With mobile device IDs falling by the wayside, it’s harder than ever to monetize in-app ad inventory.
The app-based phone service TextNow, which offers free calls and texting subsidized by ads, is especially vulnerable to the ongoing deprecation of mobile device IDs. The company monetizes its offering on any internet-connected device through the use of in-app ads, which accounted for the “vast majority” of the $103 million in revenue the company earned in 2021, said TextNow Director of Ad Monetization and Operations Evan Thor.
Following Apple’s AppTrackingTransparency (ATT) initiative, more iOS users are opting out of allowing their device ID – known on Apple platforms as IDFA – to be used for ad targeting. And the impending Privacy Sandbox changes for Android will entirely phase out Google’s ad ID by 2024.
Before ATT, about 30% of TextNow users opted out of providing their IDFA, which the company considered lower than the norm. After Apple rolled out the tracking prompt, TextNow felt a “substantial impact” that accelerated opt-out rates, Thor said.
“As users are given more choice, and as data policies and privacy laws become more strict, we need to invest in solutions that will allow us to monetize our users in privacy-safe ways and mitigate the impact of addressability concerns caused by the disappearance of identifiers,” Thor said.
Effect of ATT
The post-ATT results weren’t catastrophic for TextNow’s ad business, but its iOS app entered “a sustained period of limited [ad revenue] growth” as a result of the ATT changes in the iOS 14 update, Thor said.
So TextNow started testing alternate IDs, turning to InMobi’s UnifID and LiveRamp’s Authenticated Traffic Solution (ATS) and RampID. The solution works on consented traffic, increasing addressability for users who have opted into allowing their device ID to be used for tracking.
TextNow measured the baseline performance of its consented user base on iOS, then applied the alternative ID solution to see how it would affect fill rates and CPMs for ads targeting consented users. UnifID allows publishers to integrate ID solutions from multiple partners into their tech stacks, but for the purposes of this test case, TextNow only used LiveRamp’s ATS and RampID.
TextNow picked LiveRamp ATS because it was “one of the first to wade deeply into in-app and out of the context of web,” Thor said. To use the identity solution, TextNow installed the SDK of InMobi, a longtime partner, which it previously had not done.
Integrating LiveRamp’s ATS into InMobi’s SDK connects TextNow’s ad inventory to the 400-plus marketers using ATS, said InMobi VP of Customer Success Ram “TK” Krishnamurthy. They see the RampID on the inventory when using their DSP (such as Trade Desk, Xandr or MediaMath) and bid accordingly.
CPMs go up when addressability is restored: “If [I’m a credit card company and] I know you’re a valued rewards member of mine and I want to upsell you to the gold credit card, I’m going to pay a much higher CPM for that impression. It’s the same thing that the walled gardens have done,” said LiveRamp SVP of Addressability and Ecosystem Travis Clinger.
TextNow compared the results for ad placements sold using the RampID with ads sold without the RampID.
The test found that eCPM increased 146% for native ads and 35% for banner ads. The fill rate for banner ads using the RampID was 73% higher.
“The results reaffirmed a lot of the things that we understand to be true about traffic without identifiers – namely, that fill rates are lower and CPMs are lower. And it shows that there’s still a lot of work to do as we move forward to nonconsented traffic,” Thor said.
Preparing for the future
TextNow is optimistic that this experiment with alternative IDs will prepare it for additional upheavals to device IDs rather than be reactive to those changes, Thor said.
“When new developments come, we’ll be ready to move on them,” he said. “With the iOS changes, we were riding the wave as they happened. But the longer horizon for Google gives us the ability to forecast, plan and make sure that we have built sustainability into our model.”
Now that it’s tested ATS, TextNow plans to add LiveRamp’s Bloom filter, an on-device way to target cohorts, to make its nonconsented user base more addressable, Thor said.
TextNow is also going back to basics, with plans to expand its direct sales team. It is also shoring up internal first-party data operations to further protect its ad revenue from changes to addressability in its programmatic business.