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Apple advertising changes have “altered the trajectory of the market”

In April 2021’s launch of iOS 14.5, Apple made some significant changes to how its Identifier for Advertisers (IDFA) can be accessed and used by app publishers and, by extension, ad networks and ad tech vendors. The changes come under Apple’s new AppTrackingTransparency (ATT) policy, designed to give users more control over how their data is tracked, used, and shared. 

Crucially, Apple has made IDFA access for all third-party app publishers off by default in iOS 14.5, meaning that a user now must actively opt in to tracking before their IDFA can be used for tracking purposes.

While not leading to the substantial decline in overall in-app advertising revenue on iOS that many developers and publishers had feared, Apple’s ATT changes have still altered the trajectory of the market. Around 55% of consumers prompted opt out to tracking which, although much less severe than initial expected estimates of 80-85% opt-out rates, is still having a significant impact on the operations of publishers and developers on iOS.

Smaller developers are faced with three main options: fully implement ATT, seeking to increase opt-in rates through tailored prompts; give up on personalized ads on iOS and instead prioritize Android for ad-based monetization; or seek out new vendors of solutions that get around the new measures, such as next-generation contextual targeting or predictive analytical approaches to identity resolution. 

Bigger companies, meanwhile, continue to develop – or acquire – their own technology to tackle the issue. AppLovin’s acquisition of mobile measurement provider Adjust in April 2021 for $1bn, and Zynga’s August 2021 acquisition of Chartboost for $250m were mostly driven by Apple’s IDFA changes.

While ad revenue remains a concern, there is also the issue of user acquisition on iOS for publishers and developers, with most typical approaches becoming either redundant or much less effective in the wake of Apple’s changes. 

Apple Search Ads, which enjoy an unrivalled view of attribution at the App Store level, saw a boom in popularity in 2021 along with increased ad effectiveness (i.e., higher tap-through rates and conversions) and higher ad prices. 

As a result, Apple’s Search Ads business posted year-on-year growth of 264% in calendar year 2021 to surpass $3.5bn in revenue. Whether intentional or not, the rollout of ATT had a huge positive impact on Apple’s fledgeling advertising operations.

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