Why mobile advertising is a lot better off without UDID

Craig Palli is vice president of business development at Fiksu.

Last September, Apple introduced the Advertising Identifier (IDFA), a new technology for mobile ad tracking. Months later, the company officially stopped accepting new apps using the UDID (Unique Device Identifier), the technology it had previously used for its devices. So how have app marketers adapted to the post-UDID world? In my opinion, the industry is much better off. Here’s why.

There’s a new standard in town

With UDID gone, app marketers have a number of alternative tracking technologies to support, making attribution complicated. These include Mac addresses, HTML5, and digital fingerprinting – each of which has its pros and cons. Fortunately, the market has largely settled on IDFA as the dominant standard for tracking. In the last 30 days, according to my estimates, there’s been a pronounced shift away from UDID, with approximately 90 percent of all impressions served today using some form of non-UDID tracking, up from roughly 65-70 percent one month ago.

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VentureBeat will be taking an in-depth look at the future of mobile advertising in our “Brands and agencies: Mobile advertising hell — or heaven” track at the MobileBeat conference, coming up July 9-10.

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Publishers, advertisers and ad networks are on board

Because IDFA does away with privacy concerns, app publishers can now directly attribute advertising to return-on-investment (ROI) without running afoul of privacy regulations or user preferences. The majority of app publishers and advertisers have transitioned to IDFA, though there are still pockets of support for the other tracking technologies.

This isn’t a bad thing. In fact, it’s the opposite. Best practices in mobile app marketing call for supporting multiple types of marketing attribution. This flexibility helps marketers in two ways. First, it helps marketers reach more consumers more efficiently. IDFA is app-centric and is not compatible with the mobile web and Facebook mobile app installs. Supporting many forms of attribution allows marketers to reach the broadest spectrum of users across the entire mobile ecosystem. Second, it allows marketers to adapt to changing market conditions such as new guidelines, consumer preferences, or new sources of advertising inventory.

Furthermore, the majority of ad networks have updated their SDKs to support IDFA. But a few are still transitioning, with the majority of traffic currently supported by IDFA alternatives. Advertisers need to be aware of this as they plan their media buys.

Soaring inventory

With IDFA in place, ad buyers can worry less about how much inventory is available for each flavor of tracking. We are now seeing a significant increase in attributable advertising inventory, in the tens of billions of impressions per month (a conservative estimate). This surge is coming from app publishers like Pandora who, until now, hadn’t used identifiers like the UDID or MAC Address due to privacy concerns. Now, with IDFA, they’re comfortable opening up their apps for in-app advertising.

Despite the volume, we are not currently seeing ad costs coming down meaningfully because much of this new inventory volume is from high-value apps. We expect some networks will let inventory go unsold rather than discounting. Still, it’s worth noting that mobile app advertising is distinctly cheaper than other digital advertising vehicles.

Opting-out

Before we celebrate, mobile marketers need to understand some limitations. Notably, that IDFA allows iPhone users the option to opt-out, rendering them untrackable. Also, 5-10 percent of iOS traffic comes from devices using iOS 4 and 5. Since they don’t support the IDFA, this inventory is also unavailable to advertisers.

The world is a better place

Hats off to the industry for managing the May 1 deadline and the transition to IDFA well. IDFA does a great job of balancing the needs of all parties in the mobile app advertising ecosystem. It has dispelled the negativity that swirled around UDID and has opened up new traffic channels for advertisers. This means more choices and security for advertisers, more control for consumers, and greater revenue potential for publishers. In short, we are all better off.