IDFA Opt-In: Why Should Advertisers Care

Today, the $80 billion mobile marketing industry relies heavily on IDFA to track and build Lookalikes, attribution, and the like. Starting from iOS 14, opting in will no longer be a default setting: mobile users will be asked to grant access (similar to the way they allow push notifications). So what is going to change for advertisers?

What is IDFA?

The Identifier for Advertisers (IDFA) is a random identifier assigned by Apple to a user’s device. It is used to track and identify a user without revealing personal information. The identifier can be used to track which event is triggered and attribute it to the Ad view in different apps.

Let’s take a closer look.

Before 2013, Google and Apple were using permanent device identifiers (Android ID and [[UDID]] on iOS). There was one main concern,however: privacy. With iOS 6 in September 2012, Apple announced the IDFA (Google followed next year with GAID). The main difference between GAID/IDFA and Android ID/UDID is that users can reset GAID/IDFA at any time, while the Permanent Device ID is fixed. Therefore, users can now opt-in and opt-out of tracking the device in smartphone settings.

What is changing in iOS 14 and why this is important?

Starting from iOS 14, whose release is slated for September 2020, Apple will change the core principle of how IDFA works. Previously, IDFA access was turned on by default and users had to opt-out in the settings if they didn’t want to be tracked. Now, after installing the iOS 14 update for each application, users will be asked to opt-in to grant access (similar to the way they give permission for push notifications).

Experts estimate that the share of users who grant access to tracking will drop from 70% to 10%. This will not happen overnight, however, as it takes time for users to download and install updates, but the majority of them will have iOS 14 installed by the end of this year.

So why should advertisers care?

Today, the $80 billion mobile marketing industry relies heavily on IDFA for tracking, building lookalikes, attribution, and other tasks.

We asked Jonathan Juhn, Senior UA Manager at TwoDots mobile gaming studio, to describe the situation:

“Planning for IDFA opt-in is like removing the image from 80–95% of a jigsaw’s puzzle pieces and thinking about new approaches to assembling it as efficiently as possible”.

Сonsequences for advertisers

Here are the main issues:

1. Advertising tracking and attribution will be less precise. As a result, the quality of media buying will decrease, and cost per action will grow.
2. Building lookalikes based on events (with or without values) happening inside the application will be unavailable or limited.
3. The Audience Network and other advertising networks will be challenged.
4. The future of tracking systems like Adjust and Appsflyer is uncertain. Their tracking and attributions rely heavily on IDFA, and we don’t know yet if they are able to adapt to changes. Some companies hope to build a conversation with Apple and discuss how they can work in this situation.

Here’s what Adjust had to say on the matter: “Adjust will work with other MMPs, clients and partners to discuss these options with the Apple AppStore team, and we hope to find a solution that works within the AppTrackingTransparency framework by the release time of iOS14 in September”.

Others, like Singular, don’t believe that Apple will roll back and are looking for alternatives: “The challenge with that is it means that Apple needs to do us a favor and give us the IDFA. That means, it’s unlikely because they just killed it very publicly. Why would they have an appetite to give anyone that access again?”.

What alternatives do we have?

1. Apple announced a privacy proofed way of tracking called SKAdNetwork. Compared to IDFA, the SKAdNetwork application gets only aggregated statistics (e.g. at the campaign level) with lots of limitations and cannot track each user separately. This is currently the main alternative for most tracking systems (based on their posts in corporate blogs). It has several drawbacks. First of all, user-level tracking will not be available. Secondly, it only has a 24-hour window to gather data and, as a result, limits the apps with delayed events and big retention. Finally, it has strict limits on how many aggregated campaigns could be tracked, so the number is pretty low.
2. There is a way to track users by alternative identifiers between different apps. For example, if your app requires authorization through an email or phone number, you could use this data to identify users in other apps like Facebook. The main drawback of this method is that it doesn’t work for unauthorized users.
3. Another alternative is fingerprinting, or the attempt to identify users by the many characteristics of mobile devices like screen resolution, OS version, model, and language. Even though many companies have been trying this method for years, it’s not widely used because of the low quality of tracking and identification. It is very unlikely that companies will try to use it to circumvent IDFA restrictions.
4. This may lead to the rebirth of contextual targeting. As the transfer of data between different apps is limited, it is likely that apps with a specific audience will get another chance over Audience Network solutions. As an example, if a user is playing a hyper-casual game, it is likely that they’d be interested in installing another one.
5. Even though IDFA usage is limited, IDFV will probably continue to work. IDFV (identifier for vendor) is a unique identifier that is similar across different apps with the same vendor. There could be a chance for big publishers to promote one game inside another with proper tracking.
6. AppTrackingTransparency (ATT) may be a way to convince users to grant access to IDFA tracking. Before the popup app, developers will have an opportunity to explain to users why they are asking for permission, what they are going to do with the data, and why it is important that access be given. If done properly, the share of users who grant access to tracking could dramatically increase from the expected 10%. After all, some data is always better than no data.

What do the giants think about it?

Facebook doesn’t have any solution yet and suggests waiting for the next steps.

In Facebook’s last quarterly report, Michael Nathanson asked Facebook CFO Dave Wehner the following: “So all of our clients are worrying about IDFA and what it may mean. And I wonder, is this the change that we should be paying attention to? Because I would say, we’ve all been a bit numb to the changes that happened to this point. So I’d just love to hear your take on, is this something that we should really be aware of in terms of potentially slowing down your ability to drive ROI?”:

“I think it is something that people need to take very seriously and make sure that they understand. And so, yes, our advertising clients are asking us about what we can do to help maintain their performance and it’s an area of concern. <…> So it’s clearly something that we think warrants watching and something that we’re going to try and understand better as the year progresses. But we do think it’s a headwind. It’s not going to be a big impact in Q3, because the changes don’t start rolling out until the end of Q3, and there will be some phase-in period in terms of just upgrading cycles to iOS 14. But it’s definitely something to watch. I think this is an issue. Sorry”. — Wehner

UPD: a day after this research was published, Facebook came up with their reply to the changes. What they will do is: “not collect the identifier for advertisers (IDFA) on our own apps on iOS 14 devices” and “remind users that they have a choice about how their information is used on Facebook and about our Off-Facebook Activity feature, which allows them to see a summary of the off-Facebook app and website activity businesses send to Facebook and disconnect it from their accounts”.

Neither Google, Snapchat, nor Twitter covered the IDFA challenge in their Q2 2020 Earnings call.

Final thoughts

• An IDFA opt-in could dramatically change the mobile marketing ecosystem. Many do believe giants like Facebook and Google will be the first to suffer from an IDFA opt-in. In my opinion, the situation will be the complete opposite. The giants have lots of 1st party data (including behavior within social networks), which is good enough for targeting and optimization. While smaller Ad platforms do not have this data, and as a result, the performance gap will widen even more.

“With optimization and tracking becoming more difficult, the importance of creatives is on the rise. If you cannot control the effectiveness at the stage to whom and how you display ads and what happens after they click and install, you need to work on efficiency at the “what to show” stage. That is why we see a clear trend of Facebook and Google Marketing Partners that are focused on creativity. Aitarget is passing creatives crafting over to AI, which finds a response from many companies”.

• The IDFA challenge could be the push platforms need to develop internal shop solutions faster. If you store all data — including clicks, add to cart, purchases, and financial info — you don’t need to worry about losing data between apps and therefore can efficiently optimize campaigns. The first steps have already been defined with Facebook Shops, Google Shopping, and Shopify Shop.