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February 12th, 2021

What Do You Really Know About Apple's Latest IDFA Privacy Protection Rules?

Apple borrowed from the famous Las Vegas slogan for a tagline in its privacy ad campaign: "What happens on your iPhone, stays on your iPhone."

But Apple's new approach to privacy is hardly fun and games for publishers and advertisers. The company's decision to allow users to block companies from collecting their advertising identifier, also known as IDFA, will affect the entire mobile advertising ecosystem.

Apple's privacy changes are so profound that Facebook has accused the company of anticompetitive behavior. And companies like Snap are warning investors about the negative impact on advertising demand. 

In this post, we will provide some background about mobile IDs and the how and why Apple is changing the rules of the game. We'll discuss what the changes mean for publishers and brands and provide some guidance to get you ready for the policy shift that is set for this spring. 

What is an IDFA? 

Apple assigns a random, unique number to every one of its devices. Apple calls the random sequence the Identifier for Advertisers, or IDFA. Google has a similar unique identifier in its Android operating system. 

These mobile fingerprints are used for tracking and identifying a user across apps without revealing personal information. 

Why is the IDFA important?

Mobile audiences are critical for brands. Research shows that there are more than 80 apps on the average smartphone. Mobile apps account for about half of global web traffic. If you want to reach a mobile audience, the device ID is crucial for gathering and targeting users, similar to the function cookies perform on a website. 

Thanks to mobile IDs, businesses can build audiences of mobile users who are music lovers, or love to run or love their cats and send them personalized ads. What's more, marketers use the identifiers to measure the effectiveness of their ads.

What is Apple doing?

Apple has had a "Limit Ad Tracking" option in its mobile operating system for a few years, but it's buried in the privacy settings of the phone. The company's new operating system, iOS14, will require consumers to opt in if they want to allow businesses to track their web activity. 

Apple isn't prohibiting tracking, but iPhone users will see a pop-up prompt that will state the app owner "would like permission to track you across apps and websites owned by other companies. Your data will be used to deliver personalized ads to you."

Why is the company making the privacy setting so explicit?

Apple's changes reflect rising consumer concern about data privacy, which has led governments in Europe and in the United States to step in and regulate data collection. Amid the shifting regulatory landscape, Apple has taken the public stance that "privacy is a fundamental human right" and that its giving consumers "more control" over the data they share and "more transparency into how it's used."

Why has Apple's privacy approach become controversial?

Currently about 30% of iPhone users in the U.S. limit ad tracking. Some estimate that will increase to 85 to 90% with the pop-up notification. 

Publishers worry that the loss of IDFAs will disrupt their advertising business and create more uncertainty amid the pandemic. Besides massive search and brand budgets, businesses spend billions of dollars on app-install campaigns. Now a big chunk of that spend is at risk because it will be harder for advertisers to precisely target users and effectively measure the results of their ads.

Facebook has run full-page ads in major newspapers criticizing Apple's position on the IDFA, saying the loss of personalized ads will harm small businesses. Facebook, which relies on such tracking to power its advertising business, plans to introduce an in-app prompt aimed at educating users about its data collection.

Apple's AppTracking Transparency framework was set to roll out, but the announcement caused such an uproar that the company postponed implementation of its privacy measure until sometime this spring.

Despite widespread news coverage of Apple's policy shift, more than one-third of marketers have little to no understanding of the changes, according to a survey released in November

There's no time like the present to get up to speed and get ready for the impending privacy changes, given the impact they will have on businesses' ability to market themselves and monetize through ads. 

What should marketers do to get ready?

The emotional reactions to the heightened privacy requirements were expected. It's like the body's fight-or-flight response to stress. It's time to take a few breaths and start preparing the change.

The most important thing that marketers can do is get their first-party data house in order. Even if consumers opt-out, brands can still capture first-party data beyond IDFA when users log into the app. If you have an app, migrate to logged-in user traffic. Capture multiple identifiers beyond IDFAs or work with a partner to round out the data with, for example, hashed emails and hashed phone numbers. This will ensure you have both online and offline identifiers to continue measuring those consumers. 

Start having conversations with your in-app partners to get a sense of their expected percentage of user opt-outs. Ask them how they plan to account for any decrease in scale due to the projected percentage of opt-outs in measurement of in-app campaigns. 

Brands have to start taking a proactive role in talking with their customers about the benefits of tracking their data, much like Facebook is planning to do. Consumers deserve additional context, and Apple has said that providing education is allowed. 

Publishers and advertisers have to start thinking about sharing their proprietary data in a safe and secure environment. Marketers can also get the data and insights they need to understand consumer behavior through second-party data marketplaces. Second-party data is becoming the go-to source for relevant market intelligence, at scale, without reliance on IDFAs. Access to high-quality, identity-based datasets will improve measurement and personalization tactics.

Better data repositories that can power all forms of engagement, analytics and measurement because privacy regulations and disruption are here to stay. The path forward will require a greater reliance on identity-based connections and privacy-preserving technology. 

Recent technical innovations in data science have enabled new ways of thinking about privacy. Some privacy preserving data techniques bring a rigorous mathematical process to protecting confidential information about individuals while maintaining sufficient data accuracy for high-precision analytics.

Neustar is committed to helping the mobile ecosystem understand and respond to enhanced privacy measures with advanced digital solutions like Fabrick ID, a customer identity platform that provides a sustainable bridge between brands, publishers, app developers, data providers, browsers, and the rest of the advertising and marketing industry.

Neustar also is working closely with the World Wide Web Consortium (W3C) to build and integrate with various privacy sandbox APIs, to sustain measurement and targeting of programmatic-driven media. This includes our PeLICAn proposal that brings forward the research-proven requirements for consumer-level measurement in a post-cookie ecosystem.

Further privacy legislation and ID deprecation will require brands and publishers to take greater control and ownership of their data-driven strategies. Otherwise, you are gambling with your future. 

 

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