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How Much Will Tracking Opt-outs Impact Ad Tech?

There’s been ample speculation and handwringing over the impact of privacy measures underway. The attention to privacy that escalated in 2019 was overshadowed in 2020. But now that there’s a light at the end of the pandemic tunnel, privacy is re-emerging as a topic and source of ad-industry consternation.

Beyond pandemic timing, the volume on the discussion has also turned up as we get closer to privacy events and deadlines. Those include the recent release of iOS 14.5, Apple’s ongoing restrictions to the erstwhile pervasive IDFA, and of course Google’s countdown to the death of the browser cookie.

The most recent of these moves is Apple’s App Tracking Transparency (ATT). New in iOS 14.5, it sends users periodic notifications about apps that are tracking them and how. Moreover, it offers users a quick and easy way to opt-out of that tracking, which would otherwise linger in the background unnoticed.

As we’ve examined, these private-sector moves will have more impact than more-exposed and discussed public-sector measures. The latter includes legislation such as GDPR and CCPA, which are more bark than bite. Tech companies tend to move faster than governments so their privacy moves are more potent.

Video: Apple’s App Transparency Escalates

New Hope

But one of those mobile platform measures could be less painful to the ad tech industry than previously thought — at least if a recent survey from AppsFlyer is any indication. The report shows less-than-expected user inclination to opt-out of app behavioral tracking, such as Apple’s ATT notifications cited above.

Specifically, it tracked 300 apps and more than 13  million ATT prompts to discover opt-in rates as high as 45 percent. That may not seem like a lot — especially as apps and ad networks previously enjoyed much higher and covert coverage — but it’s greater than the 10-20% opt-ins that have been projected.

Drilling down into individual categories, here are a few highlighted findings from the survey, as summarized by eMarketer.

On average, 41% of users across all apps opted in. But that shrank to 28% on a per-app basis, suggesting that a small number of larger and more popular apps that can readily convince users to opt-in are bumping up the average.

Certain categories were also more likely to get permission from users. Utilities topped the list, on a per-user and per-app basis (45% and 39%, respectively). Shopping apps were the second-likeliest category, with 39% and 37% respective opt-in rates, followed by social apps at 33% and 36%.

Gaming apps saw the least opt-ins. Overall, nongaming apps had a per-user opt-in rate of 42%, while gaming apps saw a rate of 30%. Of gaming apps, the hardcore gaming category was the lowest-performing, with a per-user opt-in rate of 19%. However, many gaming apps will be less reliant on the ATT opt-in to track users, since they are owned by large publishers that have access to a wealth of first-party data from their libraries of hundreds or thousands of games.

Opportunity Gaps

The AppsFlyer survey results are promising for the ad tech world, but they don’t change the fact that there’s a new sherrif in town. There will still be considerable restrictions on the data-tracking field day that publishers, advertisers, and ad networks have enjoyed for the majority of the smartphone age.

Like anything else, the next era of mobile advertising will be won by those that innovate around restrictions. So we’ll see ample efforts to track users in other ways. More likely, successful strategies will focus on a better and more explicit value exchange so that users are naturally incentivized to opt-in.

This value exchange will especially be important in any apps that ask for location permissions. That’s always been the case, but will become more important than ever. Though all of the above covers a range of user behavioral tracking, location is the data set that’s arguably most prone to sensitivity.

What does this all mean for the makeup of the mobile location data and ad-tech sectors? They will likely transform over the coming months and years, including lots of consolidation as we’ve predicted. We’ll also see innovative and opportunistic players fill gaps that open as the industry twists around and takes new shape.

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