You're in charge of operating a local farmer’s market. You notice a person in a bright orange shirt, and you evaluate what booths they look at and what they buy to see if there’s anything the market can improve on. Suddenly, a large crowd enters the market and 80% of the people are now wearing the same orange shirt. You can't distinguish anybody from the crowd and don't know what any individual is looking at or purchasing.
This influx of orange shirts is happening in the digital marketing space. Marketing technologies, aka MarTech, can optimize a company’s ad spending, improve user conversions, and increase revenue by selectively matching ad content with receptive customers. MarTech does this through tools tracking user data and behavior, such as fingerprinting them with a unique user identifier (e.g., shirt color in our analogy). Eventually, as MarTech analysts understand more about the customer (observe them), you can target them with personalized and engaging ads (related booths) they’d be more willing to respond to (purchases).
Apple’s Identifier for Advertisers (IDFA) is one example of a unique identifier that’s disappearing from MarTech, and we’ll walk through the impacts of IDFA’s demise, what marketing cases may be affected, and how marketers can pivot to using other techniques and tools.
The Power of IDFA and the Financial Impacts
Apple had been providing “orange shirt” functionality for user tracking and campaign attribution through an Identifier for Advertisers, or IDFA. But in iOS 14.5, iOS reduced the effectiveness of IDFA by preventing access to the identifier unless a user opts-in to Apple’s App Tracking Transparency (ATT) framework. Analytics have shown an estimated 55% to 85% drop in IDFA availability since introducing ATT, greatly reducing the effectiveness of tracking across Apple’s ecosystem. Essentially, everybody now has the same orange shirt.
The financial fallout from Apple’s IDFA and tracking changes are still being determined, but most of the focus has been on the financial losses for large companies like Facebook losing revenue from their behemoth advertising platforms. But they probably impact you as well. To get to the heart of why these transparency updates are so impactful to you, we need to understand how IDFAs drive retargeting and revenue increases.
Advertising platform studies have shown that tracking and matching users and retargeting ads can increase return on ad spend (ROAS) by 70%. With the loss of IDFA, we can assume that current returns can be reduced to pre-IDFA levels, which would be a 40% drop. Other studies have shown that users who opted into ATT/IDFA provided a five-fold increase in revenue. Businesses that relied heavily on cross-platform retargeting may now see a reduction of 80% in revenue on IDFA-affected devices.
Mobile Technology IDFA Marketing Use Cases
These reductions in revenue and ad spending returns are more likely for businesses that have relied heavily on IDFA-based use cases. The top uses are ad attribution, targeted advertising, and campaign optimization for iOS devices.
Ad attribution: The IDFA is used like a cookie on mobile apps, allowing advertisers to see when app users interact with their ads and apps. This could be in the form of clicking on an ad banner, purchasing an item from an ad, or installing an app from an ad.
Targeted advertising: Marketers can use the unique IDFA for a device to track user actions and target them with specific ads. For example, marketers could track what types of ads they have displayed to an identifier and if the customer had previously interacted with any. This could be used to send specific ads to users who have clicked on prior banners or added items to a cart.
Optimize ad campaigns: By using ad attribution and targeted advertising, marketers can optimize their ad campaigns and spending. IDFAs can help marketers determine what ads to display to users, help with ad pacing and frequency for users, and provide a backlog of devices that have been receptive to prior campaigns.
Marketers can help stem the tide from IDFA’s absence by finding new ways to accomplish these use cases.
The Future of Mobile Tracking Post-IDFA
So now that Apple has made it more difficult to track a user across apps and platforms, companies will need to pick the most effective attribution tracking methods going forward. Even more challenging is the fact that without user-level tracking, companies will need to look at data in aggregate to determine which campaigns are the most effective. This creates a jarring transition for most marketers.
Short-Term Mobile Technology Marketing Solutions
Companies that are not able to use IDFA going forward will need to come up with a short-term solution that can identify cohorts of users and their behavior. Here are a few examples:
SKAdNetwork: The SKAdNetwork is Apple’s solution for tracking app installs and clicks on iOS apps. It provides tracking at a campaign level, although only 100 campaigns are allowed per ad network. SKAdNetwork also allows campaign tracking on an aggregated level, so marketers can see how their campaigns are doing against a group but not individual people. There are gaps with this solution that will need to be accounted for by other means.
IDFV: Marketers can use Apple’s Identifier for Vendors (IDFV) as a unique identifier tied to their developer account. This is useful to track user behavior and cross-promote apps across a developer’s library of apps, but it cannot be extended to track users on other organization’s apps.
Walled-garden ad platforms: Some advertising platforms, such as Google’s and Facebook’s, have additional data about customers that can assist with identifying users and help with targeting ads. There will also be more contextual targeting based on a user’s environment.
Long-Term Marketing Solutions Post-IDFA
There are benefits to creating a short-term strategy. It will allow you to make the transition to a framework that supports at least some level of attribution data capture. However, companies also need to begin thinking about their long-term play. The immediate options currently available are not ideal and have lots of gaps and unreliable data in their current form.
Therefore, the best long-term strategy is one that includes the ability to capture first-party data in a single customer view. Technologies such as a customer data platform (CDP) can help in this regard. This will allow each company the ability to create their own walled garden. There are numerous benefits of maintaining your own data:
Inexpensive: You will no longer need to pay for this data from third parties.
Accurate: The data you collect will be more accurate than data from other sources
Relevant: First-party data comes straight from your customers, which makes it highly relevant for each user. This allows for increased personalization.
Finding Your Next MarTech Step Post-IDFA
Apple’s shifting the decision about IDFA access and data privacy back into the hands of users will have far reaching effects across the MarTech space. Companies will need to rethink ad attribution, targeted advertising and campaign optimization, and begin transitioning to a different approach. While there are solutions that can be implemented now, most companies will need to move toward a first-party solution that will provide a path back to the type of accuracy and revenue gains they experienced prior to this shift.
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