Small developers will be hit hardest by Apple’s ATT framework

While developers and advertisers of all sizes from all around the world have been expressing their concerns about Apple’s upcoming App Tracking Transparency framework since the company first announced it at the Worldwide Developer Conference last year, small app developers will take the brunt of the hit, Bloomberg reports. 

The ATT framework which the company said would roll out in early spring with an iOS 14 update is expected to arrive after Apple’s special event which will take place on April 20th. 

The framework is expected to bring the end of Apple’s IDFA which enables advertisers to run, track and optimize personalized ad campaigns to reach more people, as it will require them to get user consent to be able to track their data. 

Many estimates from different institutes show that ATT opt-in rates will stand between %2 and 20% after the feature roll out. Meanwhile, a recent study from AppsFlyer found that it could be as high as 45% in some categories. 

Global tech companies including Facebook have been advocate about Apple’s controversial privacy changes and accusing the iPhone-maker of being anti-competitive. The social media giant ran full-page ads on major newspapers and the ‘Good Ideas Deserve To Be Found’ ad campaign stressing the importance of personalized advertising. 

Last year, Facebook said that it ran an experiment and found there could be a 50% drop in third party developers’ revenue without personalized ads.  The company is now showing iOS users in-app prompts to inform them about the IDFA change and encourage them to allow ad-tracking. 

Both Unity Software Inc. and Snap Inc. warned that Apple’s changes could risk their ad businesses. Zynga said it’s building its own ad network now. 

In addition, mobile adtech companies including Chartboost, Fyber, InMobi, Liftoff, Singular, and Vungle formed ‘Post-IDFA Alliance’.

Although the ATT framework poses a risk for developers of all sizes, small developers may be more at a disadvantage compared to the big names in the ecosystem, Bloomberg wrote. 

For example, Tenko Games’ Underworld Football Manager title which currently has over 1 million users generated $3.5 million in revenue last year. However, CEO Adam Jaffe expects a 20% drop in App Store revenue due to the IDFA change. 

“It’s like an atomic bomb,” said Jaffe, former professional soccer player who also provides consultancy services to various 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.”

Although he said his title will survive the privacy change and plans to focus on Android devices, it is quite clear that the ATT framework poses a higher risk to small developers like Tenko than global brands like Facebook.

“Users should have the choice over the data that is being collected about them and how it’s used,” Apple said in a previous statement, highlighting that developers and advertisers will still be able to track user data and the change will only require them to ask for permission before doing it.

“Supporting small businesses has been at the heart of the App Store since it was created to help developers of all sizes develop, test, and distribute apps,” said the company, pointing out its new program which reduces the App Store fee to 15% for developers earning less than $1 million per year. 

Ken Rumph who is a tech analyst at Jefferies said that ad prices could drop by more than half. “The fear of the market is that metrics will go haywire for several months until prices or data analytics stabilize,” he said. 

On the other hand, Michael Pachter who is an analyst at Wedbush Securities said that the change could be a silver lining as Facebook and Google will lose importance in app promotion which could enable games companies to generate more ad money from their own industry. He added that studios themselves can also pay lower ad rates.