iOS mobile ad revenues could sky-rocket this year as UDIDs are replaced by IFAs, says marketer

Image: http://advertising.apple.com

Apple’s early decision to address privacy concerns about the collection of personalised data gives it a head-start in the new mobile ad race, argues marketeer Gregory Kennedy in a Gigacom blog.

Some background is probably useful here. Every iOS device sold has a unique ID code known as the UDID (Unique Device IDentifier). Many app developers used this 40-character code to identify you for various purposes, some of them perfectly legitimate, such as storing push notification settings and logging usage statistics …

Where UDID got more controversial was when the data was shared with advertisers. If an advertiser knows that you’ve installed several airline apps, a couple of hotel apps and various business apps, that aggregated data might allow it to profile you as a frequent business traveller, for example. Things get murkier still if other information logged by an app – such as your gender and age – is associated with your UDID, and combined with the geographical location of the device. Privacy concerns over UDIDs were heightened when 12 million were leaked, an initial false report suggesting that they were in the possession of the FBI.

Apple responded by announcing back in March that it would start rejecting new and updated apps that accessed the UDID on May 1st, replacing it with IFA (ID For Advertisers).

The good news is this legal gray area will be cleared up on May 1. In response to critics of UDID, Apple has created a legally compliant alternative called, simply enough, IFA, or ID for Advertisers that is built directly into iOS 6. Crucially it also allows users to opt out of any advertising tracking method by changing a setting at the device level. This solution means that starting next month, anyone advertising on the iOS platform will be legally compliant. The device level solution also puts iOS somewhat ahead of the PC web, where legal compliance with ad tracking has to be handled on a site-by-site basis and is currently a messy struggle with no system-level opt out.

Apple getting ahead of the game, coupled to the oft-demonstrated fact that iOS users generate more revenue than Android users (though the difference likely could disappear when you compare iOS against high-end Android devices), makes Apple ideally positioned to substantially boost its ad revenues, says Kennedy.

iOS revenues will skyrocket in 2013. With the legal issues around UDID cleared up, a lot of the friction that was holding back large advertising budgets will be reduced. Additionally, the 14 percent decline in PC sales in the first quarter of 2013 confirms that consumers are quickly moving to mobile. Despite having a smaller overall mobile market share, Apple’s iOS  dominates both mobile ad traffic and mobile revenue; a recent study shows overall that iOS accounts for 44.5 and 49 percent respectively, versus Android’s 31 and 26.7 percent shares. And so with the continued shift away from PCs, marketers will flock even more to iOS, where they can best reach an affluent demographic.