Developers claim that Apple's privacy-first features are 'atomic bomb' for revenue

Posted:
in iPhone edited April 16
Apple will give users the ability to opt-out of ad tracking in iOS 14.5, and some developers are concerned this will dramatically impact their revenue and ability to compete.

Underworld Football Manager is one of many games that will miss IDFA
Underworld Football Manager is one of many games that will miss IDFA


In iOS 14.5 users will be able to opt out of ad tracking when installing a new app. This renders the Identifier for advertisers (IDFA) useless, showing a series of zeroes for any user who opts out of tracking.

Large businesses have bemoaned the update, stating significant revenue losses and damages to advertising as a whole. Facebook, in particular, has been very vocal about how this may affect the company's ability to advertise for small businesses.

Bloomberg talked to Adam Jaffe, the CEO of Tenko Games, to understand how this might affect app developers. Tenko Games is an app development studio responsible for games like "Underworld Football Manager."

Jaffe says he expects to lose roughly 20% of income from iPhone users after the update goes live. The company's 2020 revenue was $3.5 million, and its ability to advertise to specific users aided its growth.

"It's like an atomic bomb," said the Barcelona-based former professional soccer player who's also a consultant for other game studios. "People are going to have to reinvent how they do the job of marketing -- well, not reinvent but go back to where it was 10 years ago."

Advertising companies build complex profiles using the massive amounts of data they collect about customers. These profiles are then targeted by companies like Tenko Games to show products to people who may spend money on them.

If a majority of iPhone users opt-out of tracking, then those profiles become weaker, and advertising becomes more difficult. There is some advantage to be gained by this change, however, since the data won't exist for big companies either. Apple's change may level the advertising playing field by removing the power from companies who have more money for targeted advertising.

Apple's argument for the change is simple. Apple says that "users should have the choice over the data that is being collected about them and how it is used." The privacy-first argument rings true for users, but companies still fear what comes next.

The competitive landscape will become more brutal as companies fall victim to the changes. Rather than relying on advertising metrics like IDFA, Tenko Games might have to use data gathered internally or hike Android advertising to replace lost revenue.

Jaffe's soccer game sees all of its revenue from about 5% of its users. These "whales," as the industry calls them, are likely found via targeted advertising metrics. The IDFA tracker gives developers information like what apps people use and who spends money on them -- which is critical when identifying whales to target.

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Comments

  • Reply 1 of 36

    How did compete before they took the easy way out, and being corrupted by the leaches controlling and selling the personal info of the consumers?


    baconstangrob53viclauyycpatchythepiratejeffreytgilbertchasmFileMakerFellerwatto_cobra
  • Reply 2 of 36
    frantisekfrantisek Posts: 730member

    "It's like an atomic bomb," said the Barcelona-based former professional soccer player who's also a consultant for other game studios. "People are going to have to reinvent how they do the job of marketing -- well, not reinvent but go back to where it was 10 years ago."

    That is what I was saying before. And it is good. They have to go to sites who gather their potential customers. Those sites who do good job will benefit. This fast paced life will relax and money have to be earned not just sucked.

    I have never used Facebook for advertisement even it was proposed to me as gold mine. Now i know it wont be needed any more. They will reschool some programmers into marketing specialists.
    BeatsviclauyycpatchythepirateFileMakerFellerwatto_cobra
  • Reply 3 of 36
    dewmedewme Posts: 3,535member
    I’d like to hear these same folks explain why they thought it was a good thing to be sneaking around behind their customer’s backs to game them into buying more products or generate a side hustle for the developer by tracking their customer’s activities and behaviors. 

    What I hear is that if you developers come clean with your customers and tell them up-front that you will be invading their privacy, but doing it in a way that’s beneficial for your customer, but in a way that you the developer also benefits, they will drop you like a bad habit.

    Some will. But some customers won’t if you provide them with the proper incentives. Look at Facebook, they harvest user data like there is no tomorrow, but they still have a bazillion users and Zuckerberg ain't exactly hurting for cash.

    If you can’t be honest with your customers, you don’t deserve them in the first place. Honesty should not be optional, and that’s what Apple is doing here, closing one way (a tiny way) that developers are not being honest with their customers. Defending dishonesty is a tough sell.
    edited April 16 BeatsWgkruegerbaconstangmuthuk_vanalingammobirdviclauyycjeffreytgilbertchasmFileMakerFellerwatto_cobra
  • Reply 4 of 36
    Quick question, as I would rather poll the crowd than search for it. 🤓 

    How much money do developers make from in-game advertisements and are these the same prices that YouTubers would qualify for?

    I ask because I am trying to better understand the differences (if any) in pay scales between in-game advertising/YouTubers and pay-per-stream for musicians.

    Thanks, K


    watto_cobra
  • Reply 5 of 36
    All this means is that companies have to WORK to get customers instead of having someone else spy for them to get customers. Imagine that.
    viclauyyclorca2770chasmwatto_cobrafrantisek
  • Reply 6 of 36
    acejax805acejax805 Posts: 103member
    If you require ad revenue and data mining to "compete", you're on the wrong platform and iOS isn't for you. 

