What are ATT and SKAdNetwork and how are they helping Apple grow?

Apple introduced in April of 2021 a new privacy policy called ATT (App Tracking Transparency), this new policy moderates the data collection and aggregation practice known in the mobile industry as “tracking”. Under this new policy, an app must ask the user’s consent before collecting his unique identifier. This unique identifier is called IDFA and it was heavily used by advertising platforms to target users, personalize ads and optimize campaigns.

The impact of Apple’s ATT on the mobile advertising industry was enormous. Companies like Facebook and Snapchat in the recent quarterly earnings show some losses in their reports and it was mostly caused by the frictions on the new ATT policy since it changed the way to impact iOS and to track them.

On the other hand, Apple Search Ads (ASA), Apple’s own mobile advertising platform had substantial growth since the new ATT policy. But why?

To understand that we need to understand what is SKAdNetwork. The SKAdNetwork is an advertising measurement framework that Apple introduced several years ago and it was quite irrelevant until the App Tracking Transparency (ATT) new privacy policy was released. Basically, the SKAdNetwork allows the advertisement platforms to do the attribution of app installs and ads. But there is a big BUT in it, it is a very limited measurement tool, it doesn’t give a lot of context on the install, like which clicked ad generated the install or even the exact time that the install occurred. It lacks granular data that is critical for advertisement platforms to target and optimize and even for advertisers to understand how their campaigns are performing and why it performing the way it is.

After the ATT policy release, several advertisements platforms were obliged to you use the SKAdNetwork as a measurement tool for installs, because it respects the privacy of the iOS users anonymizing their data. But Apple Search Ads itself does not use the SKAdNetwork for ad attribution giving them huge leverage on the attribution and user data for optimization and targeting.

There is a big dilemma if Apple is respecting its own ATT policies. In some documents like the Advertising Privacy & Policy Documentation, Apple states that Apple Search Ads does not track users. But actually, they do and they have found a loophole do it without breaking their definition of “tracking”, which is the following:

“Tracking” refers to linking data collected from your app about a particular end-user or device, such as a user ID, device ID, or profile, with Third-Party Data for targeted advertising or advertising measurement purposes, or sharing data collected from your app about a particular end-user or device with a data broker.

On ASA instead of using SKAdNetwork for attribution, Apple uses Apple’s Ads Attribution API, which is also a measurement framework but with much more information and context about an install compared to SKAdNetwork, the Apple Ads Attribution API provides more granular and detailed install attribution data. It provides several data, like which ad creative delivered the install, when the install occurred, or even where, essential information that is not available in SKAdNetwork. This provides Apple a lot of advantages over other ads platforms that they must use the SKAdNetwork for install attribution when a user has opted out of ATT.

Another thing that plays against the developers is the ATT opt-in prompt shown to users. The developers are only able to customize the text under the ATT prompt headline. The headline which says “App Name would like permission to track you across apps and websites owned by other companies” can not be modified. This message quite intimidating for the users and does not communicate the benefits of opting-in on the tracking. This is one of the things highly remarked by the developers, since having the possibility of changing and trying new texts on the prompt would very likely increase the percentage of users opting in and allowing to be tracked.

Also, Apple sets a 30-day lookback window for install attribution when the user has opted out of ATT. This is a very big window and not at all a standard of the industry. This lookback window raises the number of users attributed to ASA. Apple does not allow advertisers to change this window to lesser days, while most of the other ad platforms do.

All those points mentioned above are making Apple Search Ads grow at an incredible pace, according to Financial Times, Apple could earn $5 billion from advertising in 2021. What will the ad platforms do to change this and be able to compete with Apple? Because it is more than clear that now they are making the rules of the game.