How Apple’s Recent iOS Update Will Disrupt the
$105 billion U.S. Mobile-Ad Industry
Apple’s long-awaited privacy overhaul through its recent iOS 14.5 update has arrived and we expect it to have a dramatic impact on the $100 billion U.S. mobile-ad sector. The latest release introduces Apple’s App Tracking Transparency (ATT) framework, which requires developers to ask iPhone users for permission to track their internet usage. Behind the scenes, apps can probe your phone for personal information that helps them target you with relevant ads or even sell data about you to others. Now the software that runs your iPhone and iPad is putting up some roadblocks to identify your device. As a result, marketers and data brokers will not have a direct way to track your mobile usage unless you explicitly say it’s okay. In addition to targeting your interests, tracking also helps advertisers learn whether their ads work. This means that all mobile advertisers (from global brands to mom and pops) will need to reevaluate their approach on iOS devices if they want to achieve a return on their ad spend investment.
So, what does Apple’s ATT policy mean for brands and marketing pros? Here we review the next evolution in digital privacy and targeted advertising, and what steps Simply180 is taking to help our clients reach and engage their target audience under this new era of enhanced privacy.
How Your App Usage is Tracked
In any given mobile app, up to six embedded third-party trackers collect and link data about users based on their activity across various other apps. One tracker alone can collect information on 700 million people creating consumer profiles with 5,000 different attributes, including precise day-to-day movements. This $227 billion data mining industry has been valuable to legitimate advertisers and marketers who want to place their products in front of appropriate audiences. But as privacy concerns grow, Apple launched its iOS 14 update to stop third-party trackers from gathering data without permission.
Today, a vast trove of websites, apps, social media companies, and data brokers collect, link, and monetize user information to build hyper-detailed profiles based on email addresses, phone numbers, or unique advertising numbers. Companies like Facebook collect that information to create consumer personas, which they use to serve tailored content on their platforms. Facebook also sells consumer data to brands for advertising purposes.
For instance, a travel agency may want to promote its Bellagio vacation package to future Las Vegas travelers. To ensure it is reaching the right audience, the travel agency may use Facebook’s data about people’s past behavior, the type of information they consume, how they engage with it, and where they’re located to target the right market segment. Facebook’s data-driven profiles can be as theoretically specific as “people who want to visit Las Vegas, but only have the budget for an off-strip motel.”
Most of the time, this data collection system is not nefarious and can be highly effective in certain circumstances. Apple’s decision to require opt-in to cross-app tracking is a sign that consumers demand more transparency and autonomy over their personal information.
A screenshot from Apple’s whitepaper - a day in the life of your data
When restaurant apps pop up a question about tracking, you can tap “Ask App not to Track” to better protect your privacy, but will this also detract from a personalized user experience?
Apple’s App Tracking Transparency Changes at a Glance
App developers will now have to be very clear when seeking permission to track users’ data across apps or websites owned by other companies. Apple has implied that users who trust apps will continue allowing tracking. Still, some surveys show less than 40% of people will opt-in once they receive the notification requesting consent.
In addition to asking for permission, apps will need to provide consumers with a simple summary of the developer’s privacy practices. The information should include information on the types of data the app collects, such as photos, location, and contact details.
The death of identifier numbers
Like Google’s web cookies, Apple used markers such as the Identifier for Advertisers (IDFA) to help find specific devices across networks. Identifiers also allowed advertisers to create a detailed profile of users across different apps or websites to deliver targeted campaigns and measure performance. Starting with the iOS 14 release, Apple will no longer pass IDFA information on to advertisers without user permission.
Approximate location sharing
Advertisers could track people’s specific locations using data shared and linked across apps in the recent past. But today, Apple will periodically remind users which Apps have access to their locations. Before sharing their location, users can choose to share their approximate location or only share their location once.
Access to photos and mic
The iOS 14 update lets users know every time the microphone or camera turns on and allows people to adjust privacy settings to stop this from occurring. Moreover, apps must also specify if they want permission to access a phone’s photos or other multimedia features.
