Apple's App Tracking Transparency Has Advertisers Scrambling, With Concern More Is to Come

Apple customers are among some of the most desirable for marketers, given their willingness to pay more than $1,000 for a cellphone. They also collectively generate more than $500 billion a year in revenue via in-app billings, a statistic that inspires advertisers to pay top dollar for real estate on an iPhone. However, on April 26, the device manufacturer added an element that could potentially diminish that allure for advertisers: the long-dreaded release of iOS 14.5. This update, which implemented app tracking transparency (ATT), could result in scarcity of addressable inventory for advertisers. ATT requires publishers to ask users whether they want to be tracked across other apps and websites they visit through an in-app dialogue box, with language that places cross-domain tracking in a negative light. This means the potential loss of key data insights. And in the early days, it remains to be seen if the iPhone-identifier IDFA could dissuade advertisers from paying that premium for an iPhone placement. Adweek spoke with three media experts, who asked for anonymity, to explain what's at stake. Falling victim to ATT In recent weeks following the introduction of iOS 14.5, reports of user opt-in rates varied considerably. Flurry Analytics, the mobile tracking division of Verizon Media, reported global opt-in rates of 13%. Although, the statistics paint a more austere picture in the U.S., where opt-in rates were approximately 5% as of early May. Meanwhile, figures from mobile attribution outfit AppsFlyer saw opt-in rates differ depending on the content category of a particular app. Further analysis showed that 40% of users opted in to tracking during the week of May 17-23, though this figure dipped slightly to 37% among those using gaming and social media apps. However, iOS app inventory seems to have held its value in the early weeks after its April 26 launch. According to AppsFlyer, iOS ad spend increased 20% after ATT was enforced by Apple, compared to a 2% increase on Android. User opt-in rate is expected to be very low due to the intimidating language in the pop-up box. Facebook has arguably been the highest-profile victim of Apple’s privacy crusade because it counts the vast majority of its ad spend on mobile, where some of its most lucrative CPMs are on iOS devices. This statistic does come with one caveat: The more people who upgrade to iOS 14.5, the more likely the drop in data signals continues with a (likely) accompanying decline in the price that media buyers are willing to pay for placement in iOS apps. Facebook has faced scrutiny from Wall Street analysts in every subsequent earnings disclosure since Apple made its seismic privacy changes public at its Worldwide Developers Conference in June 2020. Eric Seufert of Mobile Dev Memo, the leading expert on iOS 14.5, forecasts that the world’s largest social network will experience a 7% hit in its Q2 revenues. Cautious for the meantime In the early phases of the iOS 14.5 rollout, advertisers are momentarily adopting a cautious wait-and-see approach as to how they'll use Facebook inventory in their mobile media plans. One major holding group source, who requested anonymity due to their employer’s policy, expressed the desire for additional account support from the social network during the transition period. While this level of support was not forthcoming to the extent that some media buyers wanted, the social network has advised advertisers to run separate campaigns to measure differences in performance: one targeting just iOS users and one targeting everyone else. Facebook was able to maintain some measure of audience insight during the transition by tracking one event per user who opts out and protecting landing page views as a trackable metric across all users, according to multiple agency sources. “Knowing not all data will be lost and that Facebook will begin modeling more, we're not expecting an immediate catastrophic loss of efficacy in the platform,” Taylor Daly, senior platform media manager at media agency Connelly Partners, told Adweek. Additionally, separate ad-tech vendors have been attempting to fill the void by launching in-app advertising products that seek to engage iOS audiences by using contextual data, as opposed to the deterministic data, which is still available even if iPhone users opt out of targeting. For instance, software company Verve Group launched ATOM (Anonymous Targeting on Mobile), a tool that strips personal data gathered while an app is in use and then models demographic data in a way that adheres to Apple’s privacy policies. As Apple prepares to host its annual Worldwide Developers Conference, some wonder if the device manufacturer's privacy crusade is just a precursor to Apple making a renewed charge in the mobile ads game, a revenue-generating activity it stepped up last year.