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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

Apple + Google Don't Care About You

Apple, Google, and the different approaches to targeted advertising

Tracking: Apple (opt-in) vs Google (opt-out)

Earlier this week at their Games Developer Summit, Google announced 3 new ways for developers and marketers to target users.

1) Total Return on Ad Spend: The first feature, target return on ad spend (tROAS), enables developers to determine target users that are the most likely to engage with in-app advertising (IAA) through machine learning. This feature builds upon Google’s target cost per action (tCPA) program, which works to identify users most likely to make in-app purchases. tROAS is in closed beta and only open to developers already using AdMob, Google’s mobile advertising platform. Preliminary results from the beta show that this feature will have a substantial impact – one of the beta testers reported that their tROAS campaign saw a 44% greater ROAS and a 21% increase in UA compared to the tCPA campaign [Source].

2) App Campaigns for Engagement: tROAS will also be able to integrate with Google’s app campaigns for engagement (ACe) in Google Ads. The ACe program, which was released last year, allows developers to place ads across the entire Google ecosystem (including YouTube and Google Play). By pairing tROAS with ACe, developers can set floor limits on the ROAS they want for the in-app actions taken by users funneled through ACe.

3) Exclude re-installers: The last feature, an “exclude re-installers” option, allows developers to exclude re-engaged lapsed users from their target audience. Excluding these audiences removes the “noise” that these users add to the engagement data as the re-engaged audience perform much differently than new users in terms of lifetime retention [Source].

The announcement of these tools is opportunistic and well timed. This month, Google released an alternative to the Android Advertising ID to support analytics and fraud detection without passing the user IDs for those who opt out of personalization [Source 1, Source 2]. This is the Google equivalent to Apple’s blocking of their user ID (IDFA), however, there is a fundamental difference in the way that users are prompted to choose to opt-in or out of ads personalization.

Updating to Apple’s latest OS (14.5) prompts users (via push notification) to decide whether or not to allow their data to be tracked for advertising purposes (opt-in) [Source]. Google optionality is much more low profile. Users must go to their Settings -> Privacy -> Advanced -> Ads and proactively turn off Ads Personalization (opt-out) [Source].

The difference in these user process flows has a massive impact on the portion of users that choose to opt out of ad personalization. Singular, a marketing analytics software, reported that in their sample of 176M Android smartphone users globally, only 2.08% have turned Ads personalization off [Source]. Most countries opt-out rates are around 1-2%, with China as an outlier at ~35% [Source].

On the other hand, only ~20% of Apple consumers are saying yes to Apple’s App Tracking Transparency prompt, resulting in a 15% to 20% revenue drop and inflation in unattributed organic traffic for iOS advertisers [Source]. From a consumer optics perspective, this is great for Apple. Apple doesn’t generate revenue from ads so they aren’t taking the same hit that developers do. They have built a foundation (distribution) that is integral to a mobile developer's success so they aren’t at risk of losing developers even though they’ve built the tool that takes a direct hit at developers’ bottom line in the name of privacy (pro consumer).

Takeaway: there are three distinct takeaways here.

1) Two different approaches: there is a clear divergence between Apple and Google’s approach to privacy and advertising. While iOS continues to monetize better than Android [Source], there is more data availability for engagement, conversion and monetization for developers and marketers to utilize and adjust with on Android. In short, Google does not prompt you and is taking an “opt-out” approach (only ~2% are opting out) while Apple is prompting you and taking an “opt-in” approach (~80% are effectively opt-ing out).

2) Users take the path of least resistance in regards to privacy: At the end of the day, users actually want customization and tailored experiences. Both Google and Apple know this to be true yet they are approaching it differently (weighing optics, public perception, and monetization all at once) in pursuit of their best interests (not that of users).

3) Google and Apple care about profits, not privacy: Google shares in ad revenue which is motivating them to hide behind the “opt out” strategy in the name of privacy. On the flip side, Apple does not share in ad revenue and is therefore incentivizing app developers to push their monetization strategy towards IAPs instead of ads.

In conclusion, both entities are (unsurprisingly) “for profit” institutions and that’s driving no less than 100% of their respective strategies.