The IDFA Tsunami: What’s Next for Mobile, Part 1

Leo Giel | September 23, 2020
CRO

On September 10th, YouAppi CRO Leo Giel joined a panel of executives in the mobile industry to discuss upcoming IDFA changes and new opt-in requirements. The panel, hosted by Upnotch, was titled: “The IDFA Tsunami: What’s Next for Mobile?” Panelists included Claire Rozain, UA manager at Product Madness; Growth Expert, Olivia Smith, and Garrett MacDonald, EVP of Sales at Kochava. The panel was moderated by Chris Cunningham, CEO and Founding Partner of C2 Ventures.

Below, read part one of our recap of the webinar covering key takeaways from the panel. Make sure to check back for part two of our recap series, where we cover the Q&A portion. You can watch the full webinar recording on YouTube

Key Takeaway: It’s been clear in Apple’s moves leading up to this that the changes were coming. What’s different about this announcement in comparison to prior changes (for example, Apple’s Limit Ad Tracking privacy in 2012) is the lack of clarity. Rather than indicating the death of attribution, it’s become clear that the complexity of the IDFA changes require the need for attribution partners.

Garrett: For a lot of us the writing has been on the wall for several years. There’s been a history of bread crumbs that Apple has been placing back from 2016 with LAT settings enabled and then 2018 with the launch of SKADNetwork. In 2019, they rolled out a rule that apps in the kids’ category could no longer use the IDFA. That went into effect earlier this year. 

There’s been a lot of talk about this being Apple’s move to eliminate MMPs from the ecosystem as if it’s an existential threat to players in the space. I think that over the last 8 weeks, the advertising ecosystem has really come around to the fact that if there’s one thing that’s true about this announcement, it’s that it’s confusing and there’s a lack of clarity. 

If you think about conversion bit theory and conversion bit values, and reorienting all of your marketing analytics around data provided through SKAdNetwork, it’s really difficult and incredibly demanding. The perception was that it was a threat to the MMPs. I think people are realizing that the role of an MMP becomes even more important given the rollout of IDFA changes and opt-in requirements. I think there’s an increased need for MMPs to help advertising retool all of the systems and infrastructure we’ve built.

Olivia: The one thing that seemed a little bit different to me was the fact that when Apple rolled out the location tracking, it was pretty clear and straightforward about what was actually going to happen. 

I think with the recent pull back on the release I think that Apple did feel some of the heat that was being put on them by a lot of the top advertising firms. I mean it’s been everywhere. It’s been in AdWeek. Everyone is talking about it and we’ve seen it even negatively affect their stocks because of that. It’s such a ripple effect and I don’t think they anticipated the amount of heat they were going to get. But, there’s a real lack of clarity and I think they’re trying to make up for that now. They’re still not being really open with it even with that.

Apple doesn’t have a responsibility to provide all the resources to make [marketers’ lives easier] on the app store. But, with all the things that have come before this, there’s been more documentation. What’s missing here is the documentation. Like if I go and look for guidelines related to the IDFA changes, there’s nothing. But, if you go look at anything that came out around location tracking (although location tracking isn’t advertising, it’s still really pertinent to a lot of the apps that are in the same space) the documentation is there.

Key Takeaway: Apple’s decision to postpone IDFA changes until 2021 is good news for all players and means more time to plan, test, and innovate solutions.

Leo: [The postponement] means a longer runway. We’ve been in development on identity graph solutions and testing our identity graph solutions and ghost ad campaign solutions. To my surprise, they have been much more successful than we expected. I was expecting to see percentages like 50-60% opt-in success and we’re seeing 80-90% success. So, from my perspective, it’s just more time to perfect more campaigns to run, more opportunities to build a better product, and prepare for D-Day or the tsunami as we call it.

Claire: I think this time is definitely welcome by all the advertisers to test all the MMP solutions but also to go deeper into the SKADNetwork. We are also happy it’s after Christmas because the Q4 season is quite a huge one and really profitable. To me, this postponement makes sense because we didn’t have enough time to work on things. Now advertisers have time to test and consider all the solution options and really have a choice of which to use. We will have stability on our algorithm as well because until Christmas our UA and video campaigns will be sustainable. So I’m quite happy about the news.  

Olivia: I think it gives people more time to digest and get a better idea of what’s going on. Hopefully [Apple] will give more information as this pushback is happening. We have significantly more time but I think it really helps, like Claire said, with Q4 being really big in the banking, shopping, and gaming industries. It just gives people an opportunity to one, maximize that quarter and then two, prepare.

Garrett: But I would say there are really 3 types of people in this world, and this applies to advertising as well. A third of the people will take this 6 months and do nothing. A third of the people will aggressively test solutions, will work with their MMP partner to do A/B testing to evaluate consent solutions, and still have the ability to deterministically measure push campaigns. And, then a third of the companies will push the envelope on what is possible. 

