The Good, The Bad, and The Ugly of iOS 14.5 on Mobile Advertising

By Director of Growth, Yotam Galon

The Good, The Bad, and The Ugly of iOS 14.5 on Mobile Advertising

By Director of Growth, Yotam Galon

Intro

A buzz topic for many but an actual game changer for mobile advertising, our industry has waited anxiously for iOS 14 to be released since its announcement back in 2020. It wasn’t until the iOS 14.5 update when the mobile advertising space, from advertisers and publishers to users, felt its full effects. As a company, Bigabid believes the earthquakes that shake our foundations every few years should be answered with strong technological offerings, as they force innovation and eliminate the unnecessary. However, as a DSP (demand-side platform) partially dependent on iOS device IDs (those which Apple aims to stop sharing), Bigabid has been affected, and we’re not alone.

In this article, we will explore how Apple’s new restrictions affect the entire advertising cycle.

 

A Brief Overview of Apple’s ATT

Before we jump in here’s a short recap of this “iOS 14.5 thing”, the what and why.

What –  App tracking transparency (ATT) is a new privacy protection framework for Apple devices. In practice, it means that when one downloads or opens an app, a notification pops up asking if the user wants to be tracked across third-party apps and websites.

Why  –  It could be argued that this is a big step forward in Apple’s mission of protecting our privacy by giving us, consumers, a choice to turn off app-tracking. In the past, some of our data was being shared between companies to optimize our ad experience (and a few other benefits that we will discuss further below), but we didn’t have easy access to accept or deny app-tracking data to be released to advertisers. 

The main issue is that most consumers don’t understand the benefits of sharing their data. 

Read a deeper analysis on this subject in our CEO’s insightful article Partnering with Transparency.

In many ways this problem is analogous to nutritional labels for grocery goods – they inform you, now it’s up to you. And just like how consumers don’t read or know many ingredients in their food e.g the difference between 5% VS 7% sodium, they won’t understand nor read the lengthy privacy explanations accompanied with a small pop-up about app-tracking, therefore, it’s hard to make an informed decision.

 

What About the Neighbors from Mountain View?

Not far behind and still at a very early stage (the full details should be published in Q3/2021), Google recently announced their own privacy changes stating that they will release its Android relevant updates towards the end of 2021 / early 2022. 

However, while potentially helping Android users have more control of their privacy, the current known features don’t seem as aggressive as Apple’s initiatives. It seems like Google is being on-trend for increased privacy, though hesitantly due to the massive portion of its revenue relying on ads. At least at the moment, and unlike Apple, it appears that Google plans to continue to allow advertisers to target ads and to quantify their effectiveness, something Apple’s ATT effectively prevents.

 

Now we will dive into a breakdown of iOS 14.5s effects, past, present, and future throughout the chain. 

 

Advertisers

Let’s start at the source – advertisers. When you think of advertisers the first thing that might come to mind is some giant company in Times Square, but many advertisers throughout the mobile space are small companies, even mom-and-pop stores. This change affects them all.

Since the Announcement 

  • Uncertainty – Apple provided vague guidelines and kept pushing the release date back. 
  • Ad spend boost on iOS – Advertisers allocated new budgets and shifted some from Android to iOS to squeeze the lemon before it might be gone. Rightfully so? Time will tell.

 

Since iOS 14.5 Update 

  • Attribution tracking issues – advertisers are limited from measuring performance, which makes it harder to optimize their channels and monetize. Some attribution systems suggest fingerprinting solutions, which at the moment aren’t being enforced by Apple. Time will tell whether this is a long-term solution or not for this new environment.
  • Random integration issues – new campaigns have slower initiations due to unexpected technical issues.

 

Future Guestimations 

  • Significant ad spend budget reductions on iOS, the prestigious OS, therefore slower growth overall.
  • Some small businesses will need to give up on certain advertising channels.
  • Subscription – apps possibly shifting into more subscription-based models.

 

Media Buyers

Let’s refer to the most technology-driven ones, 2nd generation DSPs (demand-side platforms). 

Read more about 2nd generation DSP in The Modern Age of Mobile DSPs.

As agents of advertisers in ad exchanges, 2nd gen DSPs are focused on finding the highest lifetime value users (LTV) to achieve the highest possible ROAS. 

Discover more about Targeting High LTV Users. 

This requires ample testing that can only be evaluated and optimized based on results. Apple’s new restrictions challenge the optimal methods and slow down test results. In addition, retargeting, a highly profitable activity, has now become a semi-user acquisition activity since users can’t be accurately targeted across apps as they used to be. This has a major impact on the advertisers’ overall ROAS.

