Privacy in Advertising Pt. 1
iOS 14: The Beginning of the End
OVERVIEW:
For the past several months, industry articles have been warning us about the imminent iOS 14 update and how this will change the way advertisers target audiences. Facebook has pushed this topic to the forefront with their recent all-out attack on Apple, proclaiming that they are standing up for small businesses. So what exactly is going on here, and how will this impact the current advertising landscape?
Let’s start by covering some vocabulary.
PII — Personally Identifiable Information. This includes things like a name, email, address, phone number, basically any type of information that would identify a user.
IDFA — Identifier for Advertisers. This is a random number that is assigned to an iOS user’s mobile device; it allows advertisers to track user movements across different apps and websites for attribution, to refine targeting, and to build lookalike audiences.
ATT — App Tracking Transparency prompt. This pop-up will appear when users on iOS 14 download an app, providing them an option to choose how their data will be collected and used.
The big change being rolled out with iOS 14 is that the IDFA, which currently defaults to being shared with app developers and advertisers, will now require users to grant permission to this data. The new default will automatically opt app users on iOS out of tracking unless they specifically choose to opt-in. App developers will now be required to include an App Tracking Transparency prompt that appears when apps are downloaded, allowing users to choose whether or not they want to be tracked.
So why is Facebook so mad? Will this change really benefit consumers? How much of an impact will this have on the current advertising landscape? Let’s dive in and look at how the iOS 14 update will impact all stakeholders.
SMALL BUSINESSES
The basis for Facebook’s recent attack is that they are standing up for small businesses who rely on targeted advertising to pay for app development and maintenance and provide the best use of their own advertising dollars. It is hard to believe that Facebook has only small businesses in mind as they stand to lose a chunk of their own revenue. They have even admitted that the update may “render Audience Network (Facebook’s platform which allows ads to run off of Facebook across various mobile apps and websites while still utilizing Facebook targeting) so ineffective that it may not make sense to offer it on iOS 14.”
However, self-serving Facebook’s attack may be, they are not entirely wrong about a potential impact on small businesses and publishers. Many small businesses have come to rely on Facebook as one of their primary media platforms due to its ease of use, cost-effectiveness, and ability to be highly targeted. Small businesses have smaller budgets, and it is important to maximize their marketing dollars by making sure they are getting their ads in front of the right audience as often as possible. They are not able to afford the waste of broad audience targeting that larger advertisers can. The reduction in IDFA tracking will make user targeting that much less effective, and for small businesses, that could reduce their reach to core audiences and drive up their return on ad spend.
Additionally, what we often forget about in advertising, is that it is responsible for funding many services, including news reporting and educational services, which can then be offered to consumers for free. Without in-app advertising, many small app developers and Audience Network publishers will need to begin passing along business costs directly to the consumer.
CONSUMERS
Speaking of consumers, how will they be impacted by iOS 14? The main benefit of iOS 14 is that it gives the power back to consumers on how they want their own data to be used. The story of digital advertising has been built on large corporations like Facebook and Google selling and profiting from the consumer data they gather and claim to own. This is not a model that can continue, and we can expect in the coming years for consumers to begin taking back the information that belongs to them. With this update, consumers can take back a little bit of that power, enabling them to protect their information on iOS 14 apps.
Like Facebook, we can’t believe that Apple is making this update without considering how they may also benefit. What Apple neglects to do is explain to consumers the full consequences of not opting into IDFA tracking. Instead, the messaging they present in the App Tracking Transparency prompt is alarming and a bit leading. In large bold font, it declares that opting in will allow an app to “track your activity across other companies’ apps and websites.” While it does leave a few characters (in a much smaller font) for developers to defend their need for tracking, it does not paint a full picture of how the tracking will be used.
As mentioned earlier, one potential consequence of iOS 14 may be that developers and publishers will need to start charging for their services. This means more apps come at a cost, and more in-app purchases to subsidize business costs previously covered by advertising. This could impact the apps you use daily, such as local news sites like KTVB or your favorite gaming app like Solitaire. As we learned during Apple’s battle with Epic Games earlier this year, Apple will take 15% — 30% from this revenue as a fee for running an app on iOS, which is not too shabby for Apple.
If consumers had all of this information, would they be so quick to deny IDFA tracking? While some consumers may not mind paying for their apps in exchange for maintaining full control of their information, many others rely on free services that they otherwise may not be able to afford.
ADVERTISERS
The iOS 14 update will indeed impact advertisers, but how big of an impact will it be? Without IDFA, it will be difficult for advertisers to reach targeted audiences, and it will make tactics such as retargeting and attribution near impossible. Advertisers will still have access to data such as the number of app downloads and other events like in-app purchases, but these actions can not be traced back to an individual user. Advertisers will still, of course, be able to see actions of users who opt-in to IDFA tracking but will not be able to see actions taken on other apps (cross-app tracking).
While this may sound dire, it is important to note that this only impacts advertising on native mobile apps on iOS devices such as your Nextdoor Neighborhood app or your favorite coupon app. This is just a sliver of the advertising landscape. There is still a large amount of advertising that will go unaffected. This includes:
- Mobile Web (including on iOS devices)
- Android Apps
- Desktop Web
- OTT
- Search
- Digital Video
So while this update will have a noticeable impact on advertising, it is not the end of the world….yet.
The iOS 14 update is just the beginning, Google will likely be following suit with GAID, their mobile tracking ID, and we are all waiting for 3rd party cookies to fully crumble. Knowing these changes are on the horizon, we as advertisers must start to prepare and develop solutions that will be effective and respectful of user privacy.
Stay tuned for future posts to learn what Drake Cooper will be doing as we continue to explore a new privacy-first world.
