On September 16th, 2020, Apple officially released its latest mobile operating system iOS 14, and is approaching an impressive adoption rate of nearly 30% within just five days. While people are excited about some highly visible new features such as home screen customization, fun widgets, and picture-in-picture viewing, some noticed Apple has once again leveled up its commitment to protecting user privacy. One interesting move of such is Apple's decision to not allow apps to collect users' IDFA, the unique Identification for Advertisers device code of your iPhone or iPad, by default. Apps will have to ask for the user's explicit permission before collecting IDFA. Although Apple had originally planned to enforce this new rule in the newly released iOS 14, later Apple said the rule will only come into effect "starting early next year", in order to give app developers more time to make their apps compliant. So, what is IDFA and how will Apple's new anti-tracking feature (and more similar moves expected to be seen in other operating systems or devices) affect advertisers?
What is IDFA?
According to Adjust.com (a mobile marketing tool developer), the Identifier for Advertisers (IDFA) is a random device identifier assigned by Apple to a user’s device. The IDFA can be used by advertisers to track user data so that they can customize their advertising and deliver more targeted ads.
So, what data are advertisers tracking using IDFA?
While IDFAs do not contain any personal identifying information (PII) as they only provide aggregated data, they are used to measure and identify user interactions with ad campaigns, installs, and in-app activities. An IDFA is like a cookie tied to the device and allows advertisers to track in cases where a user of a device has clicked on an ad in a browser and then downloads, uses, and interacts with the ads in the app. It is widely used in non-browser apps, which do not support cookies.
The graph below (credit: appsflyer.com) illustrates how IDFA is used when someone downloads an app and sees in-app advertisements.
For Android devices, Google offers the equivalent of IDFA which is a Google Play Services ID (GPS ADID). Similarly, users can view their GPS ADID in device settings and they can opt-out of tracking and personalization or reset the ID.
What changes to IDFA were made by Apple?
The most significant change to iOS' privacy policy is that, when a user opens an application for the first time, iOS will remind the user to choose whether IDFA tracking can be enabled or disabled, and a message containing the updated privacy policy will pop up. In addition, Apple will also provide users with new tools to help them understand which data points are being tracked or collected by the applications and what permissions are needed to enable the tracks. If the user disables tracking, the app developer will then no longer be able to track any data via IDFA.
Moreover, iOS also allows users to share their "approximate location", which will limit the use of location-based services. For example, users can opt in to share their approximate location information with a weather app and share more precise location information with a fitness app to track running progress. Apple also updated its application monitoring API SKAdNetowrk.
How will this affect mobile advertising?
According to Digiday, the mobile advertising market is now over $300 billion and almost 30% of that goes to Apple. Given the fact that Apple is known for its more affluent user base across the world, this anti-tracking feature can have a massive impact on mobile advertisers, if users choose to disable IDFA or the new OS automatically has IDFA tracking turned off. However, it should be noted that turning off IDFA doesn't mean apps will not collect any user relevant information, but rather that apps would not be able to feed the data back to advertisers, which means the level of customization accuracy of ads will go down.
IDFA is important to mobile advertisers because it accurately measures user interactions with the advertisements and very few users tend to reset their device ID; at the same time, it is seen as a privacy-friendly way to track user data because it emphasizes user choice. If IDFA is disabled, advertisers will not be able to obtain granular information about users' activities in a given ad campaign, which hurts advertisers' ability to monitor the performance of campaigns and optimize campaign strategies or adjust marketing budgets.
Facebook, for instance, is expected to take a serious hit by Apple's move to protect user privacy and it has claimed that "this feature may severely impact its ad network". Facebook said in a recent public announcement: "Ultimately, despite our best efforts, Apple's updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14".
It remains to be seen how advertisers will respond to Apple's increasing emphasis on protecting user privacy and such moves will impact mobile advertising in the longer term. As more users become privacy-minded, how to balance personal privacy protection and empowering the value of advanced analytics is a key challenge for every party in the market.
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