MoPub: Without UDIDs mobile ad prices could plummet by 24%

Apple’s Unique Device IDs (UDIDs) phaseout could cause mobile advertising prices to drop by 24 percent according to according to a new study from mobile advertising marketplace MoPub. The company is cautioning that unless a UDID substitute is found soon, the drop in advertising prices will cut into app developer revenues.

UDIDs — the unique 40 digit alphanumeric codes assigned to every iOS device — have become the data backbone of the mobile advertising industry because they provide a simple, universal way to track users, installs, and measure ad campaign performance. However, they’re also a privacy concern; unlike the cookies web advertisers use to track campaign performance, UDIDs are permanent and can’t be changed or opted out of.

MoPub compared the average effective cost per thousand impressions (eCPM) on three months worth of ads on its service that used UDIDS and three months worth of ads that didn’t. Overall ads that didn’t include UDID data earned 24 percent less, seeing an average eCPM of $0.58 compared to a $0.76 eCPM for ads that included UDID data.

“The move away from UDIDs threatens advertising revenue that many publishers depend on in order to support their content creation and businesses,” said Jim Payne, CEO and co-founder of MoPub in a statement. “Here, we see a direct correlation between the money paid for an ad and the ability to track an ad. It’s clear that Apple needs to address this issue with an appropriate alternative, because the damage to a publisher’s bottom line will likely be material if UDID data actually disappears.”

Fluik Entertainment’s co-founder Victor Rubba is one developer who is well aware of what the impacts of the impending UDID phase-out could mean to his revenues. Fluik’s popular entertainment apps Office Jerk and Plumber Crack pull half of their overall revenue from advertising, but Rubba isn’t worried about his bottom line — at least in the long term.

“At first glance these numbers may cause concern, however I believe the market will adjust to the change,” he says. “Right now UDID is still an option, and it’s what everyone works best with. We’ve been working with ad networks on trying to put non-UDID solutions in place, and it’s not an overnight fix. As long as there are advertisers willing to pay for installs and publishers willing to show ads, they will find a way.”

User acquisition company Fiksu also predicts that dips in mobile ad revenues will only be  temporary as the ecosystem adjusts to a UDID-free world.

“Given that UDIDs remain the incumbent standard for attribution, a short-term dip in advertising revenue could occur,” says Craig Palli, Fiksu’s vice president of client services and business development. “Long term, however, ad revenue prospects remain strong for app developers.

Palli believes increasing interest in mobile advertising from well-funded mobile companies and mainstream brands will offset the temporary setback, a belief in line with several recent studies predicting a mobile ad spending is on the rise. Research group Strategy Analytics predicts advertiser spend on in-app advertising will hit $1.7 billion this year.

The real issue for developers like Fluik and mobile advertising businesses like MoPub and Fiksu is that a month after Apple began rejecting apps that call on UDIDs, there are more potential replacement options than ever, but no clear winner. Among the proposed solutions are CFUUIDs (core foundation universally unique identifiers), Media Access Control (MAC) addresses, digital fingerprinting, HTML5 first-party cookies and open source initiatives like OpenUDID and SecureUDID.

“As much as I would like to see advertisers all get together and standardize on something like OpenUDID, history has shown that this is very unlikely to happen,” says Rubba. “I believe that eventually a handful of ‘standards’ for tracking will emerge but there will always be some level of fragmentation.”