It was June of last year when Apple first announced the rollout of the iOS 14 update. This update will require different apps to ask permission from the users before they gather and share data through Apple’s device identifier. In addition, Apple is shifting its focus on activity tracking and app privacy. This update, planned for roll out in iOS 14.5, gives users more control over data usage and ad tracking.

Expectedly, this decision started a heated debate between Facebook and Apple. The former expressed their concern on how ad tracking and targeting will affect small businesses using their marketing features. Apple released ahead of time detailed information on the said update. However, it’s only after it was rolled out that advertisers and businesses realized its full effects.

Why is this update controversial?

The consumers surely benefitted from the added privacy they got after the update. However, the said move remained controversial within the advertising and marketing circles because it cut off the consumer data relied on by app developers and tech companies. This data used to give app developers reliable insights on how they could better improve the in-app user experience.

How did App Tracking Transparency change data collection?

Before the iOS 14.5 update was rolled out, app developers could access different tools to track in-app user data. These data could then be used by advertisers congruent to other web-gathered data sets to build different user-profiles and polish strategies to hook them with curated advertisements.

For most developers and advertisers, their primary tool includes Apple’s system known as ‘Identifier for Advertisers’ or IDFA. Before App Tracking Transparency was introduced, consumers were already capable of saying no to IDFA-based initiatives. However, ATT changed the feature that highlighted this, opting out of IDFA initiatives in a highly prominent way.

When the ATT feature was implemented, developers can explicitly ask website and app users for permission to gather data through an Apple-developed standardized prompt. When the user agrees and chooses ‘Allow,’ the data gathering process will continue as usual. Unfortunately, when they choose ‘Ask app not to track,’ the developer can no longer track that user’s activity within the app.

How is this update affecting Facebook Advertising?

As expected, Facebook is against these changes in Apple’s data collection process. They even paid for a full-page ad expressing their violent reaction against Apple’s ATT implementation. According to them, it will cause serious economic repercussions to small businesses that relied on Facebook advertising to boost their sales performance.

This antagonistic reaction against Apple’s decision is understandable because Facebook stands to lose $4 billion or 5% of its total yearly ad revenue if around 80% of iOS users choose to opt out. To recap, before the rollout, Facebook is said to be reaping a staggering $84 billion only in their ads.

Facebook is deeply concerned about the effects as historically, iOS updates are usually adopted by around 50% of users within the first month after its launch. In the following month, you can expect the figure to rise to as high as 75%. If 75% of iOS users click the ‘Ask app not to track,’ then Facebook is in serious trouble.

The only good news is the adoption rate drops after the subsequent months. Besides that, Apple already used the limit ad tracking (LAT) privacy setting in its previous updates, and this automatically opted users out. With this, you can expect a decrease in the number of users facing the prompt in the new update rollout. The performance dip that will result from LAT is a question of when instead of being a matter of if. It can hit different brands and companies at differing times.

This can lead to any of these three scenarios — advertisers shutting their campaigns, shuffling their budgets for use in a different channel, or stay at course sans the changes. These likely responses from CPM, CPC, and advertising giants could lead to sizeable ad categories and industry fluctuations.

What advertisers also fear is the possibility of losing visibility in various channel-specific conversions. While this is not happening yet, this doesn’t mean that it can’t happen soon. For example, there is a very high probability that Facebook Pixels might be thrown into the dustbin because of in-browsing tracking tech migration. This will surely force eCommerce marketers to move with change.

How is this update affecting Google?

YouTube and Maps are just two of Google’s iOS apps that use IDFA. Since Google will stop using IDFA, it will switch to a tool called SKAdNetwork. Google already introduced this in 2018. Now, it considered it as its ally in coming up with a more privacy-oriented strategy to measure attribution of iOS apps’ mobile ad campaigns.

Besides this, Google will also continue to work with the Federated Learning of Cohorts (FLoC) tech called Privacy Sandbox. This clusters user groups with the same interests. Advertisers can then make sense of these interests to identify their targets. Based on the most recent test results, advertisers can see at least 95% conversion for every dollar spent. This is said to be more effective than cookie-based targeting, especially for internet-based users like affinity and in-market segments.

With these moves and plans, Google is still encouraging businesses to keep on advertising with Google Ads. According to them, they plan to build and maintain an ad-supported ecosystem that’s continually thriving. They also promise to continue meeting the needs of their advertisers while also giving control, choice, and transparency over their information and data. They consider Apple’s privacy modifications as necessary parts of the advertising market’s evolution wherein players are called to adapt within the new normal.

Takeaway

The changes that accompanied the rollout of Apple’s ad and app privacy settings may have shocked businesses and advertisers. Still, as Google would put it, these are necessary events that shape the evolution of the digital marketing niche. There’s no stopping these changes, so it’s better to keep up, adapt, and rise above it.

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