Apple’s release of iOS 10 has the advertising industry buzzing!

What’s changing?

Apple announced in iOS 10, when users opt into the “limit ad tracking” option on their phones, their advertising identifier will be sent as a string of zeroes to advertisers and ad tech companies.

In the past, when a user enabled “Limit Ad Tracking” it would alert mobile developers and advertisers that they do not want ads targeted based on their behavior, but it would send the alert with their IDFA attached. Rather than being a directive, Apple had only issued that notice as a “suggested best practice.”

Why does this matter?

The iPhone has a unique ID number called “Identifier for Advertising” (IDFA or IFA) that is commonly used for advertising targeting, as it functions similar to the way cookies are used by web browsers, allowing third parties to identify a specific user regardless of location. The iPhone already included a feature in the device’s Privacy Settings that allowed users to enable Limit Ad Tracking.

In the past, when a user enabled “Limit Ad Tracking” it would alert mobile developers and advertisers that they do not want ads targeted based on their behavior, but it would send the alert with their IDFA attached. Apple has previously recommended that publishers not use the IDFA (“identifier for advertisers,” as it’s officially known) for purposes that are advertising or tracking related. Under Apple’s Developer Terms, IDFAs were still accessible to advertisers for purposes of “frequency capping, attribution, conversion events, estimating the number of unique users, advertising fraud detection, and debugging.”

This means that a) performance based advertisers could still use the IDFA for app install attribution even if they were honoring the ad targeting requirements, and b) the IDFA was still available for parties to use in targeting if they didn’t want to follow the rules.

With iOS 10, the IDFA gets wiped out and replaced with a string of zeroes if this feature is enabled. This means users with the featured enabled will essentially become anonymous, and it will remove the ability for advertisers to target ads based on location or user behavior data.

How many users will this impact?

According to TUNE, the number of users with Limit Ad Tracking enabled (it’s off by default) has been holding steady at just under 15%. While not trivial, it still represents a small amount of users.

How does this impact aerMarket?

Your aerMarket/AerServ revenue should NOT be impacted by this iOS 10 change. As part of our effort to be COPPA compliant and adhere to existing policies, AerServ never passed through the IDFA when Do Not Track was enabled. As a result, Apple changing this to zeroes will not impact how our advertising partners target the inventory, as it was never passed to begin with. Our team is implementing a new change server side to deal with the new zeroes passed by Apple.

How does this impact mediation?

The biggest short term impact may be with companies who are primarily cost-per-install or cost-per-click based. Those companies are going to move to fingerprinting based attribution models for users with LAT (Limit Ad Tracking) enabled, but it may take time for some.

At a minimum, all mediated SDK adapters will need to be updated to the most recent version that supports iOS 10. AerServ is working with vendors to ensure these updates are made.

How does this impact users?

  • For users with LAT enabled, it has the potential to make ads less relevant and poorly targeted. They may see an ad for a concert out of their area, or a lower quality ad with no targeting. It may mean that a user with LAT enabled will see less ads.
  • When LAT is enabled, it eliminates an advertisers’ ability to frequency cap ads, so a user may end up seeing an ad repeatedly.
  • The positive is that this change will allow the user’s privacy request to limit ad tracking to truly being honored by all parties.

How does this impact advertisers?

  • It may increase performance, as users who are not interested in seeing ads are likely those that enable LAT. The ad spend will be more efficient, targeting users who are more likely to engage with the ads.
  • It may increase advertising costs, as more advertisers will be focused on the 85% that have LAT enabled.
  • It will impact fraud detection, as the identification and measurement companies will need to find a new way to measure fraud across the 15% of users who have LAT enabled.
  • Advertisers will start coming up with different technologies for tracking and attribution, like fingerprinting, to combat the new LAT requirement.

How does this impact publishers?

  • If a publisher is primarily working with performance based advertisers, they may see CPMs decline for users with LAT enabled. For example, NativeX commented on their support for iOS 10, “If we receive a session from a device where the IDFA is all zeros, we will fall back to treating it as a mobile web device, using the same fingerprinting technology that we use for other mobile web tracking. Of course, this device will only be eligible to see offers where mobile web traffic is allowed, so the selection of offers will be more limited. This is a better alternative to losing all potential for revenue from this traffic.”
  • Publishers need to update their mediated SDK adapters to the most recent version that supports iOS 10.

Summary

The iOS 10 LAT announcement has a lot of people in a frenzy, but we’ve seen this before with prior Apple announcements. Ultimately, we don’t anticipate this having a dramatic impact on AerServ customers, and in particular, we don’t anticipate it having as much of an impact on brand advertising, the specialty of aerMarket.

We agree with Peter Hamilton of TUNE, who said, “The population most likely to turn LAT on is the same population that is least likely to engage with advertisements and is already excluded from targeted advertising based on Apple’s terms for IDFA.”