How Apple iOS IDFA Negatively Impacts Facebook, Twitter Measurement

Apple’s iOS 14.4 will negatively impact measurement, metrics and monetization at Facebook, Twitter and other social media companies, an analyst wrote in a research note published Monday.

“Opt-in rates are expected to be very low, which effectively ends the IDFA as a reliable identifier of users,” Trip Chowdhry, managing director of equity research at Global Equities Research, wrote in a research note published Monday. 

Chowdhry warns investors to steer clear from social media company stocks for at least two to three quarters. “Don’t underestimate the privacy restrictions that Apple put in place,” he told Search & Performance Marketing Daily. He also said to expect the price of advertising clicks to rise.

“This is not about Apple being a weak or strong company," he said. "The company may gain market share solely based on its privacy shift."

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It has been a concern for advertisers on Facebook, more than other platforms, especially since the agency has been buying more media focused on mobile, said Matthew Mierzejewski, senior vice president of search and managing director of the Performance Marketing Lab at Merkle. “It comes down to opting in or opting out, and I would think, most people opt out, based on [internal] research we have,” he said.

An Apple prompt in its operating system for mobile and TV software will soon require app publishers, DSPs and mobile measurement companies to get the user's permission before tracking their data across apps or websites.

Through the implementation of the Identifier for Advertisers (IDFA), a random device identifier assigned by Apple to a user's device, users gain privacy. Advertisers lose the ability to target narrow audience segments, cap frequencies, launch retargeting campaigns, and get granular reporting.

When iOS 14.5, iPadOS 14.5 and tvOS 14.5 ship, they will request permission to track activity across iPhones, iPads, and Apple TVs.

For those who are not familiar with the process, Apple’s App Tracking Transparency (ATT), a new privacy feature, makes it mandatory to take users’ permission to access their IDFA.

Google, Facebook, Twitter, and LinkedIn have been battling with this change in a variety of ways to continue support and measurement for advertisers. Chowdhry’s report to investors details a variety of changes, including frequency capping, ad targeting, and how attribution gets done.

One of the most interesting that Chowdhry highlights is frequency capping. “Frequency capping will be much harder to do in an IDFA-less ecosystem,” he wrote. “Advertisers can ask ad networks to set parameters for the frequency and time period for which devices with certain IDFAs would see an ad, such as capping views to five times within 48 hours,” he wrote. “This will be much harder to do in an IDFA-less world.”

Chowdhry wrote that ad-technology solutions that integrate frequency capping -- such as demand-side platforms that allow brands to enable automatic ad purchasing in real-time -- may become obsolete.

He also expects self-attributing networks (SANs) to “break down,” because SANs use the IDFA to register advertising impressions and clicks.

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