How Apple is disrupting mobile as we know it: IDFA, privacy, and competitive positioning

iOS 14 is a game-changer in more than a few ones. One of them is definitely privacy.

I’ve been writing a lot about privacy, Apple, and what Apple’s been doing with the IDFA (identifier for advertisers), so I was invited to speak at the Mobile Growth Summit about it. I chatted with Shamanth Rao, founder of Rocketship HQ, about what’s changing, why, what the implications are, and what Google will do as a result, and now I’m including that chat in the TechFirst with John Koetsier podcast.

Subscribe to TechFirst

Notes for my session

A good place to start would be with the basics – why did Apple make this change to have IDFAs be opt-in?
- Privacy
  - For privacy’s sake
  - Liability
- Apple hates ads & adtech
  - I tweeted … what I think Apple thinks …
    - Ads: bad for user experience
    - Adtech: at best negative at worst dangerous
  - Friend with a major app publisher
    - Exactly … top execs told him that
- Political implications … get into later
- Monetary reasons … get into later
- But … biggest by far … privacy
What are some of the implications of readily accessible IDFAs? What could someone do with, say, a thumb drive full of IDFAs?
- 2015 … FBI arrested a Chinese national
- On a plane … about to take off for China
- With a thumb drive full of IDFAs
- Had worked for Machine Zone
- So … lots of possibilities
  - Commercial motive
    - People who have installed X game
    - Whales
  - Political/social motive
    - People who have installed certain apps
    - Know their political leanings
    - Influence them … ads … apps … etc.
    - Cambridge Analytica scenario
  - Espionage motive
    - People who have installed XYZ apps … Tinder, Grindr
    - Extort them …
    - Track them … NYT: member of the secret service
Privacy aside, what are Apple’s financial and strategic motives behind making this change?
- Strategic
  - The privacy-focused big tech company
  - Big ad recently
  - Apple’s always been more touchy-feely
  - On the little guy’s side
  - Now it’s a giant corporation
  - “We’re still safe”
- Financial
  - What’s bad for my enemy is good for me
  - Big tech … Google, Apple, Facebook, Amazon, etc.
  - Two are significantly ad-based
  - Weakening them is good for Apple
One dynamic that is important to understand is that Apple makes no money from ad monetized games. How does that inform Apple’s decision – and what might be some of the things that Apple is trying to achieve through this?
- As you said … Apple makes no money on ad-based mobile monetization
- Apple makes 15-30% on IAPs and subscriptions
- Do the math …
- Don’t think it’s a primary reason … but it’s probably one of them
Does Apple’s policy conflict with – or result in confusion when you look at different privacy policies in different parts of the world – say the GDPR in Europe, or CCPA in California? What is the interplay between these different policies?
- Maybe
- We’re all affected by GDPR. We’re also all impacted by California’s privacy laws
- Now we’ve got Apple’s iOS 14 IDFA opt-in
- You could be asked to opt in 2 or 3 times
- That’s confusing and annoying
- More likely to make people do irrational things
  - Like default accepting everything
  - Or like default denying everything
- Not really a choice anymore …
What precipitated the extension of the IDFA opt-in enforcement to early next year?
- The ecosystem was not ready
  - Without a healthy ecosystem, Apple suffers
  - And Android wins
- Also … Facebook opted out
  - No, we’re not asking for IDFAs
  - We’re not playing in Apple’s sandbox
  - We’re using our own tech … own logins … Facebook identifier
  - Using the IDFA ties them to Apple’s rules
  - There are still rules for iOS apps that FB has to follow
  - But I think there’s more wiggle room for what they do by just opting out
  - Let’s be honest … there’s power at play here
  - App developers have to do what Apple says
  - Some can influence Apple … Basecamp
  - But Facebook is a “great power”
  - Apple can’t NOT have Facebook on iPhone
  - That gives Facebook power, and I’m not sure Apple anticipated Facebook just completely opting out
- SKAdnetwork … time for a few more features? Maybe …
- Biggest thing: ecosystem not ready
Where do you think Google might land with Android with regard to their device identifiers?
- I think they will be forced to eventually follow
- And that will be GDPR-influenced as well … where they’ve been accused of not adequately following GDPR
- Mobile marketers are calling for it … maybe not in USA … but in Europe
- But … different
  - Apple has an ad network
  - Google IS an ad network
- They have to build solutions that still work for their ad network
- I think they’ll do something around differential privacy and group people into 1000 or 5000 person cohorts that can be targeted …
- Every marketer wants granular data
- Almost zero marketers actually use totally granular data
- There’s an in-between solution
- And that’ll make the adtech space a much safer one for privacy
What might change between now and when the privacy policy will eventually kick in?
- Possibly a few more SKAdNetwork features
- Some more preparedness from app publishers
- Better solutions from MMPs
- But … some publishers will still be late 🙂
What’s the long-term impact to advertising? And to mobile apps?
- I think the “secular trend” is towards privacy
  - This is the opposite trend that we’ve seen in adtech
  - Which has been to more tracking
- Advertising started out: no idea what works … what ad works …
- Used coupons and codes to learn
- Digital advertising: tracking and tracing
- Now … 3rd party cookies going away
- IDFAs going away
- GAIDs going away (probably)
- Have to go back to contextual for targeting
- Means a flight to quality
  - WSJ audience
  - Only in WSJ
  - Not in Angry Birds
- And means measuring moves to incrementality and media-mix model and probabilistic models
  - No device ID
  - Spend data
  - App data
  - Closer to multi-touch attribution … or at least not last-click, which is BS
- And it means that for apps
  - Flight to quality
  - Monetize on-platform (IAPs, subscriptions)
  - Ads revenue moves to the margins
    - Cheap (gets even cheaper) on hyper-casual
    - Expensive on quality outlets