Privacy. It’s highly coveted, yet highly unattainable in today’s society. With the rise of social media and online advertising, especially in the past year, it seems that everyone and everything is collecting your personal information, without you being able to have any say in it; until now. Unless you’ve been living under a rock recently, you’ve probably heard Apple’s Internet-breaking news in regard to privacy updates on the iPhone, that has gotten many app developers talking, including major technology conglomerate Facebook.
What Is ATT?
Every iPhone and iPad product is built to include a unique device identifier called IDFA (Identifier for Advertisers). Companies use IDFA when selling mobile advertising space to target specific audiences. This unique identifier is also able to learn about users through other technologies such as Facebook’s tracking pixels or tracking cookies.
However, in early May 2021, iOS 14.5 was released, and it caused quite a buzz in the app developer community. This latest update includes a new App Tracking Transparency (ATT) feature which will be enabled automatically, requiring app creators to seek permission from all users to utilize this IDFA, effectively requiring consent to track them across other apps and websites they visit.
The consensus among the ad industry is that opt-in rates will be low, causing nearly 58% of marketers to find a new way to target and measure ads, some turning to other areas like Android devices or connected TV. Not to mention, the update will “severely limit tracking and ad targeting across Apple’s mobile devices” – affecting the $105 Billion U.S. mobile-ad industry.
The ATT pop-up, which will appear on all iPhones and iPads with the iOS 14.5 update, will allow users to opt out of their personal data being collected by applications. Developers will be required to ask permission prior to storing your data or Internet activity. To many, if not all, consumers this may be great news because they’re now able to reduce the amount of irrelevant sponsored content that clogs up their social media feeds.
For marketers, on the other hand, this makes it much more difficult to appropriately target audiences for digital ad campaigns. “Widespread opt-outs would lead to the deprecation of IDFA’s making ad targeting and attribution much harder, since a foundational piece of data would essentially be absent in the programmatic bidstream”, Adweek warns. Facebook, in particular, is feeling this burn as majority of their revenue comes from companies engaging in targeted advertising efforts via their app.
Privacy First: The Apple of Steve Jobs’ Eye
The majority of Apple’s profit comes from devices and “in-app purchases”. Because advertising is not a major revenue driver for them, they are less interested in their consumers’ data. Also, Apple has always marketed themselves as a “privacy-first company”, taking pride that their users’ data is protected.
In 2010, Steve Jobs really drove home the importance of making people aware of how their data is being used. “Privacy means people know what they’re signing up for, in plain English and repeatedly…ask them, ask them every time,” said Jobs. Current Apple Chief Executive Tim Cook furthered this statement, which some believe he was taking a “jab” at Facebook directly, by stating “if a business is built on misleading users, on data exploitation, on choices that are no choices at all, it does not deserve our praise. It deserves reform.”
Apple has already begun incorporating privacy protection into their technologies, including their browser Safari, which blocks third-party cookies automatically. In 2020, iOS app providers were required to clearly state what user data is collected directly in their app store listings. It’s important to note that Apple is not necessarily against advertising. They just want their users to have complete authority over the advertisements directed towards them.
Facebook Can Run, But They Can’t Hide
Surveys are showing that 80% of iPhone users will choose to “opt out" of app tracking, which has sent the likes of Mark Zuckerberg into quite a frenzy. Facebook is worried that this new privacy update will not only cut advertising revenue in half, but that small businesses will be the ones to take the fall. Ad targeting is critical to Facebook being able to measure the effectiveness of personalized ads.
They rely heavily on “view through conversions”, which measures the amount of users who saw an ad without taking immediate action, but at another point in time made a purchase that was related to the particular advertisement. Many products have a longer sales cycle, so this measurement is critical for most advertisers. With this update however, it will be difficult for Facebook to prove that product sales were tied to specific ads. However, Apple has introduced free tools that advertisers can use to track campaign success, without revealing the user’s identity.
Facebook also argues that “sharing data with advertisers is key to giving users better experiences”. Not to mention, Facebook sees Apple as a hypocrite, since this new app update will “force businesses to turn to subscriptions and other in-app payments for revenue, from which Apple takes a cut.” Facebook monopolizes a large portion of the social media space, so they may be forcing Apple to “backtrack on their new policy”.
Advertisers Stake Their Claim
Apple is allowing app developers to explain in the pop-up why they need to collect your data. Facebook began implementing, what some skeptics are referring to as, “scare tactics” by implying that Facebook and Instagram might require paid subscriptions if users do not enable iOS app tracking on their devices. This implication by Facebook eludes to ad tracking helping them keep their platforms free of charge.
“At Facebook we use data to provide personalized ads, which support small businesses and help keep apps free of charge,” Facebook said in a statement. “As Apple has said that providing additional context is allowed, we are showing an educational screen before presenting Apple’s prompt to help people make an informed decision about how their information is used.”
This is quite strategic on Facebook’s part, considering the confidence they have that their users won’t want any interruption in their services. The idea of a subscription-based Facebook, however, is not a new one. They have been considering implementing an “ad-free” subscription option for Facebook and Instagram over the past decade.
The Future of Online Advertising & Consumer Privacy
According to Advertiser Perceptions, “Google plans to rid third-party cookies from Chrome in early 2022, along with this and ATT, 47% of advertisers are investing more in alternative identity solutions.”
Regardless, online audience targeting is now becoming a thing of the past, and “advertisers have to prepare for the next, privacy-focused era of digital advertising”. Although it’s unclear exactly what impact ATT will have on online advertising, one thing for certain is that the debate between Apple and tech conglomerate Facebook is just getting started. Grab your popcorn and choose whatever you’re comfortable with when you update to the latest iOS.