Conversion Tracking Updates
In cases where an IDFA is not present because a user opted out, Apple created an alternative that allows advertisers to track users without permission while still protecting their privacy. Apple’s SKAdNetwork allows platforms like Facebook, Google, Snapchat, TikTok, DSPs, and MMPs to measure conversion rates of mobile advertising on iOS devices on a limited basis. In the past, advertisers used to track click-throughs for 28 days, but platforms like Facebook will no longer support this moving forward. Advertisers will only have a seven-day click-through window to track conversions.
Impact on Advertising Platforms
Apple’s iOS updates will have a significant effect on advertising platforms and the people who use them. As of January 2021, Apple’s iOS operating system accounts for 56.22 percent of the North America market according to Statista with 116 iPhone active devices in the U.S. alone. Here’s how the iOS 14.5 update will impact mobile advertisers:
- Facebook Advertising. Organizations that rely on Facebook advertising have already started facing hurdles. In particular, all businesses that optimize ad delivery using website or app events, including Facebook’s pixel or SDK, will no longer access the same campaign features. This will particularly hurt Facebook’s Audience Network, which used IDFA numbers to display advertisements in non-Facebook apps. As a result, Facebook fears advertisers could shift their budget to services like Google’s search ad business instead.
- Tracking Conversions: As a result of the latest restrictions, advertisers will not have the same access to conversion metrics from users on Apple devices. The new default attribution window may even skew the data to misreport organic vs. paid conversions. Facebook is particularly concerned about losing its ability to track long-term view-through conversion metrics, which shows that a Facebook ad later inspired a purchase through another website. Seasoned marketers will understand why this is happening, but their stakeholders may not.
Campaign Efficacy: If platforms like Facebook and Snapchat can no longer track user behavior, they will not have access to detailed targeting data about specific users. That makes Mark Zuckerberg especially angry. In March, leading up to the official Apple iOS 14 release, Facebook ran an ad campaign stating that targeted ads are critical to small business success. While Facebook’s argument that tracking our usage and location on our iPhones or iPads is good for small businesses is disingenuous, there is no arguing that the decision by Apple can be viewed as self-serving. Apple has a financial interest to push app subscriptions as an alternative to mobile advertising because it takes a healthy percentage of any in-app purchases. Twitter recently announced plans to roll out Twitter Blue, an advertising-free monthly subscription model. Apple will get a cut of those fees.
Steps We Are Taking
Marketing and advertising professionals must act quickly to minimize the fallout and set themselves up for success in this new consumer opt-in era. Here’s how to begin:
- Update Facebook campaigns for iOS 14
In response to Apple’s privacy updates, Facebook announced it would start processing pixel conversions through its Aggerated Event Measurement protocol to help users continue running successful campaigns. To prepare, Facebook recommends advertisers update Facebook’s SDK for iOS 14, verify the website domain, and set up eight preferred web conversion events per domain. Check out Facebook’s help center article for in-depth instructions.
- Prepare for reduced conversion number
On January 19th, Facebook updated its reporting window to the new default seven-day click and one-day view attribution window. The existing campaigns could see a 20% to 40% decline in conversions because of the change in measurement metrics. As a result, advertisers and marketers must educate stakeholders about the transition through training sessions to show conversion disparities between the new one and seven-day windows compared to the previous twenty-eight-day window.
- Diversify campaigns
Advertisers must look forward to platforms that allow audience targeting based on factors other than specific data gleaned from identifier numbers. That means it’s time to turn their focus to intent-driven campaigns like keyword-based search-engine advertising. Advertisers should also consider ways to reinvent tried-and-true tools like email and SMS marketing platforms where their audience is clear and identifiable.
- Create first-party data
In an age where it’s increasingly challenging to rely on third-party data, advertisers must start creating their own usable identity graph of customers and leads. Using an email address or phone number, advertisers can continue targeting relevant people on a one-to-one basis across products.
Don’t Be Last to Prioritize iOS Ad Targeting
Previously, about 70% of iOS users opted-in to share IDFA data with app publishers. That number may drop as low as 10% to 15% in some cases. Following the iOS 14 update launch, brands that haven’t already started preparing must realign their mobile ad marketing strategies. The new privacy-first framework, which includes Google’s recent ban on third-party cookies, may seem like a radical shift, but advertisers are still equipped with tools to reach the audience they seek. This isn’t the ad industry’s first shake-up, and it won’t be the last. By working with an experienced digital marketing agency, brands can continue reaping the rewards they seek from targeted ad campaigns. Let the games begin.