Interpretation Of Apple'S New Privacy Rules: Estimated 200 Billion Yuan Of Domestic Online Advertising To Be Impacted

A set of logic that the advertising industry is accustomed to may be overturned and re established.

On April 27, Apple's new mobile operating system ios14.5 was officially released, including the new privacy regulations of APP tracking transparency (ATT).

This means that it will be difficult to obtain IDFA (device advertisement identifier). Only when the user actively clicks "authorization consent", can the application use IDFA for advertising targeting and attribution.

The biggest challenge that this change brings to the industry is that advertisers will not be able to accurately measure and optimize the IOS side advertising, the effect of advertising is limited, and the industry profits will decline.

Before the release of IOS 14.5, a number of apps have made pop ups on whether users are allowed to obtain IDFA permission, such as tremolo (super speed version), tmall, Taobao, Tudou video, baidu reading, QQ music, vipshop, etc.

In the view of industry insiders, it is a consensus that the change will cause huge impact on small and medium-sized enterprises, but it is still uncertain how much impact it will have on large-scale Internet enterprises with massive data and a certain commercial closed-loop.

Before the new regulations come into effect, there have been attempts to circumvent IDFA alternatives at home and abroad. But Apple's hardline approach to new privacy rules raises questions about the survival of these alternative solutions.

After CAID test was warned by apple, the industry has not yet had a unified and effective response. The algorithm may play a more important role under the existing rules. Some domestic Internet companies are starting to use algorithm modeling to predict the transformation of user behavior.

Game rules change, or usher in a new round of shuffle. The balance between the protection of personal privacy and the realization of business promotion will become an issue that the industry needs to explore in the future.

On April 27, Apple's new mobile operating system IOS 14.5 was officially released, including the new privacy regulation of application tracking transparency and privacy function- Photo by Gan Jun

Tighten IDFA access

As early as June 23, 2020, Apple announced at the 2020 global developer conference that after ios14 system, it would tighten IDFA access rights.

Apple, which claims to be based on the consideration of user privacy, is not completely accepted by the industry, but is regarded as a big cake of the advertising industry.

Facebook has publicly said that this could make crowd targeting services inefficient. In December of the same year, Facebook published an article "we are fighting against apple for the sake of small businesses all over the world", which revealed that many small enterprises were worried about Apple's forced software upgrade, which would limit the ability of enterprises to launch personalized advertisements and reach effective customers.

It is understood that advertising revenue accounts for more than 90% of Facebook's total revenue for many years. According to the latest financial report data of Facebook, the total revenue in 2020 will be 85.965 billion US dollars, including 84.169 billion US dollars of advertising revenue, a year-on-year increase of 21%.

In fact, not only Facebook, but the entire Internet industry, advertising revenue can be regarded as the core of its survival. According to relevant data, alphabet, the parent company of Google, another US Internet giant, has a total revenue of $182.527 billion in 2020, including $146.924 billion in advertising revenue.

China and the United States in the field of mobile Internet advertising go hand in hand. According to questmobile, the scale of China's advertising market will reach 914.39 billion yuan in 2020, including 543.93 billion yuan of Internet advertising. Take Tencent as an example, its total revenue in 2020 is 482.064 billion yuan, and the revenue of online advertising is as high as 82.27 billion yuan, accounting for 17% of the total revenue, with a year-on-year growth of 20%.

According to the data released by modern advertising, a publication sponsored by China Advertising Association, it is estimated that nearly 200 billion yuan of Internet advertising business in China will be affected due to the implementation of Apple's new privacy policy.

The rapid development of Internet advertising is closely related to the Internet "free + advertising" business model - enterprises offset the cost of their operation through advertising revenue, so that users can enjoy free services. In a sense, Internet advertising revenue has become the core of Internet survival.

As one of the important economic sources of China's digital industry, digital advertising, e-commerce and content entertainment marketing are also integrated in the digital ecology.

With apple officially pushing the new version of IOS 14.5 system update, the implementation of Apple's new privacy regulations is undoubtedly a big shock for advertising and related industries.

How to affect the effect of advertising?

The IDFA, which is required by apple to tighten access to permissions, is called "identifier for advertising". Apple provides advertising identifiers to track users. IDFA is a unique combination of letters and numbers for each IOS device.

What is the role of IDFA? In short, IDFA can not directly identify the user itself, but identify the user equipment, which can promote the information communication of the entire advertising industry.

"If the industry wants to match, concatenate and connect users, advertisers and media ads, it needs to use an advertising identifier." Yan Hui, vice president of talkingdata, a data intelligence service provider, told the 21st century economic reporter that IDFA is the prerequisite for effective links between all parties.

After the information is transferred to all parties through IDFA, it will be applied to two scenarios: one is targeted, that is, accurate delivery, targeted advertising to target customers; The second is attribution. Through tracking IDFA, we can measure the effect of advertising transformation and delivery.