Kochava is in that latter camp where we’re developing and innovating solutions for really advancing what is possible with attribution and measurement, incrementality testing, A/B testing, push messaging and consent management, all tied in one. So, I think there are 3 camps that break out over the next 6 months. There’s going to be a lot of innovation that will help support this rollout.

Key Takeaway: This move looks like Apple making a strategic play to launch its own advertising solution. The task falls on developers to innovate solutions for advertisers to create a seamless opt-in flow optimized to their user life cycle.

Leo: I’m sure, part of what we’re seeing from Apple is a set-up for them to launch an advertising solution. If I were Tim Cook and I was thinking about how to grow the biggest business in the world, I would look at what worked for Facebook and Google. So, absolutely, brands need to be working across many channels. I think it’s shortsighted if you don’t.

Olivia: As Leo said, I think [Apple] is going to roll out its own advertising platform. To be honest, I think it’s going to be some more time but I think they’re working on something. You know SKAd is something that if you have the infrastructure to support and build on it it works great. But, most of my current clients and even the company I’m working for now, are focused on the user life cycle and in-app notifications. 

I think that if you’re not currently testing and optimizing for a fluid opt-in and really strategizing like how does your brand fit into like how the opt-in works and how can you make it really seamless and less scary for your users, you’re not going to make it. Because the IDFA changes are not going to go away. Apple rarely if ever has rolled back on something like this. You really need to be optimizing for it. That’s what I’m working on with 90% of my clients right now. How do we make this seamless and make people want to opt-in to the IDFA changes versus being cut off at the knees?

Leo: It’s really like what we saw when the location boom happened. It’s up to the developers. Developers have to get clever. I see developers really getting serious. They’re heads down trying to figure out nice ways to present that message. 

It’s a new boom. You’re going to have ID companies popping up everywhere. It’s going to be the new fraud innovation. You had 10,000 fraud companies pop up in two years. Same thing. Over the next couple of years you’re going to see ID companies, ID locker companies. But it’s not something that’s going to kill the industry and I think it’s important that our community comes together. It’s really our problem to solve and let’s not just rely on Apple. Let’s gather and build something innovative without Apple.

Key Takeaway: There are limitations to SKAdNetwork that necessitate the support of MMPs to innovate a frictionless user opt-in experience.

Garrett: I think there’s an important part about limitations with the SKADNetwork. On the one hand, Apple has made it clear they don’t want to get in the middle of the consent management part of it. The IDFA changes, as an example, don’t support GDPR or CCPA. So if you talk about disrupting or adding friction to that user experience, there’s got to be some way that a developer can communicate that value exchange with their end-user and then deep link that user directly into app permissions to influence that user in a non-scummy way that is compliant with both the spirit and the letter of the law that Apple has announced under the guise of privacy and user data handling.

But the reality of it is adding another step in that flow is definitely going to add friction to that user experience from an onboarding perspective. So, as the only MMP with a consent management platform built into our solution, we are doing a lot of innovation around that. We launched our solution in advance of GDPR and we got a two-year head start on this. 

The second point that’s really important is SKADNetwork, on its own, is insufficient for an advertiser that’s running multi-channel campaigns. So, if you think about incrementality testing, media mix modeling, multi-channel attribution, multi-touch attribution. All of these SKADNetwork solutions with a deterministic cohort-based framework really need to be measured against the probabilistic, device-based attribution. So, SKADNetwork on its own, while Apple has announced it is the de facto solution for iOS, doesn’t support a lot of larger advertisers. 

The third point is there are no winners except Apple. I think that’s what’s forced their hand to delay and rethink things. There’s a lot of speculation that as long as Apple is in an epic battle with Epic Games, its heavy-handed approach will need to be moderated to some extent as long as companies like Zynga and Facebook are very clear about the challenges they’re going to have with monetization. I think these things will continue to force Apple to rethink its banhammer approach and particularly. These changes were also veiled as user privacy but Apple is able to use the IDFA. So, it brings up some questions around that.

Claire: I think that on my side I would be a bit less pessimistic on the SKADNetwork. There is not one way to target your user. You can also use a social ID. You can use a phone number. There is a lot of different data that can help you target your user. I’ve never seen as much innovation since the SKADNetwork has been launched. Especially with the IDFA and cross-promotion. I think this is going to be a big thing moving forward on Apple. So, I wouldn’t say it’s not a good thing. I think it’s a good thing to change the ways we think as marketers and do things differently.

Key Takeaway: The IDFA changes will prompt advertisers to innovate workarounds to the App Store.

