challenging for advertisers to serve personalized ad experiences to users. Lack of personalization also means that irrelevant ads are shown to a user, leading to a poor user experience.

4. Measurement

Without identifiers, non-standardized data will flow aggregated without precise stamps of location and time. Data without identifiers will also have inconsistencies when aggregated from different ecosystems like iOS vs Android. All this will make old ways of data attribution redundant. Measuring the performance of ads on iOS-based devices has other specific challenges like lack of full-funnel measurement and inconsistent datasets created by constantly changing conversion windows and values in Apple’s StoreKit Ad Network (SKAN). Data collected from SKAN vs. SAN is also found to be incompatible. Measuring install-based campaigns on iOS devices will have additional challenges of mysterious privacy thresholds on SKAN and duplication of attribution sources between SKAN and mobile measurement partner (MMP).

5. In-app advertising ecosystem

The industry has spent a long time focusing on developing browser-first advertising practices with in-app advertising practices gaining attention only recently. The complexity of the in-app advertising ecosystem in tandem with these privacy-first regulations has caught the advertising industry unprepared.

These challenges have negatively impacted campaign optimization and management by directly hitting basic capabilities like A/B testing, controlling the frequency of ad impressions per user, and reconciling campaign performance across ecosystems and geographies. Small advertisers have already started seeing a slump in their iOS share of spends with some moving spends to Android as an immediate step. The upcoming mobile privacy changes from Google will only make the matter more complicated.

Solving for consumer identity depreciation the right way

Despite the challenges discussed earlier, data from Appsumer shows that larger brands and publishers have already started overcoming them. In fact, these brands have started finding new opportunities in iOS-based advertising, which might signal what’s in store for the future of all mobile advertisers. The remaining players in the industry can take a lesson from them and develop solutions for the post-identity and depreciated cookie world by keeping the following in mind:

1. Think consumer-first

Consumers will be at the wheel as we move towards a privacy-first advertising world. Therefore, it becomes imperative to create solutions for identity depreciation with consumers at the center – consumers who are spending up to four hours on mobile apps every day. Yet most ID solutions today do not prioritize the in-app world. For instance, the solution of adopting hashed emails (HED) as the common currency is limited by the lack of universal coverage of emails in user profiles for apps in categories like gaming. Hence, the solution must include potential alternate parameters that can be bolted onto HEDs.

2. Evolve targeting

It’s time for brands and advertisers to move from behavioral to contextual and in-app targeting. Using more and more contextual signals, like content consumed and time spent within the app, along with other practices like diversifying into new channels and consolidating multiple IDs from consumers will help in optimizing campaign performance.

3. Innovate to measure effectively

Combining metrics and adopting incrementality measurement might make up for the loss in performance data due to identity depreciation. Advertisers will need to update their tech stack and reporting systems to analyze unaggregated and non-standardized data varying across ecosystems and geographies. Publishers need to think about creating privacy-first client-side environments where anonymized media buying, easier measurement and attribution go hand-in-hand. They can also focus on creating a better app user experience that reinforces customer retention for optimization of down-funnel activities.

4. Accept the new order

Brands and advertisers need to adjust to the fact that deterministically measuring campaign data accurately will become increasingly impossible. In this new world, we need to get comfortable with modeling and extrapolating data to understand campaign performance.

The prioritization of consumer privacy and removal of user identifiers has forced the advertising industry to evolve. Evaluating and adopting solutions for the future will help brands, agencies, and publishers to create relevant mobile-user journeys for consumers, while simultaneously protecting their privacy. The early innovators and adopters will find themselves with more and more reliable advertising signals that can help them scale their business without compromising user privacy.

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