    If these companies want to really compete, they should charge upfront and see if there really is value in their apps rather than offering something for free and adding all the revenue via hidden costs to the consumer. Quite a dishonest way of competing. 
    baconstangviclauyycpatchythepiratechasmFileMakerFellerdope_ahminewatto_cobrafrantisek
  • Reply 7 of 36
    If the information gathered through “spying” on customers is more valuable to a company than its actual product, then no wonder we have this “boo hoo Apple is hurting my business”. Offering me products you think I might want by spying on me or “free stuff” is not payment enough for the millions you are making on MY information. 
    baconstangchasmFileMakerFellerwatto_cobra
  • Reply 8 of 36
    DAalsethDAalseth Posts: 1,501member
    And in related news, the increasing use of alarm systems and locks has cut into profits. This according to the National Society of Burglars and Thieves. 

    Excuse me if I don’t feel any sympathy for Jaffe and his cronies.
    baconstangWgkruegerviclauyycpatchythepiratechasmFileMakerFellerwatto_cobrafrantisek
  • Reply 9 of 36
    sflocalsflocal Posts: 5,530member
    "It's like an atomic bomb," said the Barcelona-based former professional soccer player who's also a consultant for other game studios. "People are going to have to reinvent how they do the job of marketing -- well, not reinvent but go back to where it was 10 years ago."


    Developers and advertises abused users for way too long.   I get that advertising pays the bills but the way it's been working is broken.  The experience has been ruined.  Free market is good, yet at the same time when the market usually decides what's best for it's own bottom-line, and does little to nothing to contribute finding a balance.  It's so disgustingly broken that I'm fed up with downloading many apps from the App Store.  The model is just so in-your-face.  As a developer myself, I am not going to cry a river for those complaining.  You did it to yourselves.  I'm glad Apple is taking a stand here since the market won't.  

    I'll send those whiny developers and marketers a lollipop to suck on.
    macpluspluschasmFileMakerFellertmaywatto_cobra
  • Reply 10 of 36
    WgkruegerWgkrueger Posts: 288member
    when identifying whales (aka users/people) to target” kind of says it all, target being the operative term.
    chasmFileMakerFellerwatto_cobra
  • Reply 11 of 36
    mcdavemcdave Posts: 1,603member
    The only developers this will impact are sneaky, underhanded, sociopathic geeks. Whilst Apple have work to do on the App Store, eliminating the Trojans is a good first step.
    watto_cobrakingofsomewherehotfrantisek
  • Reply 12 of 36
    StrangeDaysStrangeDays Posts: 11,163member
    This is fine. 
    patchythepiratemacpluspluswatto_cobra
  • Reply 13 of 36

    It’s unlikely to make much difference (to advertisers) - as the advertising revenue will continue unaffected. The recipients however might change. No doubt, all the players will adjust to take advantage of any change of rules. The lazy may find this adjustment difficult.

    FileMakerFellerwatto_cobra
  • Reply 14 of 36
    qwerty52qwerty52 Posts: 285member
    It sounds to me like a thief complaining, that his profits are going down,
    because the people began to lock down the doors of their houses and he can’t steal anymore from them.
    edited April 16 watto_cobrafirelock
  • Reply 15 of 36
    viclauyycviclauyyc Posts: 650member
    I am sure there was no way to do business before these tracking exist.

    Why don’t they focus on to make better game/app than send stupid ad to user. All of these companies think the advertiser is more important than the user. 
    watto_cobra
  • Reply 16 of 36
    Boo hoo. This is a classic case of "It's all about me." Opt-in privacy settings is good for everybody else.
    watto_cobra
  • Reply 17 of 36
    GabyGaby Posts: 164member
    Of course it used to be that the real and I would argue truly fair way to compete would be by having a quality saleable product. 80% off apps have no business being offered for download to begin with...
    edited April 16 watto_cobra
  • Reply 18 of 36
    mac_dogmac_dog Posts: 879member
    When is the update coming? That’s all I want know. 
    watto_cobra
  • Reply 19 of 36
    aybaraaybara Posts: 35member
    Did I miss the part where it says it will block ALL advertising?  This is only going to prevent the various data-mining, cookie tracking, DeviceID tracking, etc.

    Apps can STILL be loaded to play ads in between every level, they just won’t be ‘targeted’ based on the data they harvest. It doesn’t matter to most people. They either ignore the ad while it plays, or cancel it as soon as the X button appears. 
    FileMakerFellerfirelockmuthuk_vanalingam
  • Reply 20 of 36
    DAalsethDAalseth Posts: 1,501member

    It’s unlikely to make much difference (to advertisers) - as the advertising revenue will continue unaffected. The recipients however might change. No doubt, all the players will adjust to take advantage of any change of rules. The lazy may find this adjustment difficult.

    That’s been my thought. My feeling is that Facebook is terrified that advertisers will discover that targeted ads aren't as effective or valuable as Zuch has promoted. 
    chasmFileMakerFellerGabywatto_cobramuthuk_vanalingam
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