The ins, outs and industry effects of Apple’s Limit Ad Tracking changes

Apple’s iOS 10 update was a huge shot across the bow in the mobile advertising world. Apple rolled out search ads in the iOS App Store to all US users, but another updated feature has put search ads in perspective as part of a bigger plan and has simultaneously sent ripples through the rest of the industry.

What are we talking about? “Limit Ad Tracking,” or “LAT” for short. These are three little words that may strike fear into the hearts of every display advertiser and mobile growth marketer, from newbies to the most experienced pros.

Apple’s update to LAT makes the app behavior of high-value users much, much harder to track. This move adversely affects both platforms (networks, Google, Facebook) and advertisers (brands and agencies) while setting Apple up to make a major move over the coming months while its rivals scuttle for tracking solutions.

What is LAT, and how does it work?

LAT is designed to give Apple users privacy — or at least the idea of privacy. For those users who enable it, third-party visibility into their app-based actions is severely restricted.

“Limit Ad Tracking” can be distilled into two words: “IDFA zeroing.” In iOS 10, a user enables LAT, and the OS will send the Advertising ID with a new value of “00000000-0000-0000-0000-000000000000.” Over time, this means that those users who opt into LAT will no longer be tracked and targeted across apps and ad networks.

In our new post-install world, frequency capping, attribution, conversion events, estimating the number of unique users, advertising fraud detection and debugging will no longer be available for those LAT users. That’s bad news for advertisers buying users via ads and trying to measure the effects of their spend.

App publishers and developers (e.g., Clash of Clans, ESPN, Uber, Netflix) will still access a unique Vendor ID that they can use for internal purposes. This means that, since all measurement platforms will play by the same rules, we will default to device fingerprint when LAT is turned on.

Assuming you have the right attribution set via your third-party attribution partner (Note: it’s more important than ever to have a good one like Adjust, AppsFlyer, Kochava or TUNE); this is the sequence that will be enabled:

1. For ad networks that directly use third-party tracking links (ironSource, Opera, Taptica), the third-party attribution vendor will fall back to fingerprinting for attribution.
2. Ad networks that serve third-party tracking links on the server side (again, this is standard practice for almost every network you’re likely to work with) will work with the third party to ensure that they are passing along the right information for fingerprinting on the click.
3. For networks with complete server-side integration without tracking links (e.g., Facebook, Google and Twitter), third-party attribution partners are developing cookie-based solutions specific to each network. Solutions are being developed and should be available shortly. For the time being, though, the macro impact is that Facebook and Google will no longer target users who have Limit Ad Tracking enabled. The outcome is that the ability to reach high-value iOS users will decrease, leaving more untargeted ads to less valuable users on iOS.

Who’s enabling LAT?

From chats with clients, we’re guessing that the Future of Privacy Forum’s estimate of 17 percent (of users with LAT enabled) is a bit high for attribution purposes; more conservative estimates put LAT adoption around 10 percent. And a good chunk of those users will be people who are scrupulous about using ad blockers and not clicking on ads anyway.

What’s the significance (and who wins and loses)?

The quantity of LAT users might be a bit overstated, but it’s still substantial — and the composition of the users makes the value in play even greater.

The largest advertisers have massive investments at stake. At the end of the day, these market leaders, third-party attribution players, the networks, and even the self-attributing platforms will determine a kosher way to work within the confines of each player’s system.

Apple may be in a wholly unique position because of its app, hardware and ecosystem dominance, and its search ads have given every developer a chance to compete. But cutting the tracking cord to networks risks compromising discovery of the apps that are its foundation. In short, it’s complicated, though Apple has controls that its competitors don’t.

In the meantime? The big winners include, indirectly, third-party tracking solutions that have become more indispensable than ever. The rest of it will take months, even years, to take shape — which means that a complex industry that’s made so many recent strides in tracking and attribution is, for the time being, a little more in the murk.