What is IDFA & Its Impact to Advertisers

What’s IDFA, and why does it matter?

Marketers are tasked with quickly understanding and preparing for a world without third-party identifiers, including third-party cookies and mobile ad IDs (MAIDs). This industry change started in 2017, but it became a much more urgent priority in 2020 when the most dominant players in desktop and mobile connectivity, Apple and Google, announced that they were deprecating common third-party identifiers.

During their developer conference in early 2020, Apple released new privacy controls related to IDFA, their iOS advertising identifier. In 2021, they took this change a step further, rolling out the App Tracking Transparency (ATT) framework, which requires consumers opt-in to being tracked by app developers and advertisers on all Apple devices. These changes impact digital advertisers in numerous ways, and marketers need to be prepared to adapt.

What exactly is IDFA, how do mobile ad IDs work for digital advertising, when and why are changes being made to IDFA, and what does a future-proofed solution look like for marketers?

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What is IDFA?

The Identifier for Advertisers (IDFA) is an anonymized unique identifier assigned by Apple to a user's device. With IDFA, an installed mobile application can track user behavior across other companies’ apps, websites or offline properties.Much like a third-party cookie in a browser, IDFA enables advertisers to track a user’s interactions within mobile apps, such as downloads, clicks and purchases.

The purpose of the iOS ad ID is to help create personalized app experiences for users. With IDFA, Apple has enabled advertisers to deliver relevant, targeted digital advertisements to app users, which drives revenue for app developers and creates better customer experience. In iOS, IDFA allows advertisers to also track ad performance. This Apple advertising identifier doesn’t contain personally identifying information; rather, it tracks in-app activity and downloads. Ever since IDFA was first introduced, users have had the ability to reset or turn off access to their IDFA via the privacy settings on their device.

What is a mobile ad ID (MAID)?

A MAID is a type of mobile device identifier used in digital advertising. This string of letters and numbers is unique to each individual tablet or smartphone. It’s stored on a user’s mobile device, and it can be retrieved by an app for ad targeting, personalization and campaign measurement. IDFA is the mobile advertising identifier used to track iOS users on Apple devices for advertising purposes.

What changes are happening to IDFA, when do they take effect and what is the current state?

As part of its iOS 14 release in early spring 2021, Apple is rolling out a new feature called App Tracking Transparency (ATT). This will require iOS app developers to receive each user’s permission to track their activity or access their device’s IDFA for advertising purposes.

Prior to the rollout of App Tracking Transparency, which will take an opt-in approach to user privacy for each app installed on their devices, users had the option to opt out of all ad tracking across every application via the Limit Ad Tracking (LAT) feature, which is accessed by navigating to “Settings -> Privacy -> Advertising.”

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Why is IDFA being phased out?

Apple claims it’s making this change to IDFA in the name of privacy. Apple’s recent iPhone video ad, for example, features people loudly sharing personal, often dangerous information with those around them, and closes with: “Some things shouldn’t be shared. iPhone helps keep it that way.”

In conjunction with Data Privacy Day, Apple provided more insight regarding the change, quoting late co-founder and former CEO Steve Jobs, "I believe people are smart and some people want to share more data than other people do. Ask them. Ask them every time. Make them tell you to stop asking them if they get tired of your asking them. Let them know precisely what you’re going to do with their data."

In addition to the IDFA positioning Apple as a more privacy-centric platform, the shift will likely drive more revenue for the business. But in all likelihood, advertisers will be inclined to spend less with app developers because of their limited ability to personalize ads. This means more subscriptions and in-app purchases—of which Apple will take a 15% share starting this year. Additionally, it has been reported by industry analyst Eric Seufert that Apple seems to be giving preferential treatment to its own ad network when it comes to attribution. As Epsilon’s Ric Elert says, “It will take money out of the publishers' hands and put it in the platform's hands.”

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How will the loss of IDFA impact advertisers?

The IDFA move will impact advertisers’ ability to target audiences, create personalized experiences and measure campaign effectiveness. Marketers and publishers will likely begin prioritizing strategies to maximize user consent to preserve the use of IDFA for targeting and measurement and resort to previous methods or services like contextual-based advertising. Some of the impacts advertisers and app publishers are expecting with IDFA data deprecation include:

Targeting: Advertisers will still be able to deliver messaging on iOS apps, but will not be able to identify an individual unless a user opts in to be tracked by the application where the ad runs.
Pacing: Frequency capping at an individual level will become more difficult, which can result in wasted budget by repeatedly messaging the same person.
Measurement: Conversion tracking capabilities will become more limited in iOS when a user hasn’t opted in to provide IDFA access because the advertiser will lose visibility into events such as clicks, downloads, registrations and purchases.
Personalization and dynamic creative: Without consent to access IDFA, advertisers will lose some capabilities to personalize and continuously optimize the creative messaging to an individual they’re targeting. They’ll also have more limited A/B testing ability for optimizing creative.
Fewer choices for advertisers: If advertisers see a drop in campaign performance on iOS devices, they’ll be inclined to reallocate ad dollars elsewhere—creating further dependence on walled gardens.

Our research shows that 62% of marketers don’t believe consumers will be better off as a result of these changes, and 70% feel that digital advertising overall will take a step backward.

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Is personalized advertising still possible on iOS devices without IDFA?

When faced with data deprecation challenges such as losing access to IDFA, marketers will need to embrace other ways to identify people online so they can continue to personalize messages, optimize campaigns and measure performance.

For starters, it’s important to get familiar with all available options for identifiers. When you understand the strengths and weaknesses of the most common identifiers, you’ll be able to choose a smart approach to identity resolution that doesn’t rely too heavily on IDFA or any third-party identifier. To succeed, it’s important to partner with an established, people-based identity solution—one that’s future-proofed against the loss of third-party identifiers and built with privacy by design. Any adtech and measurement partners you work with should have a solid plan that limits reliance on IDFA.

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What’s Epsilon’s response?

We continue to build on the capabilities of our people-based CORE ID, something we began in 2007. Our identity is anchored in deterministic name and address data that’s tied to individual-level purchases. Shoppers provide merchants with this high-integrity data to ensure service and delivery of their purchases, allowing us to achieve 96% cross-device accuracy and industry-leading match and reach rates. Each CORE ID record is associated with an average of five points of contact. With limited dependence on mobile ad identifiers, we’ll continue to serve personalized ads across multiple touchpoints to well over 95% of the 200+ million people in our CORE ID graph even as IDFAs become limited.

Fewer than 5% of CORE IDs rely on IDFAs as their only addressable touchpoint. This means we’ll continue to deliver personalized messaging to the vast majority of iOS users across multiple touchpoints after Apple’s changes take effect. We’ll also continue building on the foundation of CORE ID to further reduce dependence on tracking cookies and mobile device IDs. We’re working closely with our clients and partners to learn, innovate and adapt so that we can continue to provide the best experiences for consumers and outcomes for our clients—all while keeping privacy at the forefront.

Epsilon was the only company to appear in all four functionality segments in Forrester Research’s "Now Tech: Identity Resolution, Q3 2020."

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