Smartphones have become entirely ubiquitous. Mobile data traffic in 2011 was eight times all internet data traffic in 2000. Cisco predicts that by the end of the year, the number of connected mobile devices will exceed the world’s population.

Yet while people spend more and more time accessing content through mobile, in many ways, mobile advertising is still in its infancy. Digital marketers have developed sophisticated tracking tools that allow brands to serve ads to users, based on data about their browsing habits. One widely used tool is retargeting, which allows brands to serve ads to site visitors all around the web, after they’ve left the site.

Retargeting is attractive, because it allows marketers to optimize their spend by serving ads only to a group of users who are already interested in the brand. Though retargeting for mobile is a highly attractive prospect, and there are a few companies out there who can do it, since there are several unique challenges that do not apply to traditional online site retargeting.

Anonymous cookies
Traditional site retargeting is a cookie-based technology, which tracks users by dropping anonymous cookies on visitors to the brand’s website. The retargeting provider then uses real time bidding to serve ads when those cookied users appear around the web.

Retargeting for mobile is a particular challenge because there are two unique ecosystems: in-app and the mobile web. Retargeting users on the mobile web can be easily accomplished using cookies. There are, however, significant blind spots, as Apple’s mobile safari browser disables third party cookies by default.

Once you get into the app-sphere, it gets trickier. According to research from Forbes.com, the average smartphone user regularly uses six different apps, which may not sound like much. However, each app operates independently, and data within apps is proprietary. You cant simply drop a cookie in one app and then serve an ad to the same user in a different app later. So how do mobile retargeters find users on their devices?

Unique Device IDs
Mobile retargeting companies like Jumptap have been using Unique Device IDs (UDIDs) to track users across their mobile device. Employed by both Android and iOS, the UDID is a permanent alphanumeric string that is assigned to each device. As its name suggests, it is unique to each device and can be used to identify that specific device.

Developers have historically had access to UDIDs to allow storage of preferences across apps and to test beta apps among other things. Marketers have been using UDIDs to serve targeted ads  and retarget users.

Last August, Apple, announced it would be changing its policy with regard to UDID access, and in iOS5, UDIDs were deprecated, indicating to mobile app developers and marketers that its days were numbered.

Mobile ad networks and retargeting providers have been in talks to find a workaround since the announcement, especially since Apple began rejecting app submissions that incorporate the use of UDIDs. So what can developers do?

Life after UDID
Though certainly not so robust an identifier as the UDID, a technique known as mobile fingerprinting could offer a solution for mobile retargeting. Mobile retargeter TapAd says it is able to retarget not only on mobile, but across multiple devices, using anonymous aggregated data gathered from web logins, app publishers, and wi-fi networks. The company has been reticent about the specifics of its methodology, however, which is unsurprising, given how many other companies would surely jump at the chance to adopt the same methods.
Jumptap has announced that it too, is working on a mobile fingerprinting solution that does not utilize UDIDs, and has  also implemented a mobile ‘do-not-track’ option to appease growing privacy concerns. 

Velti has made a similar announcement. While it does currently offer retargeting, Velti’s mobile ad targeting capabilities have been threatened by the UDID deprecation and it is looking into some form of mobile fingerprinting to continue to serve targeted ads. 

Mobile marketers will need to improve transparency in order to avoid privacy flare-ups. The mobile space may need to evolve into an opt-in, rather than an opt-out, permission system, and marketers may have to give users more in order for them to agree to be tracked. 

Some companies have already implemented mobile reward programs. Foursquare, for instance, gives users deals in places they check into, while Shopkick enables retailers to offer special deals and promotions to users of its mobile app.

People may be more willing to share their information if the data collection is more transparent, and if they are getting something in return. We’ve seen what can happen when these rules are ignored, yet it remains to be seen where mobile retargeting will stand.

Caroline Watts is an expert marketing associate at ReTargeter