Navigating New Norms: V.O.X's Role in Post-IDFA Advertising Strategy

In this article, I want to address one particular rise and lull that is looming in the future of apps and advertising and how V.O.X, the new AdOps instrument for apps in this environment can help solve the complexities and challenges that are to come.

What is the problem? What is the opportunity?

IDFA stands for identifier for advertisers which is a random device identifier assigned to a user's device by Apple. This means that advertisers are required to ask for consent from the user via a prompt to access the IDFA.

To better illustrate what particular problems and future opportunities there will be in the coming days of app advertising, here is a cause and effect chart depicting the evolution and timeline of IDFA.

I’ll be focusing on the effect of IDFA ineffective and touch more on the challenges that we’re attempting to solve with V.O.X.

The two problems:

  1. What is both the ideal and optimal method for app marketing strategies centered around advertising after the changes to IDFA (and soon to be affected GAID)?

  1. What is the best solution to counteract rising advertising costs?

Let’s dig deeper into the issue at hand by looking at the background more.

Background

Since the release of iOS 14.5 in April 2021, the app marketing ecosystem has undergone significant changes. With the implementation of IDFA being effectively removed in response to the changes in data privacy regulations, the fundamentals of app marketing have been strikingly altered. This shift has restricted the availability of precise data on ad performance, previously accessible across various media channels, to Apple's advertising platform exclusively. 

As illustrated below, this has heightened the importance of Apple’s own ad network, resulting in a notable increase in advertising expenditure and a consequent surge in CPC (Cost Per Click).

IDFA (Identifier for Advertisers) was a device ID randomly assigned by Apple to users' devices. Advertisers previously used  this ID to measure user engagement with advertisements and user behavior within apps, enabling them to deliver customized, user demographic targeted advertisements. IDFA was used for measurement and identification of users without revealing personal information.

During this period, some MMPs (Mobile Measurement Partners) began offering predictive performance measurement. This gave rise to highly accurate predictive ad networks using machine learning techniques known as probabilistic modeling. Meanwhile, other advertising media, like SRNs (Self-Reporting Networks), found it difficult to measure effectiveness, leading to a growing trend of cost reduction with CPI (Cost Per Install) being the primary metric for evaluation.

Under these circumstances, the changes in the app ecosystem caused by the IDFA regulations have led to a concentration of ad spending on Apple Search Ads, and it is safe to say that the importance of app store optimization has increased even more. 

Simultaneously, considering the sudden change in the conventional norms of advertising delivery that were considered standard before the enforcement of IDFA regulations, one could argue that we've embarked upon an era characterized by both disruption and innovation.

Navigating the Post-IDFA Landscape: The Ascension of Apple Search Ads

Let’s now take a look at the increase of significance of Apple, particularly regarding the rise in advertising expenditure, and discuss the growth of Apple’s ad network (Apple Search Ads) in the post-IDFA regulation era.

Taking a look at the left diagram, we can see the proportion of apps installed from each channel on iOS. In the post-IDFA regulation world (since April 2021), you can see that the share of Apple Search Ads (dark blue) is rapidly expanding.

Before IDFA, the share of installs from Apple’s ad network was around 20%, but after the removal of IDFA, this share has expanded to about 60%, essentially triple the number of installs. As a result, the demand for Apple Search Ads has likewise increased threefold, indicating that the importance of user acquisition through Apple Search Ads should be the top priority for a majority of apps.

The right image represents a power ranking that takes into account handling volume, advertising effectiveness, and retention. Upon viewing this, you'll notice that Apple Search Ads are positioned at the top, making it abundantly clear that they are indeed the most important channel in the app marketing space of today.

Post IDFA World | Sudden Rise of Advertising Costs

Now having checked out Apple Search Ads rise, what kind of influence has it had on the costs of advertising for app marketers?

In the post-IDFA regulation world, the surge in advertising costs has become more noticeable than ever before.

