Aug 27, 2020

iOS 14 ad privacy: what does this mean?

Duncan Smith

Duncan Smith

iOS 14 ad privacy: what does this mean?

Apple is not messing around: with the changes to iOS 14, they have pressed the nuclear button for ad privacy! But what are the ramifications for the advertising industry? In this blog, I explain what the changes in iOS 14 will mean to an already stressed advertising world. 

I discussed this with Duncan Tickell, founder of Alchemist Media, and its implications for big ad networks and marketeers. But first, let’s look at what Apple is planning.

atomic-bomb 0

The Identifier for Advertisers (IDFA) is a unique, random number tied to a user’s device. It allows advertisers and data companies to assess how a user has interacted with an ad (on an aggregated, not individual, basis). Apple announced at its Worldwide Developers Conference keynote that it was going to make the IFDA redundant with its iOS 14, macOS Big Sur, and Safari releases. Currently, the IFDA is on by default. You can opt out, but only by digging into the system settings. But with the planned changes users will by default be opted out. Users will need to ‘opt in’ by accepting the tracking agreement. This is the nuclear button; a significant turnaround: how many users will actually want to opt in? Estimates have ranged from 90-95% who will not do so!

The move continues a theme of Apple policy regarding user-privacy and data. Something that Tim Cook Apple CEO has said is ‘totally out of control’.

A brief reminder of the actions previously implemented by Apple in this area:

  • Introduced Limit Ad Tracking (LAT) in 2012; Google introduced similar tools in 2013

  • Introduced Intelligent Tracking Prevention (ITP) in 2017; Mozilla announced similar anti-tracking measures in 2018, followed by Google in 2019

  • Introduced default third-party cookie blocking in March 2020; Google is following in 2022

The September release of iOS 14 and this privacy feature spells pain for ad agencies and the big networks. This will be the end of an era for personalised ads sending shock waves through the industry.

In macOS Big Sur, Safari will include a specific “Privacy Report” to break down what specifically Safari is blocking. It will give the user more insight into which trackers are being used in their browsing activity. In effect, consumers would need to opt in to the IFDA.

Safari has also updated its anti tracking tech (Intelligent Tracking Prevention -ITP) by now completely blocking third party cookies. Google is still two years away from doing this. This means that, by default, no advertiser or website can follow you around the internet using the commonplace tracking technology.

A great quote from Apple WebKit Security Engineer, John Wilander, who is responsible for Safari’s Intelligent Tracking Prevention:

“Tracking by default + transparency + controls != privacy”

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Apple iOS 14 

In iOS 14, by moving the ‘ad tracking’ out of the system settings, users will need to confirm if they want to be tracked by the app. This is a major change. Users will be able to reject tracking preserving their privacy. This change will undoubtedly dramatically reduce the amount of data that marketeers and ad agencies collect.

Currently, when you visit a website about (for example) cars, the site can drop a cookie. Ad networks like those run by Google and Facebook check for that cookie and then serve you ads for cars. This is why you often see ads relating to topics you’ve recently been browsing. Clear your cookies and it’s all gone!

If an app wants to show tailored ads and, in effect, use the IFDA, it must display a pop-up asking permission from the user. Users will also be able to see how the collected data could be used.

What does all this mean for consumers, advertisers and media publishers?

So should we be applauding Apple for their efforts to boost user-privacy? Apple is not an ad-based model, theirs is a hardware and subscription model. This change isn’t going to affect their business model. It will probably channel more advertising revenue via its app store, where it takes between 15-30% commission. So this is not just altruistic, but good business for Apple.

However, I think it is unequivocal that they have detonated an atomic bomb on the mobile market. And in the process given consumers a hope for an ad-free, privacy-focused world.

But that’s my view, am I being cynical? What does someone from the publishing side think? I asked Duncan Tickell, founder of Alchemist Media, for his thoughts:

“Look, this is just an extension of what Apple have been doing for some time in the browser space. As someone advising players in the premium content space, where these rules have applied for some time already, this extension into mobile is welcome”.

What this means for global networks and ad agencies

These changes are potentially a nightmare for the global networks of Facebook and Google, whose incomes are largely funded by the advertising model. Apple has around 25% of the global mobile market, so significant volumes of eyeballs are at stake.

Apple will likely face opposition from the networks and advertising agencies — calling it unfair. It should be noted that there are some concerns from within the EU saying this falls foul of GDPR. Although I see this as strange, as the whole point of GDPR is the protection of privacy for consumers!

Transparency is great for Apple users, but is this going to be Facebook and Google’s worst nightmare? Not necessarily: not everyone will turn off tracking. If you look at what happened when iOS 13 came out with its ‘limitation of ad tracking’, around 80% of users stopped all background tracking by apps. This privacy change does have the potential to make Facebook and Google’s lives difficult with the potential loss of revenue. But it’s certainly not going to stop their dominance.

