iOS 10 – Impact on Mobile App Advertising Ecosystem

iOS 10 is now officially available for download and as usual, the media is going gung-ho about various end-user focused changes- the revamped iMessage app functionality, the bubble notifications and of course, the addition of a ton of new emojis.

However, apart from such easily visible functionality changes, Apple has now made a habit of putting in key changes in major iOS releases which impacts advertising industry directly. These changes may not get as much press attention as something like the addition of a new emoji, but they do end up having a significant impact on the industry. In iOS9.2, introduction of Universal Links was a key change that broke existing deeplink structure of many apps. This time around in iOS 10, Apple has changed the behavior of “Limit Ad Tracking” (LAT) feature which will have an impact on paid marketing campaigns.

iOS 10 showing Limit ad tracking feature screenshot RevX

iOS allows marketers to deliver targeted advertisement to users by using a unique ID called “Identifier for Advertising” (IDFA). Before iOS 10, if a user had enabled LAT feature, marketer was required not to use the IDFA to show “targeted ads” . However, given the vast ad-tech/mar-tech ecosystem, different players adhered differently to this restriction. Some used it properly to not show “interest” based ads, some used it for cross-screen targeting, some used it as an indication of completely opting-out of any kind of ads while some simply ignored this and continued to show ads as usual.

However, with the introduction of iOS 10, if a user enables LAT, the OS will now send all zero IDFA- “00000000-0000-0000-0000-000000000000”. Since there is no IDFA, there is no way for a marketer to show targeted ad to such a user.

So how does this impact users, advertisers, marketers and other players in the ad-tech ecosystem:

1.       Attribution Challenge - Most of the tracking partners rely on unique IDFA to do proper attribution tracking (deterministic approach). With all zero IDFA, doing attribution solely based on IDFA is no longer viable. Either the players will forego attribution or they will have to rely on probabilistic techniques which are not 100% correct.

2.       Frequency capping - Many marketers like to enforce Frequency capping (F-cap)-the concept of limiting how many ads of a particular brand a user should see. For someone who has enabled LAT, since there is no unique IDFA, there is no way for a marketer to enforce F-cap. Hence, such users might continue to see the same ad of the same brand over and over again. Not a great user experience for sure!

3.       Fraud check - Many advertising platforms use IDFA to enable bunch of fraud detection mechanisms. For instance, a platform can see that if it’s receiving insanely high number of clicks from the same IDFA, then there is a high chance of click fraud happening. Since all users who have enabled LAT will have an all zero IDFA, such mechanisms will go for a toss.

However, even with all these changes around LAT, there is still skepticism on how big its impact will be. Globally, less than 20% of users opt for LAT and there is no reason to believe that this percentage will suddenly rise with iOS 10. Hence, the impact of these changes might continue to be limited but advertisers should check with their platform providers on how this will impact their campaign performance and spend distributions.

References: Bunch of Tech Articles

Sandip Acharyya