The Stakes of Apple’s IDFA Change
Apple will diminish apps’ ability to track iPhone users sometime in the coming months. With the rollout of its App Tracking Transparency policy, the company will make tracking the Identifier for Advertisers, or IDFA, opt-in for users. The IDFA is a tracking device on iPhones. In short, then, the IDFA change means that iPhone users will be asked whether they want to allow tracking when they open an app for the first time.
Tech providers estimate that the change from opt-out tracking to opt-in will lower the percentage of users who allow tracking from as much as 70% to as low as 10 to 15%. The resulting dip in knowledge about iPhone users’ online habits could make digital advertising considerably less effective. This is why Facebook has been feuding with Apple. The social network could see a 7% revenue hit from the privacy shift.
Some digital advertisers and technology providers are mobilizing against the change. Others say it’s inevitable, will benefit consumers, and that advertisers and martech companies need to get on board. Martech players are surfacing a variety of solutions to provide consumer data for the post-cookie, post-IDFA Web.
IDFA versus cookies
The IDFA change is coming just as Google phases out third-party cookies, making for an overall privacy tsunami that will complicate internet tracking going forward.
Third-party cookies, the browser-level tracking devices that companies use to track Internet users off their own properties, are widely disappearing. Safari and Firefox already killed them, and now Google is going to kill them.
But Mike Woosley, COO at data platform Lotame, says the IDFA is superior to the cookie. That’s because it’s easier for the consumer to control, and it’s a clearer source of data than cookies.
“The IDFA is superior to the cookie in a number of ways: it’s persistent; it lives at the device level; it’s open; and it’s easy for the consumer to control,” Woosley said. “A persistent, device-level open ID means that for media and ad-supported businesses that sell eyeballs, performance is much more accurate and accountable for those advertisers that pay the bill. Cookies on the other hand are chaotic.”
Why Apple is making the IDFA change
As concerns about Internet surveillance spread, Apple is positioning itself as a privacy champion. It helps that, unlike virtually all the other Big Tech players, especially Google and Facebook, Apple doesn’t depend on ad revenue.
Woosley, whose own business will take a hit with the IDFA change, says Apple’s motives are even more nefarious than a cynical PR ploy.
“While consumers like free games and free content, Apple doesn’t,” Woosley said. “Apple takes up to 30% of all app store sales. When developers write games and applications that are ad- and media-supported, it’s harder for Apple to get its ‘fair share.’ Breaking the media and ad-supported model is the actual intent.”
In other words, the IDFA change will undermine advertising and could, in turn, force app publishers to seek other forms of revenue, in-app or when users download the app. A portion of that money will go to Apple. It’s harder for Apple to get its chunk of that money now when ads support apps. Of course, Apple has this power because it controls the App Store on iPhones, allowing it to play gatekeeper to mobile users’ experiences.
Do consumers benefit from the IDFA change?
It’s a good thing for consumers to have greater control over whether and how much apps track them. Ostensibly, the IDFA change strengthens that control.
But the IDFA change could also lead some currently free services to charge a subscription or entry fee. So, it could, along with cookie changes, force a shift in the Web 2.0 status quo: money for services instead of the current exposure to ads and handing over of data in exchange for services.
In addition, Woosley says it’s unclear that the IDFA change will boost access to privacy all that much. After all, iPhone users already have the power to block IDFA tracking. But the construction of the new opt-in experience will facilitate a mass rejection of tracking.