By Roy Shkedi, Intent IQ’s chairman
The Weather Channel recently announced that it will be moving its mobile app further into a subscription model to compensate for the anticipated loss of revenue when targeted ads will become harder to produce. Non-targeted ads are significantly less effective and cheaper than targeted ads, and the channel is anticipating taking a hit.
But the Weather Channel isn’t alone. Publishers and app developers realize that with the anticipated loss of central IDs (third party cookie and IDFA), they will lose over 50% of their ad revenues. As those revenues originate from ads targeted using off-site and off-app data linked to the ad viewer by central IDs. To counter the anticipated revenue loss, publishers and app developers turn to a subscription model to make up for their advertising losses.
What’s Happening to Targeted Ads?
Certain methods used for targeted ads have been a source of controversy due to potential risk of infringement in individual privacy. As a solution, Google has been working on its Privacy Sandbox initiative, while Apple has come up with a different solution called App Tracking Transparency or ATT. Apple’s system will require app publishers to give users the option to opt into the Identifier for Advertisers (IDFA) or not. In other words, Apple’s users will have a choice whether they want to share their device IDFA, which is a numeric number identifying their device.
According to Mobile Marketing, it’s estimated that only 5% to 10% of users will opt into sharing their data, down from pre-App Tracking Transparency numbers of around 70%.
Who Wins in This Situation?
The industry will have to adjust to these low numbers of users agreeing to share their data, when apps start expanding their subscription options in anticipation that their ad revenue will drop, it’s the users who will pay for it (literally). And it’s still unknown whether the subscriptions will make up for the lost revenue and whether consumers will be willing to pay!
There’s only one winner in this situation, and it’s Apple. The tech giant keeps 30% of app subscription revenues while every other medium to small player in the space will suffer a great loss in revenue. Behind a facade of addressing the public concern over privacy, Apple has positioned itself to become a monstrous earner — at the expense of all other parties.
In Germany, a group of ad, tech, and media businesses have already filed an antitrust complaint against Apple. They claim that Apple’s new move will result in a 60% decrease in ad revenues for app developers since they won’t be able to gather the necessary data for targeted ads.
Intent IQ’s Mobile Identity Hub Solution
Intent IQ’s Mobile Identity Hub (MIH) service enables DSPs to target mobile apps using data from outside the app where the ad is delivered. Therefore, preserving off-app data-based targeted ads as a major revenue source for mobile apps.
Importantly, Intent IQ does it without the help or involvement of the app developers.
MIH works by clustering mobile apps’ user IDs of each of the apps on a device, and providing the cluster along a device universal ID to DSPs. Intent IQ’s MIH covers over 80% of ad inventory with 90% accuracy.
While our solution can help companies despite the new developments, it doesn’t absolve Apple from using the excuse of user privacy to cut out a significant portion of ad revenue from all their mobile app publishers. Had Apple been sincere about their true purpose behind App Tracking Transparency, Apple would right the wrong they have committed and reduce their app store commission to zero. If they would do this, we’ll know that they have no ulterior motives. If they don’t do this, we will know that they were never really acting for the sake of user privacy, but rather just to increase their bottom line.