Breaking down the update

In June of 2020, Apple announced that with the rollout of its newest update, iOS 14, there would be new privacy features that would include consumer opt-in for permission to track, increased consumer controls over location, and overall, more data insight for consumers. The update requires apps to request explicit consent from consumers to access the device’s Identifier for Advertisers (IDFA) and transmit data to third parties. Advertisers will have less control over automatically accessing users’ data, seeing website traffic, or creating new conversions. The potential impact of this update could change the way we approach digital advertising and force Big Tech’s players to change their business models considerably. With that in mind, the industry was given until spring of 2021 to prepare for iOS 14.5 to enforce the changes.

Apple's power play for consumer trust

Hannah Lane: While controversial among media companies, Apple's move on IDFA is seen as part of a bigger ecosystem movement towards greater consumer control over privacy. As we’ve seen with GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act), Apple is instating a framework of data compliance for media partners on the collection of personal information. This also falls on the heels of the Cambridge Analytica data scandal, in which Facebook allowed the British consulting firm to gather data on millions of Facebook users without their consent. For consumers, this will be a step in the right direction for protecting their privacy and seeing what data is being shared, where the data is being shared, and who it is being shared with. For advertisers, it will hinder the amount and type of data they will be able to leverage to target these users, thus driving up cost of reaching the right potential customer.

Henrik Persson: In spite of its famous “1984” ad, Apple has often acted like an older sibling. It knows what’s best for us, and we have to deal with its decisions. It limits the number of ports in our laptops and decide which apps are allowed on our phones. Giving users a peek behind the curtain and showing them exactly how they’re being tracked could be seen as an educational effort towards increasing trust and transparency in available apps, as well as in some of Apple’s own products, like Sign-In with Apple ID.

Opting out of higher conversion rates

HL: Advertisers who collect data via these applications— or own their own third-party applications— will feel the impact here. Tech giants like Facebook and Google have already taken the next steps to comply with Apple’s changes, but they aren’t necessarily happy about them, since these companies expect their ad targeting capabilities to be impacted. Facebook has stated that the new policy will decrease audience sizes, increase the overlap between audience segments, and reported conversions will be fewer due to the iOS14 update not supporting app-to-website conversion metrics. Thus, advertisers’ and media companies’ ability to connect with potential customers and track revenue will be significantly impacted.

HP: We can’t know for sure what percentage of iOS users will choose to opt in or out of cross-platform tracking, but it will definitely be noticeable. Studies on digital opt-in vs opt-out behavior have shown that users will almost exclusively choose the path with less friction. From screenshots provided by Apple, both options are given equal weight, but the position of “Ask App Not to Track” leaves us studying the digital world thinking it will be the more commonly selected option.

With severe limitations on this type of tracking, we will have to rethink where we place ads, target audiences, and the content of the ads. Until we see where everything shakes out, I believe we will see more brand-focused ads sent to a larger audience, followed by direct sales ads that stick around even after a purchase has been made, since we can no longer see into third party websites and apps.

Breaking the internet

HL: Since data collection hinges on a user opting in for media companies like Facebook and Google to build audience segments for companies to advertise to, companies without access to 1st party data will find themselves battling out other similar companies for access to these potential new customers. It will increase media costs and decrease overall efficiency if companies do not have established CRM programs to build profiles of current and potential users. We will also have to lean on other targeting opportunities as behavioral targeting slowly decreases in value. With users potentially opting out of being targeted by media, more value is going to be placed on targeting opportunities like contextual targeting. Contextual targeting is the most promising targeting solution. It works because it’s based on the content being consumed (not the user itself), it doesn’t track users, and it captures intent.

HP: It has been said that data is the new oil. It’s what keeps large portions of the internet free. Facebook, Instagram, Snapchat, TikTok, YouTube and Spotify are either completely free or have free tiers that are supported through ads. With less data available, placing ads on these platforms becomes less desirable. They might have to adjust or completely change their business models from ads to subscriptions in order to keep up with investor demands.

This one update might cause a domino effect that changes the internet completely.