Apple just castrated IDFA, sending an $ 80 billion industry to turmoil

That tremor in the Force that you felt yesterday was probably not a surprise to be able to send your car keys to Apple’s new iOS 14 or do an offline translation in real time with Siri. Instead, it was a shot from Apple in the bow of a $ 80 billion industry.

IDFA is dead.

Long live the IDFA.

Yesterday, Apple announced iOS 14, its new mobile operating system for iPhones and iPads. The company did not announce, as mobile marketing specialists expected, the death of IDFA.

Instead, Apple essentially castrates the identifier for advertisers. Castrated. It made him basically useless without actually killing him.

Like Google’s advertising identifier, GAID, Apple’s identifier for advertisers helps mobile marketers to attribute advertising spend. What that essentially means is that when a company like Lyft or Kabaam runs user acquisition campaigns to win new mobile customers, a mobile metering partner like Adjust, Singular, Kochava or AppsFlyer can help them connect a click on an ad. with an eventual installation of the application on a specific device. (Full disclosure: I make some queries for Singular). That helps Lyft know that an ad worked and that the ad network they used for it was successful.

Also, if the person who installed that app eventually signs up for an account and shares the ride, Lyft knows where and how to attribute the results of that marketing effort and connect it to the ad spend that started it. Even better, from Lyft’s perspective, you can use IDFA to essentially tell mobile ad networks: I like users like this; go find me more.

All of that will disappear with iOS 14.

Yesterday, Apple killed the IDFA without killing the IDFA, by pulling it out of the depths of the Settings app where almost no one could find it, although more and more people were finding it and turning it off, and explicitly engaging it for each unique app if an app wants Using IDFA, iOS 14 will present mobile device users with a great dialog like this:

Would you say “yes” to allow an app or brand permission to “track” you through third-party owned apps and websites?

Neither will 99% of consumers.

This is really a cool move from Apple. Marketing specialists really can’t be bothered to lose IDFA ability, because technically it’s still around. Apple can polish its privacy credentials without removing large amounts of criticism from brands and advertisers because, after all, who can argue to give people more rights with their personal data?

And make no mistake: this is a great move for user privacy.

But it is also a big problem for a massive industry.

AppsFlyer estimates mobile app installation spending at about $ 80 billion in 2020, and that estimate was made before COVID-19 put mobile in high gear for the gaming industry, one of the biggest spenders in the mobile user acquisition space, so it could be low. And while Android accounts for more than twice as many app installs as iOS (22.5 billion in Q1 2020 vs. 9 billion, according to App Annie), the numbers are almost reversed when it comes to spending per platform.

Consumer spending on iOS reached $ 15 billion in the first quarter of 2020, compared to $ 8.3 billion on Android, growing 5% year-over-year on both platforms.

That means that iOS users are almost twice as valuable to advertisers and publishers compared to Android users. AND that It means that iOS represents a disproportionate share of those nearly $ 80 billion in user acquisition expenses. We are talking about tens of billions of dollars here, most of which Facebook and Google accumulate in their advertising ecosystems.

Now large amounts of those billions are at risk.

Not that advertisers don’t need to advertise yet. And it’s not that they stop completely. But it will be more difficult to advertise if they don’t think they can effectively measure the results of their ads.

Perhaps most critically, this affects spending on the two largest platforms for mobile user acquisition: Google and Facebook. Google and Facebook are perennially at the top of the charts for the highest return on ad spend for a reason: They typically have more data on more people to make smarter decisions about ad targeting, plus more opportunities to display those ads in high value contexts.

Now they face some risk for that privileged position.

Two of the ways Facebook enables smart acquisition of mobile users for mobile brands are App Event Optimization (AEO) and Value Optimization (VO). AEO searches for new people for you who are similar to the clients you already have in your applications in defined stages, while VO searches for people who will spend a certain amount of money on your mobile application. It’s going to be much harder for Facebook to run these types of campaigns if Apple refuses to let Facebook know what people are doing in an app after installing it.

Facebook could do this if the Facebook mobile software development kit is installed in the code of an app, for example. The Facebook SDK is currently found in more than 80,000 iOS apps, according to MightySignal, including more than half of the 200 largest iOS apps on the planet.

No one knows how Apple would react to that, but since Apple has rejected Facebook’s social gaming app at least five times, it probably won’t be good.

Similarly, Google Ads can be configured to find new users for your mobile app based on “tROAS” or the target return on ad spend. To know that your ads work, Google needs post-installation data from users you acquire through Google Ads – data that will be more difficult to obtain now, if not impossible. Like Facebook, Google has its own SDK on many mobile apps: 69% of the top 200 iOS apps with gross revenue, and more than 115,000 iOS apps in total, so you can get data that way.

But again, this will not make Apple happy.

And just because Facebook or Google have their SDKs in many apps doesn’t mean their software is in every app … so there is a potential barrier to using your mobile user acquisition services for mobile apps at the current level of sophistication in the not too distant future.

However, Apple is not just completely leaving advertisers in the stream without a paddle. After all, the company earns $ 1 billion annually with its own ad network, Apple Search Ads, which is fully focused on acquiring mobile users on the iOS App Store.

Advertisers who cannot track the effectiveness of advertising do not remain advertisers for long.

So Apple has been working on a new privacy-safe framework for mobile attribution, the science of identifying which ads generate what results, for the past two years. It’s called SKAdNetwork, and Apple just updated it.

SKAdNetwork promises to let advertisers know which ads resulted in the desired actions without revealing which specific devices, or which specific people, took those desired actions.

So again, you are a mobile brand and you want users. It’s October 2020, and 70% or more of iOS users are now on iOS 14. Access an ad network like Vungle or AdColony or Chartboost – or Facebook or Google, for that matter – and start an ad campaign. They show their ads to potential new customers for mobile devices, and when you click on it and download its app from the App Store, Apple will take care of sending a cryptographically signed notification, a postback, to the ad network. That return will not include any user or device specific information, so while it will validate the conversion for marketing purposes, it will not reveal any personal information about your new app user.

Google and Facebook are now like any other ad network: They line up to get a pinch of privacy-safe information from Apple.

Brands have until September to prepare to measure the results of their mobile advertising campaigns in this new way. Mobile measurement providers plan to help, of course.

Adjusting Technology Director Paul Muller said today, “We will continue to allow our customers to not only view their data for all of their campaigns on iOS and Android, but also to make sure that this data is actionable.”

Singular CEO Gadi Eliashiv has already announced SKAdNetwork support “first in the market”, saying that the company’s technology will make it “scalable, simple and seamless for mobile vendors”, and that Singular has been working on SKAdNetwork support for “over a year now.”

Other mobile measurement providers will undoubtedly follow suit.

However, the most interesting thing in the coming days and weeks will be how Facebook and Google react to Apple’s announcement. SKAdNetwork has the potential to make your cozy user acquisition benefits somewhat less advantageous. But they also have vast resources and vast amounts of data on billions of people.

We live in interesting times!