Appocalypse now: How Apple’s iOS tracking cull hits data governance, tech stacks, targeting and the $200bn mobile ad market
In September, Apple will release its iOS 14 update and a far more overt request will be made to iPhone customers asking if they want to be tracked - for every single app on their phone. Google could well follow. It’s likely to trigger oceans of sweat and tears for brands and marketers throughout the mobile marketing and app supply chain – and comes just as Covid-19 has pushed digitisation and e-commerce to new heights. Michaela Michaut of AdoreBeauty.com.au, Chris Brinkworth of SynergyStack, Joey Nguyen of Venntifact, and Geronimo’s Matt Hunt unpack the impacts.
You need to know this:
- Apple is expected to launch iOS 14 in September or early October, with major implications for brands and ad partners
- All apps on the App Store will have to use explicit wording from Apple asking existing and new users if they wish to be tracked across apps and around the web, and spell out precisely what and how data will be used to track users
- Polls suggest it could quickly wipe out more than 80% of targeted advertising on iPhones as only 14-19% opt in
- But implications go much further than performance marketing because data from Apple’s Identifier for Advertisers (IDFA) is used in many parts of the media and marketing supply chain
- This will significantly impact measurement and attribution, retargeting and data partnerships – and the data that marketers can safely put into customer data platforms (CDPs)
- Marketing tech stacks must be quickly re-examined for functionality, compliance and governance
- “In a few week’s time, you’ll be rebuilding your entire mobile marketing tech stack that you’ve been working with” – Chris Brinkworth, SynergyStack
- “Apple states if the user chooses to opt out of the IDFA, they should not be retargeted with identifiers including fingerprinting and including email addresses” – Joey Nguyen, Venntifact
- “80% of search is mobile-based, 40% of online transactions are mobile-based … This is going to effect digital marketing across the board” – Matt Hunt, Geronimo
Apple moves, Google to follow?
Just as Apple’s tracking crackdown on its Safari browser is forcing Google to kill off third party cookies from 2022 (rendering up to 85% of current digital marketing useless), the iOS update is likely to effect similar sweeping change within the mobile ecosystem.
Apple says the move is to protect its customers, but it will also hurt Google and perhaps Facebook too. While Apple has become the world’s most valuable brand by making desirable phones and computers, with some content and ads on the side, the duopoly are reliant on monetising the data they have acquired on much of the world’s population through advertising. With the tracking and privacy changes contained within iOS 14, Apple will cut off a chunk of that supply, while ostensibly taking back some control of who does what with its customers’ data.
While its approach, proposed alternative solutions and lack of notice to market has left many in the industry fuming that Apple does not understand how the ad business works, there’s an argument that it doesn’t really need to know. As Joey Nguyen, Co-founder at martech and CDP advisory firm Venntifact, tells Mi3, “you could definitely say this hurts Apple’s competitors more than it hurts themselves.”
“The changes really impact any brand on a major level that interacts with users in a mobile app context.”
Impacts for marketers
At the heart of the change is Apple’s Identifier for Advertisers (IDFA), which since creation in 2012 has become central to the mobile ad industry, playing a major role in how ads are targeted, conversions tracked and app pages optimised. Even Facebook uses IDFA for a significant percentage of its advertising technologies.
In short, according to this useful explainer from Clearcode, ad tech companies use the IDFA to enable:
- Ad targeting and retargeting
- Frequency capping
- Campaign measurement
- Ad fraud detection
In a few weeks time, every app on every iPhone will ask users whether or not they wish to be tracked for advertising purposes. If they say no, they have opted out of IDFA. That means advertisers won’t be able to target them – and the implications go way beyond apps.
“The changes really impact any brand on a major level that interacts with users in a mobile app context,” says Venntifact’s Joey Nguyen. He cites market polling that suggests as few as 14-19% of iPhone users will opt in to tracking.
The impacts are wide ranging because Apple’s IDFA is used in more places than brands may be aware. As well as attribution and retargeting for those with apps, there are effects for brands that have become reliant on third party apps. Facebook’s audience expansion is one such example, says Nguyen, where brands may be attempting to target audiences based on their behaviour.
