There has been a great deal of speculation about how apps would adapt to changes to Apple’s Identifier for Advertisers (IDFA). The changes came into effect at the end of April 2021, meaning Q3 2021 was the first full quarter where advertisers had to contend with the changes.
How apps are weathering the early days
Many people were watching end of quarter results from app-companies like Snapchat, Facebook and Twitter very closely, watching to see how much impact the changes had on their advertising revenue.
Snap was hit particularly hard by the changes. During the Q3 2021 earnings call, Evan Spiegel, CEO of Snap said the changes had impacted his company more than they had expected.
“Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July,” he said during the call, “While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”
After the earnings call, Snap’s shares fell by as much as 25 percent. Earlier this month, a shareholder in Snap sued the company, saying that they had oversold their ability to adjust to the changes.
While Snapchat seems to be an initial loser from the changes, other apps seemingly have adjusted to the initial shift better than they expected.
During Twitter’s earnings call, CFO Ned Segal said that the impact on ad revenue from IDFA changes were “lower than expected”.
Although the coverage of Facebook’s earnings call dwelled largely on its rebrand to Meta, the company did reveal some details as to how Apple’s iOS changes are affecting the company. COO Sheryl Sandberg said that the company has encountered two challenges.
“One is that the accuracy of our ads targeting decreased, which increased the cost of driving outcomes for our advertisers. And the other is that measuring those outcomes became more difficult,” Sandberg told analysts.
Same Problem, Different Outcome
Although the changes to IDFA are across the board, apps are experiencing it differently.
Dan Larden, head of UK at The Programmatic Advisory, says that there are a number of reasons why companies have been affected differently by the changes, the most obvious being how users access the platforms.
“Snapchat is heavily weighted towards pure app traffic. Twitter on the other hand still has a decent share of web traffic across different countries,” Larden said.
Indicators are that opt-in rates to IDFA are low in general, but Ben Holmes, general manager, DSP at Digital Turbine, says that opt-in rates are a crucial differentiating factor.
“This all comes down to the opt-in rates, and social apps are amongst the lowest categories for opt-ins,” he said.
Holmes added that Snapchat’s USP is also one of the reasons they have been acutely affected by the changes.
“With fewer opt-ins, the ability to target and attribute diminishes and Snap, as an app whose whole selling point is anonymity, is feeling that squeeze,” Holmes said.
If you’re concerned about anonymity the App Tracking Transparency (ATT) prompt message is not exactly reassuring. In order to opt in to IDFA you have to agree for the app you are using to “track your activity across other companies’ apps and websites”.
How much companies are being affected by the iOS changes also reflects the kinds of advertising on their apps.
“There’s small to medium enterprises who mainly use Google AdSense, or maybe the Facebook Ad Network to increase their reach. These are businesses who will press a button asking to find more of a certain type of person,” Dan Larden said, “ And Google and Facebook’s ability to do that has been decreased. If you’ve got a high percentage of those types of advertisers, then you’re going to be hit.”
He adds that upper-funnel advertising activity has been less impacted by the change than lower-funnel activity.
“Performance advertising has become harder because of the changes,” said Larden, “They limit the ability to be able to optimise and really get granular on that audience targeting. People will cut performance budgets when they don’t see results.”
There is lots of brand-awareness rather than performance-based advertising on Twitter says Larden, unlike on Facebook and Snapchat.
These are still early days for the ATT framework, and DT’s Ben Holmes says the ecosystem is still adjusting.
“We’ve been saying since May that after an initial dip, iOS demand quantity would recover at lower prices around this time, and that’s proving to be true. Advertisers have just taken time to adjust to the new reality,” he said.
