Digital advertising is all about personalization - sending the right content or ad to the right consumer at the right time - and for the longest time consumer data is how brands and publishers accomplished this. Recently Facebook announced their participation within IDFA would end, resulting in potentially huge revenue losses for publishers. The IDFA, for those who don't know, is the way ad requests are linked up from independent apps using Facebook's Audience Network, to Facebook user account, providing that hyper-targeting ability that social marketing is known for.
"The reason advertising on Facebook is so effective is because the social network can create a very full profile of who a particular person is, including their interests and proclivities. Then using the high-end predictive modeling that we know they use, they can serve ads to people who are very likely to engage with whatever that ad is selling. The whole shangri-la of the right message, right time, right person, is achievable on Facebook to a degree pretty much never seen before," said Pierre Diennet, VP of Product Management, Lotame. "If and when IDFA goes away, or is restricted, and the independent app sends an ad request to Facebook without it, Facebook will no longer be able to tie any personalization to the ad request, and will only be able to serve an ad that might have some sense of the app context that the user is in."
Those feeling the brunt of this change won't be people using Facebook ads directly, but those using the Audience Network, but it may be felt in inventory because overall inventory may be reduced. This could cause a chain reaction in the reduction of CPMs because it would reduce the value - i.e. revenue made - from overall app pageviews, and will hinder app makers' ability to run personalized ads across their inventory levels. So why do it, if it's going to hurt advertisers? Because it won't hurt Facebook.
"Facebook themselves admit, by citing this paper, that they will ultimately benefit from this change. The paper presumes that "$24 to $29 billion in annual publisher revenues would likely be absorbed by walled gardens (Google, Facebook, and Amazon) if ad personalization goes away." That being said, they also know that Apple will be inserting itself more clearly into their business model. Facebook needs to be able to do cross app tracking to show it's brand advertisers that their ads work. The brand marketers of the world require Facebook to prove that what they are doing is working both from a product sales and product awareness perspective and the only way to do that in a neutral and fair way is to pass the IDFA around to sales platforms, and attribution reporting entities. Facebook is using the publisher revenue story to defend their territory and their business model from future disruption by Apple," said Diennet.
One other issue is that the effects of Facebook's change could have a ripple effect throughout the digital space. Google has announced plans to devalue cookies, there are upcoming iOS 14 changes from Apple relating to data and data collection not to mention the already established GDPR and CCPA regulations. That ripple is because so many businesses don't own their data and instead put their dollars into walled gardens - like Facebook and other social networks - that own the data. They key, says Diennet, is that there are already options out there for these publishers if they'll only take hold.
"Adwords, the search tool from Google is very effective, 3rd party data targeting through DSPs and DMPs is a solid alternative, and there are others. If, on the other hand, your question is about how, without the IDFA, can a marketer effectively advertise within the IOS app universe, the answer is I don't know. The alternative solution that has been offered by Apple, SKAdNetwork, is like trading a pair of tweezers for a mallet. It's both blunt and possibly destructive. That is I think the main reason the change has been postponed. There is no alternative right now and until there is one, I'm not sure anyone who generates their livelihood from in-app advertisements on IOS is going to sleep well," said Diennet.
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