How Apple did (not) kill a 330B$ industry

After the big January blowout full of clickbait-ey headlines about Google killing cookies, (yes, for most marketers that’s still an open emotional wound) which we debunked for you here, we are in for another treat, my friends! If you read the advertising media headlines only, which like, I am sure none of you ever do, you’d easily get the impression that the advertising world as we knew it ended in post-apocalyptic flames. Treat yourself to some advertising anxiety here and here. Though if you do look beyond the headlines, Forbes actually provides a quite well-rounded analysis of the situation, although some comments in that article don’t align with our view.

What

..caused the upheaval was the announcement made at Apple’s July WWDC 2020 keynote.

Apple revealed that come full rollout of iOS 14 this fall, they will be making changes to IDFA tracking and availability. Up until today this ID, which is used for marketing and advertising purposes such as targeting app users on ad networks or deeper user behaviour analytics inside of the app, was available to every app owner.

How are the user behaviour insights, metadata, and identifiers like the IDFA (Apple) or AID (Google, Android) being used of course grossly varies? On one side, you have brands who collect in-app user data and use it for better segmentation and understanding of customers and on the other side, you have thousands of free apps that sell your data to anyone who asks and trust me, a lot of companies in the ad tech ecosystem do ask.

Why

..would Apple do this? There are two aspects to this question and the latter will be highly speculative. But if you have a few seasons in the ad tech world under your belt, you would surely find it plausible.

First, the noble cause of user privacy. Apple has long been trying to position itself as a consumer privacy steward. Though their track record in this space is hardly unscathed let’s just leave it at that. The other option could be Apple’s fierce competition with their major frenemies, the tech giants, namely Google and Facebook who maintain a de facto duopoly on the advertising market at roughly 60% of the whole pie (US figures). They cooperate in some areas, compete in others and the digital advertising industry which is worth some 330 B$ annually is surely a strategic stake.

Who

..will be hit by this move? The truth is that the impact will be felt by the entire industry and all its key players. Everyone will have to change their strategy in the short term and their role in the ecosystem in the long term. But if we really have to take names, here goes:

    • Advertising agencies – who may now find it difficult to build retargeting campaigns and therefore will be under pressure to deliver the results and positive ROI.
    • DSPs – Without IDFAs of Android’s equivalent in the future, DSPs will be pressured to find alternative solutions, or have a hard time adapting, being unable to value their ad inventory, or filter out fraudulent devices. Targeting and attribution will be much harder.
    • DMPs – With an Opt-In era beginning with the end of IDFAs, DMPs will no longer be able to anonymously collect and resell data, they first got toppled by loss of third-party cookies and what’s left in their data pools is data from long-tail free apps. This doesn’t apply to telco related DMPs in Asia as their data sources the telco network itself but that business model we anticipate will be soon under scrutiny due to changing data privacy regulations.
    • Device graph providers  – Companies who use device graphs can expect a significant loss of graph quality as a lot of them have been powered by the very app IDs we’re talking about here. 
    • Header bidding in programmatic –  The unified auctions of ad inventory are reliant on ascribing a value to users, and thus reaching a price. But with this disappearing overnight, new processes may come into play.

How

..does this affect the world of Customer Data Platforms?

A lot, and yet – only a little. While the absence of IDFAs may be a loss of data, there are still other first-party data, typically PII based identifiers that CDPs use – in identity resolution i.e. persistent cookies, advertising app IDs, emails, and phone numbers, that aren’t really going anywhere. More identifiers per customer mean more options and opportunities for data activation. So what does the solution look like? By using these 1st party identifiers to build a comprehensive client profile using intelligent profile stitching, potentially enriched by third-party identifiers. We are not cheesy enough to say that this situation will help CDP as a category overall since we are a CDP vendor, but if you read the market like that, who are we to argue?

What’s

..next for brands?

Despite the doomsday predictions, brands can still look forward to bright days ahead for digital marketing, albeit via different, more responsible, and transparent means. Let’s take a look at what’s what.

  • First-Party Data – We’ve long predicted the primacy of First-Party Data, and the demise of 3rd Party Data. The emphasis on combining and merging all first-party data points brand owns will continue to grow stronger by the continuous push for user privacy even in the big walled gardens like Facebook, Apple, or Google. Very importantly your consumers demand to know what you are collecting and how you are using it.
  • Multiple identifiers and identity resolution solutions will become a must to build complete customer profiles. While this may sound more complex, it could lead to newer, more innovative avenues for marketing.
  • Retargeting is dead, according to Forbes. NOT. Retargeting will still be alive and kicking though brands will need to be smarter about how they are segmenting and activating their first-party data. If you’re able to stitch together a good customer identity (see above), you can still do it and nothing changes.
  • Within the Asian marketplace – The Apple market share for non-premium brands isn’t really that significant, so there may not be a huge direct change for marketers of the region. What will be very closely watched though, will be how Google responds. Which side will they take? Our take: Similar regulations will soon appear on the Android platform in the coming months, and that will be a true shakeup for South-East Asia. Ok Google, the ball is in your court!
  • Brands will be forced to come clean – to develop good narratives around data collection, and be transparent with how they use it. For personalising and tailoring a better experience for their customers, and not for reselling it.

The changes that are to come, may seem sudden. But they’re only following the trends of more customers waking up to data misuse, and demanding stricter data regulations. Apple has only kickstarted the movement with concrete action and created a whole new world. It’s up to brands to find the many opportunities hidden within it. Through every change that’s to come, Meiro is here to help design and execute your first-party data strategy

If this article got you thinking, get in touch!

Pavel Bulowski

CMO | Co-Founder Pavel stands behind all the smooth operations and business growth. You would run into him in the queue at airports rather than in one place. Besides that, he enjoys chess, boxing, and history.
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