U.S. mobile advertising revenue is now worth $70 billion, according to IAB numbers. And the in-app mobile advertising economy–ads not served across the mobile web–is forecast to be worth $226 billion across the globe by 2025.
But a cloud hovers above the space because the industry’s major platform providers (with regulators peering over their shoulders) are growing increasingly preoccupied with privacy.
Many in the space now believe that in-app mobile advertising is set for the introduction of similar restraints. Principally, experts believe that mobile advertising IDs, often referred to as MAIDs, are set to be retired by the sector’s two major power brokers: Apple with its IDFA tool and Google with its Android equivalent AdID.
Last year, Apple announced the introduction of a series of updates that inhibit app developers’ (and advertisers’) ability to track user iOS location, restricting any ad revenue they can generate.
The iPhone maker claimed it was “shutting the door on abuse” and last week, Google appeared to echo these sentiments with the announcement of planned policy updates to its Play store.
“Later this year, we will be updating Google Play policy to require that developers get approval if they want to access location data in the background,” Krish Vitaldevara, director of product management trust & safety, Google Play, wrote in a blog post.
As a result, starting in August, app developers will have to have any background location-tracking features approved by the Google Play team when they are submitting new apps to the outlet.
Law firm Hopkins Carley notes how these requests appear to line up with the California Consumer Privacy Act, which requires a “just-in-time” notice for data collection on mobile devices.
“Businesses and application developers that aggressively aim to collect additional data through broad permission requests will now need to disclose what categories of information are being collected, and thus may want to evaluate whether such aggressive collection is worth potentially alienating users,” reads an advisory note from partners at the firm.
The great MAID rollback?
Given the industry’s preoccupation with privacy (and the mood music trumpeting from the industry’s major players) there is now rampant debate as to whether or not Apple and Google will revoke their respective MAIDs, which some claim are more persistent identifiers than cookies.
The notion appears to be validated, as Facebook, a company that relies considerably on mobile app advertising, quietly updated its terms and conditions to state that it will no longer pass device IDs back to marketers.
One source, who requested anonymity given his/her organization’s ongoing negotiations with such platforms, told Adweek that Apple considered withdrawing IDFA last year, but execs opted to watch which privacy measures Google would introduce first.
Paul Gubbins, an ad tech consultant who specializes in mobile, explained to Adweek the potential impact such a move (from both Apple and Google) could have for both app developers and advertisers.
“As an app developer, you’re fundamentally reliant on that device ID,” he said, adding that the app ecosystem relies on a host of third parties such as mobile attribution providers.
A separate source from an app developer that is highly reliant on programmatic demand who requested anonymity due to his/her employer’s communication policy, predicted that both Apple and Google will pull support for MAIDs within the same timeframe as the Chrome browser pulling support for cookies.
The source informed Adweek their organization has forecast that such a scenario could result in a 60% reduction in revenue.
And while programmatic demand can be substituted with direct sales, such a measure will lead to an increase in costs, plus put paid to their earlier efforts.
In-app advertising post-MAIDs?
However, some believe the power brokers of the mobile app ecosystem will offer ad-supported players an olive branch. After all, hamstringing a multi-billion dollar industry is unlikely to paint such players in a favorable light with regulators that increasingly have Big Tech in their crosshairs.
Matt Barash, svp of business strategy and business development at mobile advertising outfit AdColony, explained to Adweek his theory that the mobile app ecosystem won’t necessarily follow the cookie-based web ecosystem.
“Most developers rely on the ad-supported model and for Apple to totally upend the existing identity framework would be massively disruptive, potentially catastrophic, to their businesses,” he said. “They may morph and change to respect user privacy concerns and privacy legislation, but MAIDs aren’t cookies and we shouldn’t assume their fates are intertwined.”
Separately, Charles Manning, founder and CEO of mobile attribution provider Kochava, detailed how his company has constructed “an identity model that is flexible,” an approach necessary after Apple began continually depreciating the data that can be extracted from MAIDs since the early 2010s.
“And so, we have constantly been in a place of we cannot rely on a singular ID,” he added.
The attribution provider works with developers to place software, dubbed IdentityLink, on their in-app ads that helps provide performance analytics. Kochava is possible as Kochava drops a first-party cookie after an app user has clicked on an ad, this happens via a mobile redirect.
From here, the company is then able to construct a cross-screen identity graph that app developers and marketers can use to measure advertising performance.
“We’ve really taken an abstracted view of identity separate from a cookie and separate from an AdID or an IDFA,” Manning added.
When asked about the ability to perform these kinds of analytics should MAIDs be retired, Manning cited the 2018 introduction of SKAdNetwork by Apple–a company that notoriously plays its cards close to its chest–as the potential genesis of an in-app advertising ecosystem post-IDFA.
Apple has not communicated much with the app ecosystem since SKAdNetwork documents were first made public, but there is a hypothesis that centers upon the potential for it effectively using it as a registry for approved app monetization partners.
In such a scenario, Apple would require monetization partners, such as analytics providers or ad servers, to sign up with SKAdNetwork to gain approval for their privacy measures; otherwise, an app developer’s submission to the App Store will be rejected.
Manning further hypothesized Apple’s approach to in-app advertising will be similar to how it requires app developers to send push notifications. Its current policies require third parties wanting to send push notifications to app users to do so via Apple.
“If SKAdNetwork is what I read it to be it would treat ad delivery similar to push notifications where they control that whole closed-loop,” Manning added.
Meanwhile, Robert Webster, cofounder of consultancy Canton Marketing Solutions, explained his expectation that Google’s efforts to maintain an ad-supported ecosystem post the (expected) removal of AdID will involve its Privacy Sandbox–an initiative to explore data-led marketing with less PII.
“This may mean MAIDs survive another 18 months, Apple will likely follow suit, I expect an announcement on the end of MAIDs before the summer from Google or Apple,” he concluded.
With so much resting on the decisions made by just two companies, the entire ecosystem is holding its breath, with advertisers and developers making what provisions they can given the scant amount of detail currently on offer.