Is iOS 14 the end of programmatic in the app ecosystem?

In this two part series, we will examine the impact of iOS 14 on the programmatic side of the in-app advertising industry, and the solutions of evolving in an IDFA-less world. Part 1 will explore the impact of iOS 14 on programmatic, the results of buying LAT and our contextual targeting solutions moving forward. Part 2 will introduce how the ecosystem is working more together than before, becoming codependent, and the solutions that lie ahead in this collaborative environment.


Programmatic taking a stance in the right direction

Over the last few years, programmatic has consistently grown to become a crucial piece of both marketing and ad monetization strategies for app publishers. Adoption of in-app bidding solutions is accelerating as publishers experience the superior performance and increased operational efficiency that stems from the ability to offer ad inventory to all demand sources concurrently. In parallel, DSPs have been winning a growing share of user acquisition budgets, becoming a substantial marketing channel for top app and game developers.


For programmatic to operate effectively, it uses precise targeting and identifying tactics to segment audiences with real data. Without IDFA – the identifier tied to the user’s device that allows ad exchanges to target, track user behavior, and collect data, it’s fair to say that Apple’s upcoming iOS 14 update felt like a kick in the gut to the mobile app industry.


What changes with Apple’s iOS 14?

The topic on every mobile marketer’s mind is – what happens the day after IDFA. Once iOS 14 is released, publishers will have to ask users for consent in order to access the user’s IDFA, which is predicted to be as low as 10% opt-in. To request permission to track the user and access the device’s advertising identifier, publishers need to use Apple’s AppTrackingTransparency framework.


How does this affect programmatic?

In an attempt to push the entire app ecosystem to make much needed progress toward privacy-aware solutions, when Apple designed the underlying infrastructure meant to keep advertising-based app businesses viable through this transition, programmatic was a big blindspot.


Programmatic works best when data flow is standardized. Apple’s iOS 14 update has caused a major shake-up for the programmatic ecosystem because the SKAdNetwork specification was not designed for real-time transactions between multiple touch points. SKAdNetwork was built for ad networks operating a single SDK that primarily serves its own managed service campaigns/ direct demand.


When programmatic DSPs register to receive postbacks from Apple’s attribution framework, they rely on third-party ad SDKs in order to fire all the necessary signals – thus creating codependency between DSPs and the multiple SDK-based supply sources that they work with. This puts DSPs at a disadvantage since it creates more touchpoints where the data flow could potentially break, keeping DSPs in the dark about their own performance.


Additionally, DSPs evaluate bid price for each impression and commit to a price in real time, whereas SDK-based ad networks buy large subsets of inventory for one negotiated (but not committed) price that represents their average performance. The IDFA has been the most important parameter used by DSPs to determine the price they are willing to pay for an impression, so presumably without it they will have to significantly drop their bids in order to still deliver ROAS and buy impressions profitably. Without access to an identifier, DSPs experience a greater disadvantage than SDK networks in the ecosystem’s natural flow.


There are many other examples for the presumably unintended imbalance that Apple created between DSPs and ad networks as part of the iOS14 changes, but rather than dwelling on these points we would rather focus on how the programmatic ecosystem could potentially handle the new reality.



Rays of programmatic growth will shine through the iOS dark cloud

DSPs’ success lies in their ability to build these sophisticated, adaptable algorithms to optimize performance based on the available data. While the nature of this data may change, this underlying logic remains the same and DSP technology is well positioned to achieve this transition.


DSPs retargeting capabilities, is a subset of user acquisition based on their ability to prove incremental lift was achieved. However, without IDFA, running retargeting campaigns on iOS seems pretty much impossible. But on the other hand, the ability to seamlessly prove incrementality of ‘regular’ user acquisition campaigns is likely to become increasingly important, as app marketers adapt their budgeting decisions across channels.


On the monetization side, all mediation platforms now support in-app bidding and will not deprecate it only because of iOS 14 changes. Publishers who experienced the increase in efficiency, transparency and yield driven by programmatic have a vested interest in collaborating with platforms to ensure that these benefits are preserved post-IDFA.


Last but not least, programmatic is already adapting – DSPs were quick to react to Apple’s announcement, increasing their buys on Limit Ad Tracking (LAT) inventory in order to train their algorithms while IDFA is not yet fully gone.


The results of buying LAT traffic

Since Apple’s announcement, Fyber observed incredible growth in buying activity on LAT inventory. In the many ongoing conversations with DSPs during this period, buyers reported that they are seeing a positive trend in performance and were able to deliver ROAS in an identity-friendly and privacy-aware environment.


During these preliminary stages of testing LAT (from June through the end of August) we’ve seen an uplift across all major metrics, including a 50% to 60% increase in average CPMs and 2X-3X spike in fill rate (calculated as impressions/ad requests). Average CPMs on LAT traffic are around 66% of average CPMs on IDFA traffic, up from 44% just 2 months ago.


This is a good indication of DSPs already making this transition. The increase in spend would not have persisted without delivering ROAS for advertisers. DSP algorithms are able to gradually optimize their bidding patterns, and this trend is expected to persist as the programmatic ecosystem introduces new solutions such as contextual app targeting, providing DSPs with additional privacy-friendly data points for targeting and optimization purposes.


Programmatic isn’t going away, it’s only growing stronger

While IDFA as we know it is dead, and short-term impact is unavoidable, the big picture implications can actually be positive — the advertising industry is becoming more privacy-aware (by being explicitly opt-in), but the need to put the right message in front of the right user at the right time did not change. The increased inter-company collaboration that this change drove opens the door for additional beneficial changes to how our industry operates.

More about the ecosystem’s growing codependency in part 2 of this iOS 14 and programmatic series

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