What Retail Marketers Need to Know About Apple’s App Tracking Transparency Update
It feels like every year since 2016 has been hailed as the "year of mobile." The truth is, marketers, and especially retail marketers, recognize the steady increase in the importance of mobile as a platform, and have been increasing their investments in the channel every year to match.
There are now over 3.6 billion unique smartphone users across the globe, with the average user spending close to four hours and 10 minutes on their device every day. In 2020, ad spend across mobile reached $240 billion, growing by 26 percent year-over-year, and is expected to reach $290 billion by the end of 2021.
Mobile presents a huge opportunity for retailers and, since the coronavirus pandemic hit the world, as with many media trends, this opportunity has accelerated. Thirty-one percent of U.S. retail spending came from mobile last year, and platforms like Amazon.com, Shein, Wish, and Walmart all saw an increase in their platform usage.
And when we talk about mobile, we're really talking about in-app. Ninety-two percent of time spent with mobile is spent on apps, with the majority of ad spending following that trend.
Mobile is Changing
The way advertisers can track and measure user engagement with their mobile ads is changing. Apple, whose operating system is used on around 30 percent of smartphones worldwide, and closer to 60 percent in the U.S., recently released its latest version, iOS 14.5. The update includes a feature called App Tracking Transparency (ATT), that means whenever a user opens any app that wants to access a mobile device ID called the Identifier for Advertisers (IDFA), they will see a pop-up asking them if they want to be tracked and giving them the option to opt in.
So what does this update really mean for retailers that want to make the most of the mobile opportunity?
Firstly, on devices that opt out of app tracking, attribution will change. Up until now, in order to see whether your mobile ad on a particular publisher led to an app download or another action, generally you would use the IDFA for attribution. The good news is that Apple has created an alternative, more privacy-friendly way to provide the addressability that advertisers seek, called SKAdnetwork (meaning Software Kit for Ad Networks).
Essentially, this is an API that will allow advertisers to receive publisher-level conversion data without revealing any user- or device-level data. Although the granularity of data available in the new framework is a lot more limited than marketers might be used to before now, and some may have reservations that it's not quite so independently verified, this sort of measurement will be the norm of the future in a privacy-first landscape.
Adoption of the SKAdNetwork framework continues to increase, with big players like Facebook, Google, Twitter, and Snap adopting it, and already nearly 60 percent of bid requests are compatible with the framework, up from 20 percent in February. While many ad networks and DSPs are still working through the development needed to fully adopt SKAdnetworks, it provides a promising future for mobile attribution.
With Change Comes Opportunity
Secondly, we may see CPMs fall in the short to medium term on iOS apps. Depending on the proportion of users opting into app tracking, a fall in trackable users in-app while adoption of SKAdnetworks is still nascent could lead to reduced bid competitiveness and reduced CPMs. For some, this could present an opportunity to target campaigns contextually across iOS environments for increased value, providing you adopt a measurement framework that doesn’t rely on IDFAs.
But Apple’s update is not the only change in identity and privacy happening right now. Mobile doesn’t exist in a silo, so retail marketers need to look further. With Chrome phasing out third-party cookies as well, there' a fundamental shift happening in user identity and tracking, and a new approach is needed.
To continue to win across mobile and other digital channels in tandem, marketers will need to take more control of their first-party data assets tied to both web and app properties, such as CRM data. By working to connect this to both other authenticated data from publishers via identity resolution as well as anonymous datasets such as geo or contextual data, marketers will be able to continue to run re-engagement and user retention activations in the future that are less dependent on both IDFAs and cookies.
For retailers, mobile presents a huge opportunity. However, if you’re not already speaking to your programmatic media partners about switching to future-proofed identity solutions across both mobile and other channels, there’s no time like the present.
Rebecca Rosborough is the global chief marketing officer at MiQ, the programmatic media partner for marketers and agencies.