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Last update: October 2021

4 mins to read - 2021/10/12

How to Approach Mobile App Monetization in Apple’s Post-IDFA World

If there’s one bogeyman that’s haunting the dreams of all digital and mobile advertisers, it’s Apple’s new App Tracking Transparency (ATT). When Facebook announced in a blog post on September 21, 2021 that advertising conversions were underperforming due to iOS users opting out of having their data tracked by advertisers, Facebook’s stock fell by 5%. Smaller apps have reason to be nervous as well, especially those whose business model depends majorly on advertising revenue. For mobile apps who are looking to survive ATT and adapt with the changing times, here are a few ways you can evolve your monetization model to keep user levels high and revenues robust in a post-IDFA world.

Download our Data Security Whitepaper to learn more about OpenBack’s innovative approach to data tracking and privacy regulation compliance:

What Is IDFA?

First, a quick refresher on what an IDFA is, and how Apple’s introduction of App Tracking Transparency is a game-changer. “IDFA” stands for Identification for Advertisers, an anonymized unique identifier which Apple assigned to each device prior to January 2021. Like browser cookies, IDFAs were a way for 3rd-party advertisers to track a user’s data within mobile apps, which they then use to send device users targeted ads.

In-app advertising is a major stream of revenue for many apps. So when Apple introduced App Tracking Transparency, requiring apps to get permission from their users to track their data, it was a huge game changer. With around 56% of Apple users opting out of having their data tracked, companies like Facebook, whose business model exemplifies the predatory advertising tactics that Apple is seeking to combat, are losing significant value.

What Recourse Do Apps Have in a Post-IDFA World?

Like it or not, this is way the world is going now, and post-IDFA developers will have to get creative about the way they incorporate monetization into their apps.

According to Dean Takahashi of GamesBeat:

“[App Tracking Transparency] has the potential to hurt in-app purchase revenue, which accounts for the bulk of overall app and game revenues and is often enabled by the careful individual targeting of users with ads that is much harder to do now.”

In light of this, there are a few paths mobile developers can take to mitigate the effects of ATT. First, it’s likely that sending app users a pre-permission notification will become common practice. By explaining the benefits data tracking brings to UX, you might be able to inspire some users will give their permission. Some people appreciate receiving marketing that’s targeted to their interests. However, given the high percentages of users opting out, it’s likely that the majority have already made up their minds.

SKAdNetwork, In-App Bidding, and Other Tactics

Mobile marketers are scrambling to improvise with new – or sometimes not so new – monetization methods. Apple’s answer is its SkAdNetwork, an alternative framework for attributing clicks and impressions on iOS apps. It shares conversion data at an aggregate level, without any means of tracing it to an individual user’s identity. What’s more, mobile marketers have no direct access to it, making it difficult to gain insights and optimize a marketing campaign in real-time.

Facebook has also suggested a different approach to ads, using in-app bidding instead of the older “waterfall mediation” method of app tracking. With the waterfall method, the value of ads is tracking according to cost per mille (CPM), or how much an advertiser pays per thousand viewers. In-app bidding spurs competition between ad networks and other bodies, resulting in more revenues flowing to mobile developers and developers for each ad impression.

It’s likely that in the post-IDFA world, free-to-play app and mobile games will start to implement more upfront payment methods such as paywalls, subscriptions, and battle passes. And some publishers have also included a disclaimer to users that, since ads will be worth less in terms of CPM, if iOS users opt-out of having their data tracked, they will be shown a greater volume of ads to make up the difference in revenues. Research has shown that hyper-casual games, where players expect to be shown lots of ads, have higher levels of success doing this. However, flooding users with a blitzkrieg of ads ultimately has diminishing returns. And, unless you’re confident that your app is absolutely indispensible to your users’ lives, it may not be a wise tactic to try to blackmail them into opening up their personal data to 3rd-party advertisers.

Make the Switch to Device-Side Data Processing

Experts are predicting that in-app purchases will be the first casualty in the post-IDFA world. Using traditional mobile platforms that personalize mobile ads for micropurchases requires data-processing methods that are curtailed by App Tracking Transparency.

However, instead of writing off IAPs altogether, many apps are switching to a mobile engagement platform that uses device-side data processing. There are myriad benefits to device-side processing, the most important of which is data privacy. Platforms like OpenBack that use mobile edge computing process user data at its source never have to remove it from the device. As such, the data never has to be sent to a cloud server, it’s never accessed by 3rd parties, and it remains in the user’s possession at all times.

This means that mobile marketers can send highly personalized, real-time push notifications, while functioning within the parameters of App Tracking Transparency. And all while remaining fully compliant with COPPA, GDPR, and all other regional data privacy regulations.

To learn more about OpenBack’s industry-first device-side data processing platform, get in touch with one of our experts.

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