Limit Ad Tracking: What You Need to Know

There has been a lot of news lately regarding personal data policies and regulations such as the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), and the Children’s Online Privacy Protection Act (COPPA). Tony Ouk, director of product marketing, recently spoke to Rina Matsumoto, product manager for demand products, regarding another potential upcoming data initiative, Limit Ad Tracking (LAT).

Tony: Hi Rina. It seems like there is so much news about these different personal data regulations. Can you explain Limit Ad Tracking and why it’s important to understand?

Rina: Absolutely. Limit ad tracking (LAT) is a feature on iOS devices allowing users to opt-out of having an ID for Advertisers (IDFA). Until iOS 10,  even if the user opted into LAT, it could be utilized for various reasons such as “frequency capping, attribution, conversion events, estimating the number of unique users, advertising fraud detection, and debugging”. However, when iOS 10 was released in late 2016, the IDFA could no longer be used for any purpose when LAT is turned on. In fact, with this setting enabled, the user’s IDFA appears zeroed out. This is different from Android’s opt out of ad personalization in that when the user has opted out, the Google Advertising ID is still available for attribution.

It’s increasingly important to understand LAT as privacy becomes such an important part of advertising practices. In addition, LAT is growing in market share. A Singular report finds that LAT has doubled in the last four years. If this trend continues, all parties will need to adapt accordingly.

Tony: Do you see any differences in characteristics of users who have LAT enabled and those who don’t?

Rina: We’ve done analysis across the Vungle network and the results have been rather interesting. In general, we find that LAT users exhibit higher quality across all LTV (Lifetime Value) metrics, including retention and revenue.  In our most recent cohorted data, looking at iOS US, we’ve found that LAT users have on average 31% higher D7 ROAS (Return on Ad Spend) performance. This is unsurprising. A user who is purposefully going into their settings to enable LAT is likely sophisticated and savvy.

Tony: There are rumors that Apple may remove IDFA completely. Why would they consider this change?

Rina: Apple has been hinting at an eventual removal of IDFA through the iOS 10 update in 2016 as well as the introduction of SKAdnetwork (attribution solution without IDFA) in 2018. In my opinion, it’s part of a larger privacy narrative trend from Apple that include stronger regulations of an individual’s personal data usage. Today people are more sensitive about how their personal data is being used and are calling for more transparency. There is also the fear of personal data being misused or even abused. I can only imagine that Apple is strongly looking into ways to better protect their consumers and this is potentially an additional way to do that.

Tony: It sounds like this is then a good initiative for everyone, right?

Rina: No one will argue that giving users more control and transparency with the way their personal data is used isn’t positive or important. At Vungle, my team has always supported these initiatives, whether it was GDPR, CCPA, or COPPA. At the end of the day, users are spending more and more time online, whether it’s on desktop or on mobile devices. It’s important that users feel confident and safe about any sensitive personal transaction online or in Apps such as credit card information or a text message sent to a friend.

If a change is on the horizon, it can benefit the ecosystem if everyone is prepared, as this will affect all parties involved in the mobile marketing ecosystem.

Tony: What kinds of concerns do you have?

Rina: IDFA is utilized for a number of reasons that could affect the mobile marketing space with its removal.

The first point that comes to mind is attribution. Currently, device matching is the primary method for attribution and the fallback method is fingerprinting. Fingerprinting is a probabilistic method of attribution that leverages the device’s IP address and device user agent. Because of this probabilistic component, it has an inaccurate element and can lead to both false positives and false negatives in attributed installs.

This also leads to my next point: potential changes in Conversion Rate. IDFA is also an important way that networks show ads efficiently through frequency capping (ads shown per user), suppressing ads from being shown to users that have already installed an app, and ultimately showing relevant ads to the end user.

Tony: You’ve mentioned two potential problems: knowing your audience and reaching them. What does this mean?

Rina: This can all lead to CPM degradation. What I mean by that is the value or amount transacted between Publishers and Advertisers will go down. This will hurt Publishers in terms of revenue and will hurt Advertisers in terms of the quality of inventory they feel they can buy. The best way I explain it is with the analogy of going to a restaurant to eat. Remember that IDFA allows advertisers to understand you better. It allows them to show you content that you care about and give you an overall better user experience. Imagine if you went to a restaurant and the server couldn’t show you a menu or ask the type of food you wanted. The best a restaurant could do would be to bring out a dish and hope it’s something you might enjoy.

Now, imagine if you were a vegetarian and the dish the restaurant brought you was a steak. Even worse, what if the restaurant couldn’t even tell if you wanted to eat at the restaurant or have your order to-go, so then you’d be a vegetarian who got handed a bag of food only to discover when you got home that it was a steak.

Tony: I have also heard that this may raise new challenges with fraud. Can you explain what that means?

Rina: There are countless ramifications in a world without the IDFA. For example, Fraud detection is currently highly dependent on device ID tracking. Retargeting will be impossible without being able to leverage a list of device IDs to target.

All in all, what I’m saying is that I think we should also consider all aspects of any policy change and enact them accordingly with a clear timeline and a plan to educate all those that the policy will affect.

Tony: How should those in the mobile advertising space prepare for such a potential change?

Rina: For ad networks providing advertising inventory, like Vungle, we’ll need to think about new ways to show ads efficiently to our end users without device IDs. Vungle has the advantage of having already invested in contextual targeting, especially since the onset of GDPR and CCPA. In addition, SDK-direct networks like Vungle can work closely with our Publishers in order to obtain first-party data to provide more tools for advertisers to reach their target audience so that their ad campaigns are effective.

For advertisers, I hope they’re thinking about how their systems rely on the IDFA and are keeping track of this in a list. Many Advertisers use device IDs such as the IDFA for tracking campaign performance. Making use of their first-party user ID wherever possible,will be a great step to take in preparation.

Attribution is a key puzzle to solve in the bigger picture. Without accurate attribution, marketers can’t properly analyze their efforts and invest in the right channels. Networks and Publishers won’t get the credit or revenue for the traffic they’re driving. There’s a lot of thought leadership from the largest MMPs in the market on the topic of  fingerprinting. While there are some differences between them, one thing is clear, fingerprinting is a fallback, not a primary attribution method. There will need to be some additional investment if this is to be the primary method moving forward.

Tony: Thanks, Rina. This was very informative. Anything else you’d like to tell our audience?

Rina: There’s still no set date of when LAT will become the default with Apple or if it will even happen in the near future. But if this happens, you can learn more about it through partners such as Vungle and through channels such as this blog site. I’ve love to discuss openly around the topic and figure out how our mobile advertising space can sustain beyond a world without IDFA.