The days of being tracked by the apps you use are coming to an end, thanks to Apple. During the summer of 2020, Apple announced that it would be focusing more on consumer privacy. The California tech giant stated that in an upcoming update, iOS users would be able to choose whether or not to allow apps to collect data for advertising purposes. Such a decision might not mean a lot to an everyday app user but it’s a devastating blow to app developers and the advertisers who use that data to generate targeted ads. The update was supposed to go live last fall but was pushed back to give developers more time to reconfigure their apps.
What happens when the iOS update goes live?
Once users open an app they will receive a pop-up notification alerting them that the app they are using is gathering data for advertising purposes. Users will then have the option to block the app from tracking them and gathering data. App owners can alter the message that appears on the notification but only within certain parameters established by Apple. Furthermore, developers can’t incentivize users to opt-in or make it so that the app will not work without user tracking enabled.
What’s the problem?
Companies and app developers fear that many people will opt out of tracking. App developers will lose out on data they previously sold to advertisers and advertisers lose the ability to generate highly targeted ads. Facebook stated that publishers could lose 50% of Audience Network revenue. Facebook’s Audience Network allows mobile software developers to provide targeted in-app ads based on the social platform’s data. A major pain point is an effect on companies who provide free ad-supported apps. Will people be willing to pay, if not, can they survive?
Failure to comply with Apple’s consumer privacy changes will result in serious consequences. The most notable consequence, being kicked from the app store. When it comes to violations of the iOS update, app developers face the most risk. Marketers and developers are fighting back with Facebook leading the charge. Marketing leaders from across the globe wrote a letter to the California tech company stating their concerns over the new update and asking that Apple work with the industry not against it. Other groups have requested meetings with Apple to discuss the changes and ask questions about what practices will and will not be tolerated.
Marketers are turning to contextual targeting, which targets the users’ environment and not the individual user. Companies will also have to develop targeted ads based on primary data from other consumer touchpoints. Some have even considered delivering targeted ads based on consumer battery level and network connection strength.
This won’t be the last tech update that affects digital marketers. Google is looking to establish a similar system for Android users. One thing is for certain, marketers and app developers will adapt. This is not the end of targeted ads, but simply a minor delay while the industry readjusts.
-Tyler Hall, Fox School of Business '22