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With cookies crumbled and IDFA DOA, it’s time for a better identity strategy

 

Among many other disruptive changes, 2020 is proving to be the year of identifier deprecation.

In January, Google made waves in the ad tech ecosystem when it announced plans to end support for third-party cookies within two years. And then last month, Apple announced that application developers in iOS 14, its mobile operating system, will need to seek end-user permission before gaining access to Apple’s mobile device ID, also known as Identifier for Advertisers (IDFA).

This update is expected to roll out in the fall, and we expect up to 80% of users to be on the new operating system by the end of the year.

While disruptive, we at Epsilon believe this announcement presents an opportunity for brands to rethink their identity programs and how—and who—they partner with for their digital media dollars.

What this means for consumers

On iOS 14, every app will display a pop-up notification at launch asking users whether they want to allow tracking or not. If someone wanted to opt-out of interest-based advertising before, they would have had to manually enable the Limit Ad Tracking (LAT) feature. Epsilon has seen user adoption of the setting at around 10%, though industry surveys claim adoption levels of over 30% in the United States.

Although Apple made this switch in the name of privacy, another part of its goal is likely to shift its app ecosystem from an ad-supported model to a subscription model.

While this news isn’t necessarily surprising, what’s unclear is how consumers will respond. There are varying points of view on how many people will allow tracking, with predictions as low as 5%, all the way up to 70%. App developers will have some control over how the language is presented to their end-users which could help increase opt-in rates.

What this means for app developers

Many iOS app publishers rely on the ad-supported model and removing accessibility to IDFA will significantly disrupt their monetization strategies and hamper their app download marketing strategies. They will probably shift to encouraging users to share data through other means, like requiring a login and obtaining consent to share it with advertisers. App developers without the resources to do this may not survive and launching new apps, without a free ad-supported option, will become harder and more expensive.

What this means for advertisers and the advertising industry

This move will make effective advertising on iOS more difficult and leave those affected with a limited timeframe to prepare. The industry should expect a significant decrease in the ability to use Apple’s IDFA for targeting and measurement. Anyone heavily relying on IDFA will be severely impacted and will need to find a new solution for targeting and measurement or resort to legacy methods like contextual-based advertising.

Of the three groups impacted, advertisers are bearing the brunt of the pain in several ways:

  • Targeting impact: Advertisers will still be able to deliver messaging on iOS apps, but not distinguish between individuals. Obviously, this will be much less efficient.
  • Pacing impact: Advertisers will be unable to implement frequency caps by individual and waste budget by repeatedly messaging the same person.
  • Measurement impact: Advertisers will lose the ability to calculate return on ad spend in iOS because they won’t have the IDFA to connect messaging to conversion events like registrations and purchases.
  • Personalization/creative impact: Without IDFA, advertisers will lose the ability to personalize and continuously optimize the creative messaging to the individual they are targeting. They’ll also lose the ability to do A/B splits and to test and optimize creative.
  • Fewer choices for advertising on iOS: This will further increase advertiser dependence on walled gardens such as Facebook and Google, which have account-based logins and thus don’t require IDFA.

It’s time for a new identity strategy

No doubt, the IDFA phase-out will be disruptive. The good news is that better identity strategies exist for a more reliable and future-proof approach.

For example, Epsilon’s IDFA strategy is very similar to how we approached Google’s announcement about the third-party cookie. With CORE ID, we’re able to identify and serve 98% of our ads to real people, not orphaned cookies or device IDs.

Also, we have direct relationships with advertisers and a fast-growing network of over a thousand high-quality app publishers to establish an alternative, authenticated and persistent identifier such as login-based ID with user consent. Those high-quality apps, which provide significant value to the end-user, are more likely to gain such consent. In turn, our unique access to these high-value brands minimizes our dependency on device IDs like IDFA.

Given the success seen with this approach in the aftermath of Safari Intelligent Tracking Prevention (ITP), we’re confident it will help marketers weather yet another wave of data deprecation and allow for the steady growth of ad delivery on Safari.

This trend will likely continue with other platforms making similar moves. Within the next 18 months, we expect Google to take similar action on its Android platform in conjunction with its Chrome third-party cookie deprecation.

In the meantime, we’ll continue building on the foundation of CORE ID and direct publisher relationships and reducing dependency on tracking cookies or mobile device IDs so marketers can withstand changes by the browsers and mobile operating systems.

***This article was originally published on Adweek, July 2020.