“Facebook gives you the option to extend that into their mobile app network, but that is completely dependent on IDFA. So those extension options that may increase the reach or the effectiveness of the campaigns that you were running before are now going to be off the table,” suggests Nguyen.
Data partnerships where brands try to fill in the blanks on their users will also be affected, he warns.
“A lot of these data partnerships have a range of identifiers, but the IDFA is absolutely a key one. So not being able to link, for instance, between two brands to know ‘this is the same user’ is another thing that will definitely be impacted by this.”
“A lot of tools use Apple's Identification for Advertisers for onboarding first party data [such as that used in customer data platforms, or CDPs]. So if you are investing in technology from Adobe or Salesforce or Oracle, the IDFA is used to onboard that data.”
Stack impacts and incoming governance issues
A further challenge for marketers is that the changes could hit their core systems and data.
“A lot of tools also use the IDFA for onboarding any of their first party data,” such as that used in customer data platforms, or CDPs, says former eMitch exec and SynergyStack founder Chris Brinkworth. “So if you are investing in technology from Adobe or Salesforce or Oracle, the IDFA is used to onboard that data.”
As such, Venntifact’s Joey Nguyen urges marketers to speak with vendors and agency partners sooner rather than later to see which aspects of their technology stack is reliant on IDFA – and what the implications for their business will be.
But he warns of side effects that are not yet fully understood for otherwise go-to workarounds.
“The signals that aren't going to be affected are email address, phone number etc. When a user trusts you with that information, when they log in, you still have that available. So I would expect a lot of brands will prioritise incentivising authentication and giving the users a better experience if they identify themselves,” he says.
“But where that comes with a warning is that the wording of Apple's terms of service in this area are very unclear. Apple has said if the user chooses to opt out of the ID for Advertisers, they should not be retargeted with identifiers including fingerprinting and including email address.
“That is explicit in Apple's terms of service, which could mean things like using a measurement partner that has its own fingerprinting technology to try and get around the IDFA is a breach,” warns Nguyen. “It could mean if a user doesn't give you IDFA consent, that targeting them on Facebook with their email address is a breach.”
Whether and how Apple can monitor and enforce this aspect of its policy remains to be seen. But it could expel apps from the App Store if it considers them in breach. Nguyen urges marketers to stay tuned, “Because if Apple is intending to stop brands retargeting based on email address, this obviously has much wider-reaching impacts.”
Ad supply chain impacts
SynergyStack’s Chris Brinkworth forecasts serious ramifications throughout the advertising supply chain, with ad networks and DSPs “majorly impacted”.
But there will be some positive outcomes. Cookie bombers will fall over, he says, because Apple’s suggested replacement solution for ad measurement and app install attribution –SKAdNetwork - uses last click attribution. That also means businesses such as Facebook and Google will not be able to claim credit via view-through attribution models (also known as impression tracking).
On the flip side, Brinkworth thinks more spend will be channeled to Apple’s Search Ads, while app developers, deprived of ad revenue, will be forced to try and make more money from in-app purchases, of which Apple takes a 30% cut.
Brinkworth also points out that the move could impact both international and local streaming platforms, with the likes of Netflix, Twitch, Prime Video, Kayo and Foxtel “having a harder time finding audiences if they cannot track their target install base as precisely as before.”
Ultimately, Brinkworth thinks Apple’s move is the latest luminaire in a now well-lit path for the marketing and ad supply chain around privacy compliant data.
“It's all going to come down to the fact that if you don't have a good chain of custody and knowledge of where that data came from initially; which company you either acquired information from or which consumer you collected that information from and the chain of custody of the opt in and permission went along with that line of data, then you shouldn't be using it.”
“As marketers, we have a responsibility for the privacy of our customers’ data, but we have a responsibility for relevance as well. And it feels like in some ways this new update is going to put those two at odds.”
The digital marketer’s view
“There’s nothing like a deadline to really hone in people's attention to a particular issue,” says Michaela Michaut, Head of Acquisition and Retention at AdoreBeauty.com.au. “Knowing that we have a matter of weeks, not even months - or years in the case of 2022 and Chrome - definitely puts it onto our radar.”
“I definitely see implications on our marketing as an online-only business that’s traditionally very performance marketing-led. Our ability to target our customers with increasing relevancy is incredibly important,” she continues.
“Any retail business that is incredibly customer focused is genuinely passionate about delivering relevant ads to customers and about finding relevant people for their brand. So I think this really makes all of those elements far more challenging as well, even before you get to the efficiency side of spend and targeting and so forth,” adds Michaut.
“There's a real human element here. As marketers, we have a responsibility for the privacy of our customers’ data, but we have a responsibility for relevance as well. And it feels like in some ways this new update is going to put those two at odds.”
Meanwhile, given the industry’s long struggles to move away from last click attribution, Michaut is not entirely convinced that Apple’s proposed shift back to last touch is progressive.
“As a digital marketer, it doesn’t sound like an ideal solution.”
“Is it so hard to predict that a privacy-led advertising model would come to the surface? I don't think so. There are huge amounts of data available and able to be processed if you know how to do it.”
Time for a privacy-led advertising model?
Matt Hunt, founder and CEO of mobile customer experience agency Geronimo, says the impacts of Apple’s changes will be profound.
“80% of search is mobile based, 40% of online transactions are mobile based. Twenty eight billion dollars in the US is spent on mobile search every year, and it accounts for about 70% of all digital spend,” he says. “So it's very difficult to decouple mobile-based advertising from the broader ecosystem.”
Hunt thinks Apple’s changes will affect digital marketers around customer acquisition – and will also depress the value of Apple-based users and the prices brands will now pay to reach them.
“What Apple’s done has effectively reduced the amount of inventory available to effectively reach your audience. And while there's some seemingly good news, I think we're expecting that the price of inventory will actually go down for Apple based users,” says Hunt citing estimates that the value attributed to those users is going to drop around 60%.
“But that's not ideal. The reason it's going down is because it's less attractive than it was before, because it's very difficult to understand who those people are and attribute marketing activity off the back. So I think anyone who's doing any sort of digital marketing is going to be affected by this.”
Hunt says the iOS 14 changes also hampers the ability to achieve CX nirvana - the ‘single view of the customer’ across channels, on and offline. “So we need to rethink how we go about doing that.”
But Hunt is optimistic that the marketing and advertising industry has the ability to find solutions.
“IDFA is one signal that's been a big pillar and a foundation of how we think about connecting with customers. But it's only one. And in a recent conversation I had with someone very senior at Facebook I said, we think this is going to have a big impact on your business. Their response is ‘we are far better placed than a lot of other organisations,’ because they have huge numbers of signals that they can use to simply understand audiences to connect them with brands,” says Hunt.
“And I think from our standpoint, we've anticipated this for a long time. Is it so hard to predict that a privacy-led advertising model would come to the surface? I don't think so.
“There are huge amounts of data available and able to be processed if you know how to do it,” says Hunt. “So yes, this is a huge change. But I'm optimistic that we'll navigate this in the way that we're navigating cookies and all the rest of those things. The best marketers are going to navigate this - and they'll create the winners and the losers.”
Mi3 Special Report: Australia's looming $1bn retailer media market
- Australia's retailers are gearing up to become major media channels.
- US retailers are already displacing 'legacy' publishers.
- All retailers are eyeing media, not just supermarkets and FMCG.
- Mi3 supported by Resolution Digital have produced a 28-page report with cross-industry views on what you need to know.
Expert analysis & market impacts for brands, publishers and agencies.Get ahead of the curve. DOWNLOAD THE REPORT HERE DOWNLOAD your 28-page report here.
As much of Australia looks forward to emerging from long lockdowns in the coming weeks, there is huge pent-up demand for retail therapy. Scentre Group, which operates 42 Westfield shopping centres across ANZ, has polled thousands of customers on their Christmas plans. The results should give brands and retailers some pre-festive cheer.