Comment & Opinion

The end of the IDFA: Then and Now

LifeStreet CEO Levi Matkins on how advertisers and developers can navigate the changing mobile space

The end of the IDFA: Then and Now

The mobile space is continuously evolving, but it's important to note that while the mobile market remains the most profitable branch of the gaming sector, it also faces unique challenges, including monetisation. As legislators and game makers alike attempt to codify how the space should work, changing regulations can create significant hurdles.

One of the largest obstacles imposed in recent years is the new IDFA regulations, effectively changing how advertisers are able to bring products to the attention of consumers. The changes have caused a ripple effect throughout the industry, with some estimating that up to a third of mobile gaming businesses may close.

In this guest post, LifeStreet CEO Levi Matkins discusses how developers and advertisers can navigate the changing space.

When Apple unveiled that it would be restricting its IDFA at the 2020 Worldwide Developers Conference (WWDC), it marked the end of app advertising as we knew it. In one sweeping announcement, Apple notified the mobile ecosystem that its device identifier would soon be unavailable and with it —audience signals that had once made hyper-targeted advertising possible. While most players in ad tech have experienced profound losses since Apple’s changes - Facebook, for example. For many of us, the outcomes of iOS 14.5’s rollout in April 2021 were not as bad as we thought they would be.

Here’s a look back at the deprecation of the IDFA, where the mobile industry is now and where it’s headed.

What happened after the IDFA went away

Until iOS 14.5, Apple had made its unique device identifier available to advertisers so that they could deterministically tie impressions to conversions and optimise their ad spend. With the loss of the IDFA came the loss of this capability and various outcomes, including a loss of performance, scalability and user level signals.

The loss of performance for big and small brands

For players that were hyper-reliant on the IDFA, performance has certainly suffered since its deprecation. Take a walled garden like Facebook and its Audience Network, which lost $12 billion because of Apple’s changes. It also cost many smaller players that relied on device-level data to target hyper-specific audiences. A 2022 survey found that 40 percent of mobile companies reported losses post-IDFA. Seventy-five percent of these companies said these losses put their business at risk.

Finding scale can be more complex

For some advertisers, such as those that have a “broad appeal” brand or product, advertising is still pretty great. But, for advertisers that have very specific niche audiences, finding scale is much harder to come by. Post-IDFA, there’s been a decrease in audience size overall and, therefore, the ability to create rich, custom lookalike audiences to scale campaigns.

Take advertising for a casual game app versus a hardcore game app as an example. For a casual game app, finding specific users across the mobile ecosystem using device-level signals is less necessary because the app’s content has broad appeal in the mass market. On the other hand, a hardcore game with a niche audience of hobbyist gamers may be relegated to advertising in just a handful of other hardcore game apps with a similar audience without the device-level signals to target users across the mobile ecosystem.

The rise of contextual signals

With the loss of the IDFA, marketers have had to increasingly rely on contextual signals to optimise their ad spend. Unlike device level data which gives historical background on who an ad is shown to and what their tastes are, contextual signals give present-moment context — such as where and when the ad is shown.

For players that have innovated bidding models based on these signals — marrying the context of where an ad is shown with the ad creative to successfully engage a user in the present moment — the effects of the IDFA’s deprecation have been less severe. At LifeStreet, we’ve actually found that contextual signals combined with the decreased cost of impressions has leveled out to a higher return on ad spend in many cases.

Looking ahead

What’s to come in the next 18 months? It’s smart to expect the continued march towards enhanced user privacy as Google moves to restrict its device identifier, GAID. Here are a few other trends to look out for.

Back when the IDFA was still available, the most powerful lever of performance was audience profiling. It used to be possible to take data points about a user and build algorithms that iterated bidding and decision-making to serve ads to high potential users at the right place and the right time.

Post-IDFA, this has changed. Now, a key lever available to marketers to control the performance of their campaigns are creatives. With that said, there will be a heightened focus on building highly-engaging creatives and drilling down on the details of their performance.

The continued measurability of mobile advertising

Whether attribution comes from MMPs or Apple’s SKAN framework, marketers should expect measurability to be maintained on iOS campaigns. Why? Because less measurability means less advertising and fewer in-app purchases (IAP), which would chip away at Apple’s 30% commission rate. Therefore, Apple has no incentive to change the measurability of iOS advertising campaigns.

The use of brand IP to engage new users

Going forward, marketers will turn to different strategies — like leveraging well-known brand intellectual property (IP) — to unlock scale. Take high-performing Harry Potter mobile games or King, which continues to find the best performance from games that use its well-known Candy Crush IP. Leveraging existing audiences in this way is a smart play for tapping into an already engaged, scalable audience.

Advice for advertisers in the post-IDFA age

As the economy fluctuates and privacy regulations continue to evolve, advertisers should be even more demanding of their partners. Marketers should also integrate with their BI teams as closely as possible to stay ahead of changes in their monetisation trends. Finally, we recommend that marketers operate in a kind of “safe mode”. In other words, with LTV curves harder to predict during these uncertain economic times, it might not be the right time to over-invest in risky channels or inventories.

An exciting time to be in mobile

Whether it be privacy restrictions or the rise of the latest high-performing channel, the mobile ecosystem will always be changing. There’s no question that the deprecation of the IDFA has brought losses, but it’s also brought enhancements — to consumer privacy protections and balance in the industry. Today, the playing field is leveler than ever with all players — whether big or small — having the same permissions and access to user data. It’s an exciting time to be in mobile and I look forward to what changes our industry will be challenged to scale next.

Edited by Lewis Rees regularly posts content from a variety of guest writers across the games industry. These encompass a wide range of topics and people from different backgrounds and diversities, sharing their opinion on the hottest trending topics, undiscovered gems and what the future of the business holds.