iOS 14 and Its Impact on the Future of Digital Advertising

Recently, Apple announced some updates in privacy features for iOS 14 users, which caused a massive outcry among digital advertising platforms. Let’s explore the infamous feature in more details and discuss its presumably far-reaching impacts on the key advertisers and the industry at large.
5 min read
20/11/20
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By Max Kalmykov
Vice President, Media & Entertainment
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iOS 14 and Its Impact on the Future of Digital Advertising

In June 2020, at Apple's Worldwide Development Conference, Apple announced updates for its brand-new iOS 14 operating system for all the iPhones and iPads. One aspect of Apple's iOS 14 that caught digital advertisers by surprise was the new privacy feature that enables users to easily block data tracking, which countless advertising platforms utilize to provide personalized suggestions and ads.

Upon Apple's announcement, there was an immediate media frenzy on the implications the software will have on digital advertising. In this article, we discuss how iOS 14's privacy delayed feature could affect digital advertising, Apple's response, and how the tech giant may set a precedent for the future of privacy-focused software.

Anti-Tracking Features and Their Influence on the Digital Advertising Industry

Last year, when Apple introduced iOS 13, it announced an ad tracking feature designed to protect a user's data privacy from developers and marketers. However, the only way to activate the privacy feature on iOS was deep in the phone's privacy settings, so it was often an underutilized feature. With the iOS 14 update, Apple wanted to give users the ability to easily opt-in or out for personalized ads companies use for monetized purposes. The feature would work by prompting a pop-up to users asking whether they want to "Allow Tracking" or "Ask App Not to Track" when they use the app.

The new privacy feature was not met with enthusiasm from digital advertising platforms, most notably Facebook and Google. Both companies control a vast majority of digital advertising, where they track personalized data and then send it to third-party brokers. They rely on a user's Identifier for Advertisers, which tells advertisers when a user clicked on a specific ad or not, and whether it leads to a download of an app. However, the new iOS feature levels the playing field and has the potential to make the entire digital advertising ecosystem obsolete, causing profound financial losses to companies like Facebook. In fact, Facebook has announced the new iOS feature could decrease its Audience Network advertising business by 50%.

Apple Backs Off

In response to the outcry from digital advertising industry giants such as Facebook and Google, in a statement to TechCrunch, Apple announced that the privacy feature is delayed till early 2021. Both Facebook and Google have to face the reality that Apple's new feature is on the horizon, and they will face substantial losses if they do not adjust their business model accordingly.

Apple's announcement promptly displays the unilateral power it holds over its app developers in App Store. However, Apple's move could prompt app developers to move their services to Android, or another mobile operating system, for business reasons. There is no doubt the privacy changes to IDFA tracking gives the user more control over their data online but could seriously affect app developers. The iOS 14 feature will also be available in the Safari web browser for Apple's Mac products.

How Should Advertisers Get Ready for the Change?

To quote my previous article about the future of programmatic advertising, advertisers should look more into contextual advertising to prepare for the next, privacy-focused era of digital advertising. Even though users want their data privacy to be respected, they are still expecting and are more drawn to personalized experiences.

More precisely, relevant and specific ad placements are the key to accomplishing this task. Instead of placing an ad that shows up on a social media feed or randomly across the web, advertisers should opt-in for ads that show up where they belong, e.g., fashion-related ads should show up on websites that talk about fashion. Such ad placements look natural and do not make users feel like their privacy has been violated.

Alternatively, ad-placements on podcasts and influencer marketing offer another alternative solution to the problem. Not only these options are getting more and more popular with advertisers, they are a great way to serve ads in a relevant and non-intrusive fashion.

Conclusion

Apple's move yet again proves that users demand these companies to respect their privacy. People are getting more and more concerned about what type of data their apps collect and want more transparency. Therefore, Apple aims to meet the demand and attract new customers in yet another way. For advertisers, this means that they have to start investing in alternative methods of advertising, like using contextual ads instead of algorithms that violate privacy rules.

Privacy will undeniably become subject to even more intense debate in the coming years. If Apple has proved anything, it is that privacy in software is a huge cause of concern for data conglomerates and their bottom lines. Nowadays, it is essential for every tech company to invest in data safety and make sure that its users’ privacy is properly protected. Many tech companies have come to learn this the hard way with data leaks that caused a great deal of damage to their brand name.

If you need assistance with making sure your advertising platform is well prepared for Apple’s privacy feature launch, feel free to contact us for a free expert consultation.

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