For example, if a user clicks the advertisement of a certain product on Taobao's headline today, the headline will send the IDFA of the user to Taobao. When the user jumps to Taobao for shopping, Taobao also obtains the IDFA of the user through the purchase behavior record. Then, through the background attribution of Taobao, matching IDFA information to judge that the user is from today's headlines, and the information is sent back. After the background matching of today's headlines, users can click the information to realize the attribution of advertising effect.

Once the user refuses to open IDFA, the attribution scheme will change accordingly. Even if Apple offers an alternative to IDFA, skadnetwork, there are many limitations.

In the IDFA era, advertisers or developers can obtain the "exact information" of the user's device, and only the "fuzzy information" of the user can be obtained by using the skadnetwork solution.

"The loss of real-time data has become one of the biggest factors." According to Dr. Wang Wei, general manager of Greater China region of appsflyer, the mobile attribution and marketing analysis platform, under the skadnetwork scheme, attribution results that can be fed back in real time in the past are delayed to release, ranging from 24 hours to several days.

This means that many small and medium-sized enterprises according to the effect of attribution, timely adjustment of advertising programs are blocked. In terms of timeliness and accuracy, it will be greatly reduced, which can not meet the scenario of accurate effect measurement of advertisers.

Second, traceable user behavior is greatly reduced.

In the IDFA era, as long as the privacy is not violated, advertisers can record many key behaviors of users, such as registration, login, customs clearance and payment of game users.

However, in the framework of skadnetwork, the number of recorded events is limited to 6 bits. Most importantly, there is no access to device level data, and apple only provides aggregate attribution, such as how many new users it has brought in.

As for the limitations brought about by the skadnetwork scheme, Wang Wei gives an example: "in the past, apple gave 'rice'. You can make rice, fried rice, or grind it into flour to make pasta. But now apples are directly given to rice. You can make fried rice with eggs at most

Impact and break

To a certain extent, skadnetwork is the digestion of IDFA's self portrait, settlement and effect analysis in Apple system.

Facebook has publicly cited, for example, that, without personalized advertising, small business advertisers would lose more than 60% of their sales profits for every dollar they spent.

Most people in the industry agree that Apple's new privacy rules have an adverse impact on small and medium-sized enterprises and impact on Internet giants, but they are not sure.

It is predicted that the new privacy regulations will not have much impact on these head enterprises due to their strong data capacity or ecological closed-loop.

"The top players in China's online advertising, such as Tencent, byte, Ali, Kuaishou and Baidu, account for more than 80% of the total. These super large enterprises have a large amount of data accumulation, basically established their own ID system, and have little dependence on IDFA. " Yan Hui said that even so, the head enterprises are still promoting the second format, advertising alliance, such as byte pangolin, Tencent youlianghui, Ali Huichuan, etc., gathering a large amount of loose traffic and selling them to advertisers.

When a large platform has a full data system, and small and medium-sized advertisers can not use IDFA to judge the effect of different channels, they may give up cross platform advertising to a single platform in order to save costs.

"The bargaining power of giants is becoming stronger, but the bargaining power of small and medium-sized advertisers is getting weaker and weaker. Advertisers may be more cautious about advertising on IOS in the future and need to adapt for a period of time. " LAN Xu, co-founder and President of mobtech, a data intelligence technology platform.

According to Liu Jingjing, co-founder of digital alliance, with the tightening of IDFA, if the skadnetwork scheme is adopted or there is no better solution, it will not be able to realize the accurate advertising and the evaluation of the advertising effect, which will increase the cost of advertising, reduce the ROI (return on investment), and reduce the profit of the whole advertising industry.

"In the communication with games, social networking, news and some enterprises that are highly dependent on advertising revenue, we think that 50% of the loss will be wasted, and half of the advertising expenses will be wasted." Liu Jingjing said.

Is there an alternative to IDFA to avoid Apple's privacy management policy?

Shortly after Apple announced restrictions on IDFA rights last year, China Advertising Association and China Academy of communications jointly launched CAID (CAA advertising ID) scheme.

"There is no mobile Internet advertising logo specifically used for advertising in China, most of which are mobile device identification with high personal information attribute or various identifiers provided by operating system. It is necessary to define mobile Internet advertising signs that meet the requirements of personal information protection and data security laws and regulations and meet the needs of the advertising industry. " In December last year, the China Advertising Association released the technical specifications for mobile Internet advertising signs.

China's Internet giants, including Tencent, Alibaba, Xiaomi, byte beat's massive engine and Baidu, are the drafting units of the standard.

CAID warned

However, the future of CAID is still unclear.

"We found that your app collects user and device information and creates a unique identifier for the user's device." Since mid March, some developers who have used the CAID solution of the SDK version have received a warning email from apple.

Apple said in the email that it needs to remove all the functions that use algorithm conversion devices and usage data to create unique identifiers for user devices. At the same time, the app must be updated within 14 days, otherwise the app will be deleted from the app store.