Olivia: In one of my previous roles we had to run Facebook ads for a non marketplace facing app. We had our own landing page that had an Apple toolkit enabled and people had a seamless experience downloading the app. I don’t think that’s the approach that everyone’s going to be able to take to run these types of ads. But at the end of the day, we had a business team that ran really tight analytics. We were able to measure that it worked for us. I think we’ll see a little bit of that. I don’t think people are going to take their apps off the app market because that just doesn’t work. But, there’s going to be some really smart workarounds that get people to that acquisition point and that will probably be one of them. 

We can’t have an advertisement that says click here to download. But, we can go to a landing page that allows them to download it very seamlessly. We might see a lot of that and i think it makes sense too because you can also build on the experience that the user has. Not everyone is able to easily download apps from the app store. Sometimes they forget their password and other different scenarios. When we ran that process we actually could go around that because of how it was set up. So we can really focus on the user’s experience from that perspective. But, it’ll be interesting to see if anyone else starts testing that to make it a very unique experience. But again, it doesn’t work for everyone.

Leo: You know, trying to circumvent Apple doesn’t work for everyone. You’ll see more players innovate the way that they put their brand or their product on a consumer’s device. Definitely it will be a point that a lot of folks are focusing on.

Key Takeaway: While many advertisers have invested more in Android since the announcement, other advertisers have shifted more budget to iOS to leverage the decreased competition. 

Leo: I’ve seen shifts in budgets to Android and advertisers hesitant to launch iOS campaigns because they didn’t know what was going to happen and they thought they were wasting money. The reality is that Android is still a very big player. Globally, it’s much bigger than iOS. So let’s not forget about Google and the Android platform. 

Definitely, we started to focus more on Android and build out a first class Android platform for retargeting and UA. As I said, we also have been building out unique approaches to identity tracking and targeting on iOS. But, definitely, budgets have slowed down. People haven’t stopped spending money, they’re just being smarter about it.

Claire: I think I had quite the opposite reaction on my side. I saw a lot of advertisers spend a lot on iOS because of the release that was about to happen. A lot of advertisers wanted to shift spend this month even more and create more audiences on iOS to test them. What I saw as well was some advertisers saw some opportunities to continue to spend even more on iOS. For example, for a lot of games, iOS has the highest LTV. Even more so for games that have a really high USP. So some people said let’s spend even more because we will have less competition. 

Garrett: I’ve seen a little bit of both. I’ve seen a run on iOS because of the deterministic capabilities. And, because of the potentially short window with which an advertiser can buy on iOS deterministically and measure the feedback loop. 

I’ve also seen a run on data for companies in the ad tech space that are trying to enrich their bidding and buying algorithms. But also advertisers and marketers looking to enrich what they know about their users bc typically all you know about your users is the ad signal, the impressions and the clicks they’re exposed to, and then what happens inside the app and/or on the website. Whether they engage or reengage. There’s a whole constellation of other attributes and metadata that can inform targeting and insights about your users to help run more effective campaigns. That said, there’s been a massive run on UA data knowing that first-party data and second party data are really key to building effective marketing strategies.

Key Takeaway: Following IDFA changes, it seems likely that Google will follow suit with GAID but will take a drastically different approach than Apple.

I think there are two camps that are developing. There’s one camp that says, yes, Google follows suit within 12 months like they usually do. That’s particularly obvious knowing that they’ve made it very clear that over the next 20 months, third party cookies are dead. So, it would be a natural progression for them to do something about GAID. 

But there’s another camp that’s growing in popularity. This camp says Google won’t follow suit in light of this banhammer approach from Apple. The difference here is that Google, in their deprecation of third party cookies, gave the ecosystem 24 months to innovate whereas Apple gave us three months. I think that Google will take a lot of learnings from what happened with Apple and take a different approach. The open nature of Android is a lot different and so I think you’re going to see a different approach. We’ll likely see something from Google in the next couple of months, but it’s clear that [Apple’s] banhammer approach won’t work.

Olivia: I think we could see something within a year of when IDFA changes actually kick in. But I think Apple is really trying to be the leader in mobile privacy. They have always put the consumer first with little consideration to the apps and advertisers on their platform. I think we’ll see a little bit of more privacy for all perspectives from Google. I think they’re going to wait and see how this plays out. But, I think they’re going to be a little bit more lenient towards the advertisers.

Google ads have existed for a very long time for a reason and people still use them for a reason. I think Google understands the level of investment that a lot of companies have in their products and also the longevity. They make a significant amount of money from advertisers. I would say anything from 12-24 months we’ll see something happen. But I think it will have less of a drastic hit to all of the advertisers because they’ve seen how it played out with Apple.

Leo: And, let’s not forget that Google is an advertiser and a publisher. They make apps. So, they understand the pain much more intimately. 

Olivia: Yes. They have as much skin in the game as any of us do.

 

Make sure to check back for part two of our recap series, where we cover the Q&A portion of the webinar. You can watch the full panel below: