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News Plus 5 May 2021 - 3 min read

'There will be blood': 10% user opt-in rates hobble Australia's ad industry as Apple's tracking changes bite

By Brendan Coyne - Editor

How are we tracking: Brands and publishers are asking Apple users to let them track. So far, it's not working very well. Pic: attprompts.com

Opt-in rates to ad tracking by Apple users are far lower than predicted, with major ramifications for Australia's digital ad industry. While early days, publishers have warned that things may not improve. Some think the stability of Apple's ID for Advertisers, a crucial cog in the ad machine, is seriously compromised, with billions of dollars worth of advertising impacted.

What you need to know:

  • Early opt-in rates currently averaging 10 per cent.
  • Even best performing publishers shedding vast majority of tracking permissions for Apple users.
  • "Blood before the year-end" for some.
  • $3.6bn of annual ad spend affected if current rates continue.

Opt-in rates to tracking are far lower than anticipated following Apple’s iOS update. Media and digital agencies told Mi3 they are seeing 90 per cent of consumers refuse permission to track, with major ramifications for publishers, brands and the broader digital supply chain.

Globally, opt-in rates stand at 13 per cent in the week since Apple’s iOS 14.5 rollout, and have reached just 5 per cent in the US, according to Verizon-owned analytics provider Flurry (update: today dropping to 11 per cent and 4 per cent). Ad industry execs suggest it is far too early to draw conclusions, but publishers that have been experimenting with permissions for months in anticipation of Apple’s master changes do not expect much improvement.

As of 4 May, no Australian publisher canvassed by Mi3 has yet seen opt-in rates above 35 per cent, the upper end of the IAB’s anticipated range, with IAB CEO Gai Le Roy warning advertisers to expect "significant negative impacts in terms of efficiencies and effectiveness". 

A Melbourne-based performance agency said its visibility of the mobile ad pool suggests a 9 per cent opt-in rate. One of the major ad holding companies told Mi3 its trading platforms are seeing around 10 per cent of Apple users opt-in to tracking – and do not expect it to rise above 20 per cent in the medium term.

This poses “stability risks” to Apple’s broader ad ID system, IDFA, used throughout the ad supply chain, per the firm.

 

Chicken Little?

While the initial fallout will be “considerable” opt-in rates may increase over time, according to Clay Gill, CEO at IPG’s Matterkind, formerly its Cadreon unit. “The question is by how much,” he said. “It’s too early to draw definitive conclusions.”

In the meantime, Gill suggested the cheaper end of town will be most affected, with “considerable impact” on performance numbers, though he added this may end up cleaning up the ad ecosystem, flushing out low rent run of network providers and affiliate marketers. Facebook, he added, “is the one sitting here saying ‘oh shit’” with the platform telling advertisers to expect smaller audiences, higher costs and fluctuating performance as a result.

While Gill thinks premium publishers “will be fine … because they offer value and people will opt-in”, others are less convinced.

John Vlasakakis, head of organic search at Next & Co, said the firm’s mobile ad buyers report that opted-in iPhone inventory is down by 91 per cent. For some publishers, that will mean “blood before the year-end”, especially for those without strong first party data and the ability to properly use it, he added.

Suzie Cardwell, GM for Data & Ad Product at News Corp, said the publisher had largely escaped any impact, as most of its mobile traffic comes through the web rather than apps, and that broader changes such as Google’s retiring of third party cookies are also mitigated by News’ first party data strategy – via both log-ins and people coming direct to its platform.

“That means we can still collect data on behavioural and content consumption – that’s not interrupted by Google and Facebook,” said Cardwell. “But who knows what they are going to do next?”

Hearts & Science Ollie Fifoot: "The lack of detailed information on how an individual has interacted with a campaign will be felt most acutely on our performance based clients, potentially having a negative impact on CPAs." Pic: attprompts.com

Big hits

Southern Cross Austereo is increasingly reliant on apps, having launched ‘one app to rule them all’, or Listnr, earlier this year. Head of Digital Commercial Jonathan Mandel said opt-ins so far were significantly higher than Australia’s ad industry is reporting, though declined to publicly disclose numbers.

“Overall when looking at the high single and low double digit figures coming in from the rest of industry – we’re quite pleased with our success rate so far.”

Mandel suggested the higher outturn is a result of “premium content and a transparent value exchange”.

He said SCA will “continue to optimise” its requests to track and “hopefully we will see improvements”. However, he pointed out that the publisher has already been testing and optimising permission to track requests for some months. As such, “there are too many uncertainties” to predict an upturn, said Mandel.

Former Westpac head of digital & media technology turned consultant, Nick Barnett, suggested those hoping for a dramatic increase in opt-in rates will be disappointed.

"Most Apple users are voting against being chased around the internet by creepy ads – who could have predicted it?” he said, warning the outcome will be “more painful than predicted” for many publishers, app developers and adtech firms that fail to adapt their business models.

Based on earlier industry estimates of a 39 per cent opt-in rate, Barnett last week forecast some $2.2bn of annual Australian ad spend would be affected by Apple’s changes.

At current rates, he revised that estimate to a “worst case scenario of up to $3.6bn… with an even bigger hit to advertisers’ targeting performance in the short term”.

Barnett advised advertisers and publishers to move on – and fundamentally rethink strategies.

“The thing to remember is that hyper-targeted advertising is a lot like Game of Thrones,” he suggested. “We enjoyed it for a while but now it’s coming to a disappointing, confusing end, so it’s time to start a fresh series."

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