For example, when comparing 2020 to 2021, the Cost Per Tap (CPT) for Apple Search Ads has skyrocketed from $0.93 to $2.00, nearly doubling in value. Similarly, the average Cost Per Install (CPI) for iOS as a whole has increased from $3.28 to $4.82, approximately one and a half times higher. Furthermore, the average CPI for Android as a whole has also doubled from $0.92 to $2.02.

The rapid surge in costs is attributed not only to the increased investment in advertising on Apple platforms due to IDFA changes but also to the heightened importance of app store optimization, which has led to significant investment in Android platforms. As a result, both CPT and CPI have doubled, significantly impacting the industry as a whole.

The app advertising industry is currently undergoing a major period of transformation. Old norms are no longer applicable, requiring adaptation to new rules. What was once affordable may now be out of reach, and players who were once powerful may no longer hold the same position, leading to various power and marketing shifts..

In the midst of these changes, how advertisers adapt to the new circumstances and establish new norms is crucial. It's also essential for us to work with our clients to approach these issues and develop solutions together.

Solution

Once again, let’s go over the challenges we mentioned in the beginning. 

The two problems that V.O.X is attempting to address are:

  1. What is both the ideal and optimal method for app marketing strategies centered around advertising after the removal of IDFA (and soon to be removed GAID)?

  1. What is the best solution to counteract rising advertising costs?

We believe that there is a need for a new advertising delivery infrastructure that evaluates and strengthens the synergy between Paid and Organic channels. As we can see from the right graph, traditionally marketing have relied heavily on Paid channels. On the flip side, Organic channels have been left relatively untouched. However, as shown on the left, Organic installs (58%) actually outnumber Paid installs (42%), indicating that the influence of Organic is greater. Therefore, we believe that the approach of "evaluating and strengthening the synergy between Paid and Organic" reveals aspects of app marketing strategy that have previously never been emphasized.

So far we have touched on various aspects of advertising and as a result of dependence on Paid advertising, the surge in advertising costs and changes in the ecosystem have occurred. In this context, if the ecosystem changes and Paid advertising becomes unattainable, advertisers would typically shift their focus to Organic installs. However, we believe that evaluating both Paid and Organic channels can be a healthier choice for advertisers. Yet, marketers advocating for such an approach are rare worldwide.

Through years of trial and error, we have leveraged our proprietary expertise to evaluate both Paid and Organic acquisition, considering their interaction, and have been able to achieve more effective results than traditional acquisition methods.

This is the solution we propose, and V.O.X is the new advertising delivery platform that can make this solution a reality. By utilizing V.O.X, advertisers will be able to deploy effective advertising strategies that leverage both Paid and Organic channels.

A New World of Solutions: Redefining Platform Advertising

In the world beyond solutions, we predict that V.O.X will create a "redefined world of platform advertising." This implies a world where maximizing both Paid and Organic users from platform acquisition is the norm.

Traditionally, mobile app acquisition has evaluated Paid advertising and Organic app store acquisition separately. However, with the introduction of V.O.X, we can now see the interaction between Paid and Organic media. This means that "considering both Paid and Organic is now the norm," allowing advertisers to develop even more effective advertising strategies by leveraging this approach.

In this new world, utilizing Paid advertising appropriately, i.e., how Paid advertising contributes to the expansion of Organic, becomes a crucial factor. We have been advocating for and realizing this approach, which sets us apart from others at the moment.

From a business perspective, the product of mobile app advertising has a history of agencies focusing solely on Paid advertising to generate revenue. However, with the introduction of V.O.X, the importance of Organic, which was previously underestimated, will be reevaluated.

In this sense, in the future world, V.O.X will become indispensable when running platform advertising. This is because V.O.X allows us to see the effects of both Paid and Organic advertising. Moreover, if advertisers cannot see both, they risk not being able to properly address the issues of IDFA.

Currently, we are facing significant opportunities amid this change. And we believe that the value of V.O.X will be increasingly recognized as it redefines the landscape of platform advertising in this new world.

In summary:

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