The impact upon Facebook could be greater as it has no OS and app stores, unlike Apple and Google. We should not forget that Facebook is in the middle of an ad boycott due to privacy and scrutiny concerns.

I asked Duncan, “Do you agree with my synopsis, am I being too pessimistic? Will the global ad networks not even blink an eye at this change? Is it the nuclear bomb that many are describing, and could Facebook eventually move to a subscription model?”

“I agree and disagree with your synopsis, Duncan. Whilst Google and Facebook will lose some ‘off-network’ activity data, the reality is that they have enough rich first-party data to continue to thrive, serving customised ads to their logged-in users in their own environments and extended networks. Where you’re spot on, is the impact on wider networks, reliant on third-party cookies and data. Hopefully this will provide a platform for publishers to once again unlock the values of their first party relationships with engaged consumers”. 

What this means for consumers (you and me)

For consumers, it’s a win-win situation, isn’t it? No more of the intrusive ads that follow you around and just get in the way of our browsing experience. Protection of your privacy – we don’t want Big Brother knowing what we are looking at and have bought!

All the above will no doubt have resonance for consumers but someone has to pay for the content. Is it the start of the Internet v2? An Internet that is not free, not subsidised by advertising, but funded by subscriptions? If so, this might be good for those publishers who struggled to compete for a slice of the advertising pie dominated by the global ad networks.

I don’t think many consumers will be upset and mourn the changing experience of ads following them around. But what do you think, Duncan, reducing the dominance of the big networks… surely this is good news; there can’t be any downsides to this?

“Regrettably things are a bit more complex. I’d love a world where consumers are ready to pay for content by default, but we’re not there yet. Over time this may change but in the interim we need to make the ad model work as effectively as possible. Everyone welcomes inhibiting the most intrusive ‘stalking’, but consumers also want to see relevant advertising and don’t want many of the interruptions that the latest privacy regulations demand. Finding the right balance is in the interests of consumers and advertisers alike”.

What this means for advertisers 

Advertisers, well they are going to lose out, aren’t they? They won’t have the common data identifiers and their views will be impacted, so they won’t know where to direct their spend. But I think they still have a lifeline. They will still know which sites their adverts perform best on and get the most traction. They want the best ROI on their advertising spend. Preventing consumers from seeing ads when they are either not looking, or worse, are getting annoyed is not in their interest!

Now maybe this is my most contentious point. Duncan may well have some thoughts on this and how it will affect advertisers and, subsequently, publishers…

“While Apple should be lauded for championing privacy, I believe the market will still find a compliant way to identify consumers. Yes, it will be harder. As a consequence, context and quality will increase in importance – a welcome development for publishers. But equally, we want to identify consumers and deliver optimised experiences too. Hopefully these moves are part of a rebalancing, and not a return to completely, un-targeted, irrelevant advertising experiences. An outcome that would be in no one’s interest”.

How some of the UK’s leading publishers are reacting to this challenge

This could be a huge opportunity for publishers. Advertisers are interested in those who have great content and loyal audiences. Advertisers want to reach and connect with those audiences that have an affinity for their products.

For publishers this could be the start of wrenching back some control and dominance from the big global networks. They have traditionally hovered up the lion’s share of advertising for so long.

This is a billion dollar industry, so publishers should be asking… where is that money going to go? The revenue currently obtained from those global networks is going to diminish. This is an opportunity for publishers to claw back some of this money.

Publishers should be thinking what their strategy is to address this, along with the monetisation of content with subscriptions. It won’t be about the mass of data for data’s sake – it will be about the quality of the data. That’s good for advertisers and consumers. Not for the big networks who may look to move their model from ad funded to a subscription one.

From your standpoint, Duncan, do you think this is the opportunity that publishers have been looking for? Could this be a change in the dominance of the global ad networks? Can publishers grab a bigger slice of the pie? Will this hasten the move from ad-funded models to a subscription one?

“In a word: no! It’s not a silver bullet but nonetheless a welcome change. It is part of an evolution, rebalancing value to publishers in digital. By making it harder for aggregators (that add little value to the digital ecosystem to identify and trade consumer data), those that add value through creating original content will be able to better realise their investments. Whether that’s through advertising, subscriptions or direct to consumer transactions. That ultimately can only be of benefit to all in the digital ecosystem”.

So what’s the conclusion?

Well it’s certainly a momentous moment in ad privacy and user data. It will dramatically affect a market rocked by ad fraud, COVID-19 and a dominance of the global networks. But will the billions of dollars be lost regarding ad spend? Probably not. Will this end the dominance of the global networks? Probably not.

This is likely the beginning of a sea change in behaviour and trends. You can already see this in the battles between Google and the Australian government regarding paying for publishing content. You can see this in the battles that Facebook is having regarding the ad boycott. Now Apple has thrown a bomb into this with the way we view and track users. Privacy and data will only increase. It’s not going back to the open wild west we knew previously – that has passed. I think this is going to speed the move from the ad-funded model of the internet to a subscription-funded model. It’s a step in that direction.

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