Since the Announcement

  • DSP’s must shift to more contextual-based targeting with tools like Bigabid’s Deep Categories.

 

Discover why Deep Categories is so effective post-iOS 14.5.

 

  • Testing boost on iOS – splitting boosted testing on UA and retargeting of non-LAT traffic, and boosting testing with LAT (Limit Ad Tracking) traffic to emulate the real-life scenario of the post-IDFA (Identifier for Advertisers) environment.

 

Since iOS 14.5 Update

  • With no more real-life emulation, there’s been a massive resource allocation towards testing and development to support growth in this new era.
  • Transparency – a necessity to tighten collaboration with clients to maintain the same performance as before.

 

Future Guestimations

  • Fewer media buyers will manage to provide a competitive offering for advertisers as 2nd gen DSPs widen the gap from less modern DSPs.
  • A continued increased focus on personalized creatives and contextual-based solutions.

 

 

Media Inventory and Publishers

Much like Times Square and the real-estate moguls, media inventories would sell ad placements to the highest bidder on different publishers and operating systems. iOS in-app ads-driven apps (publishers) took a severe hit since the iOS 14.5 update, and their foreseeable future isn’t bright under current conditions. We are already seeing evidence that when advertisers and media buyers aren’t confident buying ad placements, due to the inaccuracy in targeting Apple created when eliminated ad tracking, prices drop. As the percentage of LAT users go up, the CPM prices in media inventories go down, as well as the profit publishers can make.

Since the Announcement

  • Ad exchanges are suggesting more contextual information along with bid requests such as App Store subcategories, prior app bundles, and keyboard language settings. 
  • Promoting complementary solutions of services related to data analysis in addition to their current offering to compensate for current and future losses.

Since iOS 14.5 update

  • Price drops across the board – and the drop becomes greater as consent rates rise.
  • Lack of readiness – some ad exchanges don’t yet support passing IDFV (Identifier for Vendors).

Future Guestimations

  • Price drops will affect today’s monetization methods, and therefore, affect the way media is being bought
  • At least until there is more clarity in the market, there will be an increase in PMP (Private Marketplace) deals to ensure a more stable income for publishers. 

 

Users

That’s us, the consumers of content, services, and merchandise. Ads can be annoying, but that’s been our social contract to consume affordable or free goods for centuries. Today we see more ads, which can be disruptive at times, however, targeted ads help filter the number of ads we see, as well as the relevancy of ads based on our needs and interests. If you were going to see 10 ads per day no matter what, would you rather they be random or personalized? If you were looking for a new sofa or the latest Ariana Grande limited edition CD, after purchase, would you need to keep seeing ads for that same product? Probably not until the next renovation or release. Instead of having personalized ads would you rather see more ads so advertisers can cover their margins? In Apple’s idle world, where users aren’t tracked, we will be bombarded with ads that will likely be irrelevant to us, often by more careless developers, DSPs, or channels. We will also see ads for products we already acquired, and topics we couldn’t care less about or even be offended by.

Since the Announcement

  • Nothing much, unless you’re a tech geek like me following keynotes ;).

 

Since iOS 14.5 update

  • Seeing random and unclear pop-ups regarding ad tracking that most users don’t fully understand.
  • Increase in advertising interactions via owned media.

 

Future Guestimations

  • An inferior ad experience that also diminishes the entire app experience often leading to users churning. 
  • Shift towards subscriptions to mitigate a disruptive ad experience.

 

To Recap

We hope that Apple cares about users and businesses and isn’t simply trying to maneuver the iOS advertising space for their own profit. Technology will overcome this challenge, as it has many times before, but the real concern is the monopolization of giants. Just as Google, Apple, and Facebook are surpassing 50% of the advertising space, Apple’s IDFA restrictions could actually lead to the large enterprise advertisers spending more (lower accuracy requires more spend to acquire and maintain users as before), therefore leaving no chance for SMBs, SMEs, and mom-and-pop. Soon, we’ll know if Google will follow suit.

Bigabid believes the mobile app space is better off with the large enterprises, SMBs, SMEs, and the mom-and-pops involved, where strongholds and challenger companies create healthy competition, which advances the mobile experience for advertisers and users alike. We are committed to pushing for transparency and better experiences through all parts of the advertising chain via our services and the sharing of knowledge. We are committed to developing technologies that align with privacy trends while maintaining optimal results for advertisers. Please click the “contact us” button below to learn how you can grow your app in this new era of contextual targeting. Talk to us!

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