On April 5, apple issued an official statement, specifically mentioning: "the collection of equipment and usage data with the intention of obtaining the user's unique identification or fingerprint is still in violation of the Apple Developer Program license agreement."

21st century economic reporter learned that many game customers involving CAID related fingerprint fields, byte skipping and Tencent received Apple's rectification email at the beginning of April. After the CAID SDK scheme was offline, it passed Apple's audit again.

Apple stressed in the FAQ "user privacy and data use" that developers should not obtain data from devices for the purpose of unique identification. Examples of user or device data include but are not limited to: user's web browser properties and configuration, user's device and its configuration, user's location or user's network connection. Otherwise, the app may be rejected by Apple's app store.

China Advertising Association has previously given a response, CAID does not object to Apple's privacy policy, is actively communicating with apple.

Similarly, some overseas developers are considering alternatives to avoid IDFA.

Snapchat, a competitor of Facebook and a camera company, also claimed that its privacy policy might damage its advertising business. Recently, it was reported that it tried to bypass the new privacy rules and try to collect data such as IP addresses from some companies to cross check with user information to identify and track users. Snapchat said it would stop the plan after Apple's new policy took effect.

Apple's tough stance on the implementation of new privacy regulations has put a question mark on the survival space of IDFA alternative solutions.

The algorithm predicts or trends

"Are we going back to the past or embracing the future?"

After the implementation of the new regulation, how to achieve better advertising effect based on incomplete data?

Wang Wei proposed a solution. Based on the skadnetwork scheme, appsflyer developed the sk360 solution to configure and optimize the skadnetwork conversion value. Wang Wei disclosed that dozens of channels have completed the skadnetwork connection with appsflyer, including Facebook, twitter, snapchat and domestic Tencent and other head platforms.

Another way to achieve the original advertising effect through algorithm modeling and prediction is becoming the exploration of many platforms in the industry based on skadnetwork.

Some large domestic Internet technology enterprises are testing new solutions to IDFA access rights adjustment. An employee of a head advertising media disclosed to the 21st century economic reporter that the company is building a corresponding model based on skadnetwork to predict the transformation of user behavior and improve the timeliness of attribution.

Yan Hui explained that using a relatively safe, non sensitive multi field construction algorithm, after a lot of mathematical reasoning and verification, the model was built to predict the matching probability. This will not involve long-term tracking of personal information, and can achieve the business purpose of targeted delivery and attribution technology.

"This algorithm can be used for cross platform monitoring, but it needs time to connect with each platform to reach a consensus. Because only when the non sensitive fields obtained by the platform are consistent, the matching rate and application rate of the algorithm after collision will be higher. " Yan Hui suggested that on the one hand, technology should be optimized, and on the other hand, domestic authoritative institutions, alliances or associations should be jointly advocated and promoted.

The solution proposed by LAN Xu is similar to the above one, that is, using algorithm instead of reading ID directly to build ID or build a third party ID“ Using "arithmetic" instead of "reading" can effectively protect personal privacy. It is difficult to achieve the same results as before. After all, the algorithm has a certain degree of confidence, but for a large range of samples, it can still ensure a high effective population. "

In addition, some enterprises have accumulated a large amount of data when they can freely obtain IDFA. By matching the newly released ID with the existing data, the original IDFA of the device can be obtained, such as mobtech's mobid and digital alliance's ID risk control solution.

"However, it will become more and more difficult to obtain IDFA for new devices in the future. It can only be used as a solution for the transition period. " LAN Xu said.

At present, there is no unified and effective response plan for the whole industry. Before the impact of the new privacy regulations comes, most enterprises are still waiting and exploring.

However, even if an alternative to IDFA cannot be found in a short period of time, the situation is not completely pessimistic. Wang Wei mentioned that in the previous industry evaluation, only 20% or even fewer users would authorize IDFA, but the latest pop-up test data shows that in the 300 application samples, the proportion of users' active authorization is more than 30%, and some apps can even reach 40%.

"It's too early to talk about the disappearance of IDFA at present. I suggest that enterprises still try their best to let consumers actively allow IDFA collection based on the convenience of brands or apps." Wang Wei said.

At the same time, some industry insiders believe that the new privacy rules are a good thing for companies focusing on technology research and development.

"Everyone needs to work hard on technology, how to develop new algorithms, so as to carry out business under the premise of protecting users' personal information and promote the flow of data." Ge Mengying, the data compliance officer of talkingdata, thinks so. She suggested that some commercial solutions could be made in the future, such as giving users more options and encouraging users to authorize IDFA by transferring advertising costs; We can also refer to foreign countries to establish trusted organizations or alliances to issue authentication to enterprises that meet the privacy standards, so that users can build trust and promote enterprises to carry out business smoothly.

(Editor: Cao Jinliang)

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