By Matt Moore, Associate Manager of Product Marketing, Impact.
Originally published on Marketing Donut
Amid months of looming privacy updates and policy changes, brands are facing a challenge that will alter the mobile marketing landscape forever.
Released on April 26 after two months of beta, the latest version of Apple’s mobile operating system, iOS 14.5, fundamentally changes mobile acquisition measurement on Apple devices, which account for 65% of those in the U.S.
The most significant change that brands face lies in the measurement and payment structures of install efforts. Over time, these have evolved to a point where brands assume little risk but reap all the rewards. That is about to end, and brands need to act quickly if they want to continue to drive app installs.
Fortunately, partnerships can bridge the gap created by this loss, so long as brands and their partners make an effort to rethink the way that they structure their relationships.
A new world of opt-in
In brief, the most significant thing about iOS 14.5 is that it only allows apps to track explicitly opted-in users. By default, tracking is now set to ‘off’, making it much harder for app makers to collect behavior signals. This has obvious implications on campaigns that pay on a cost-per-install (CPI) model, or a CPI+ model built on post-install engagement – the primary ways that mobile partnerships are structured today.
Living without granular targeting data
App marketers using these models have become used to a great amount of data and granularity on behaviors and audiences. There’s really no way to sugarcoat it: app marketers will need to get used to significantly less data than they have enjoyed in recent years.
SKAdNetwork: An uneven replacement
Apple is offering a replacement technology, SKAdNetwork, yet this solution has its limitations. Apple is promising that it can verify ad campaigns and affiliate partnerships by measuring conversions, but it can’t tell a brand if a specific media source drove a specific user to convert.
This lack of user-level data makes it hard to track for CPI or CPI+ purposes. There’s also no web-to-app tracking yet, which is critical for understanding how users move across environments on mobile devices.
Faced with all this, the natural response is for app marketers to try to retain as much of the control they are used to. But brands can’t hold on to everything they’ve enjoyed thus far.
Instead, this seismic change gives partnership teams a chance to revise their strategies.
A changing world of measurement
On one end of the spectrum lies the paid placement model, whereby one entity pays another a flat fee for app promotion. This puts risk on the acquiring brand, and virtually none on the publisher. No matter how well or poorly the placement performs, the publisher partner gets paid. They do not get paid any extra if the placement is a huge success.
Meanwhile, the acquiring brand assumes all the risk in case of poor performance, but also stands to benefit if the customer response exceeds expectations. The flat-fee guarantees that there’s no need to pay extra for greater value.
In the center of the spectrum we have cost-per-click (CPC) payment models. This arrangement shares risk and reward more evenly between enterprise and partner. If a promotion does well, the publisher will make money for driving clicks, and the brand will be happy to pay, because it will experience a surge in traffic.
The primary risk for the publisher is the opportunity cost: It needs to assess which are the best performing offers in order to maximize partnership revenue. The risk for the originating brand is overpaying for traffic that is high in volume, but low in value, or worse, fraudulent.
That last risk that has driven the industry to the more common CPI/CPI+ models. These payment models are based on brands only paying out for conversion actions that they have deemed valuable, such as installs or post-install in-app actions. In this model, publishers assume all of the risk. They must not only drive traffic, but in order to get paid, it must be high-value traffic.
The dawn of iOS 14.5 largely eliminates this option from brands’ playbooks.
Fortunately, actual installs aren’t going anywhere, so partnerships will be able to drive value. The difference lies in how brands measure their partnership performance.
Building back better mobile partnerships
Now is the time to talk to your partners. Dig deep into the performance data you have and identify those partners which consistently drive the highest-value users. It’s very likely that these partners will continue to drive high-value customers, whether or not you enjoy the same level of granular measurement. With this in mind, work out new terms with these partners. Build a new model that combines flat fees and CPC, but also maintains CPI/CPI+ for users opting-in.
These users will be a fraction of those previously available, but they are important. This cohort can be used as a barometer to assess whether the value of each partner’s traffic is changing. If clicks spike, brands can consult the trackable users to determine if the surge is valuable traffic. This allows them to correct CPCs in their partnership terms as needed.
Moving forward, together
While iOS 14.5 is a headache for app marketers, it’s not the end of the world. Rather, it’s a moment that will force brands to adjust how they handle mobile install efforts.
Many brands have fallen into a set-it-and-forget-it mindset, because they only have to pay for installs. The release of iOS 14.5 marks the start of a more proactive period, in which brands and publishers must communicate regularly. This should refocus both parties on the true strength of partnerships: driving mutual benefit.