Blog Post - Frank Kochenash , Sep 28 2020

Apple's iOS 14 update and the impact on Amazon Ads

Apple's iOS 14 update and the impact on Amazon Ads

The Amazon DSP has become a proven performance drive for our clients. Some pending changes embedded within Apple's iOS 14 update have raised concerns by Facebook and other advertisers about the impact it would have on their advertising products. Even though Apple's implementation has been delayed until the new year, it's reasonable to wonder what the impact would be on Amazon Advertising. This week I provide a 'virtual Q&Q' with our Group Director of Commerce Media, Allison Lewis.

What is Apple doing, and why do advertisers care?

Earlier this year Apple announced its new mobile operating system, iOS 14. Among many new features are new controls that provide an easy way for consumers to opt-out of being tracked for advertising purposes. Apple will now ask customers if they want their behaviour tracked for a more personalised ad experience. It is likely that most individuals will opt-out of this option, leaving advertisers limited ability to recognise users on third-party apps on iOS.

In layman's terms, please?

Say a person uses the Weather Channel app on their iPhone. When they upgrade to iOS 14, they will be served the permission opt-in/opt-out message. If this person chooses to opt-out of being tracked, then certain ad networks (e.g. Facebook's Audience Network, Amazon's DSP) will no longer be able to serve an ad to them when they are on the Weather Channel app.

How does this more specifically impact Amazon and users on its app?

Amazon will still collect information about their users when they are logged into the Amazon shopping app (they will still be able to use this information, for example, to create their in-market and Lifestyle targeting segments). The change, as it relates to Amazon, really comes down to who we can target and serve ads to in-app. Under this change, if an Apple iOS user opted out of tracking, then we could no longer serve that person as ad on non-Amazon apps (e.g. the Weather Channel app) via the Amazon DSP. However, these changes will not affect our ability to target users with Amazon first-party data while they are browsing the Amazon mobile app. Thus, we could still serve this person as ad on the Amazon mobile app or on mobile web/desktop.

What does this mean for Amazon Advertising and the growing popularity of their DSP?

At the core, DSP still provides exclusive Amazon first-party data that allows advertisers to reach shoppers at scale wherever they are - on Amazon, across the web, and in mobile apps. While this will change for iOS users across mobile apps, the restrictions will not impact any Amazon owned and operated media buys or web traffic.

We estimate that up to 8% of Amazon DSP traffic could be impacted by this release. This roughly means that about 8% represents the estimated percentage of inventory that iOS third-party in-app supply makes up relative to all the supply available in the DSP. However, since iOS upgrades will likely occur gradually, users who continue to leverage iOS 13 and below will still be served ads in-app. This gives us time to test, learn, and evolve our strategies to best pivot to meet and exceed our client goals based on the impacted scale.

Does that mean it's a volume impact? What about performance?

We do expect a volume shift - but not a decrease as the budget will flow to other placements. However, in-app inventory generally performs well. So, as in-app placements decline as a percentage of total, advertisers may find it more difficult to maintain performance levels (on the margin).

What does this mean for strategy when using Amazon DSP?

Our strategy off Amazon will need to be nimble based on the impacted scale, likely shifting spend away from mobile iOS apps and into mobile web and Android inventory, where Amazon data will still be used to influence placement based on Amazon's audiences that identify both in-market and lifestyle audiences that match a brand. Losing some portion of mobile app iOS inventory forces advertisers to take a closer look at our strategy across all campaigns. Android OS apps, for example, may be a beneficiary.