It seems with every new software update Apple rolls out, a bunch of unhappy campers in the competitive space roll out with it.  

This time, Facebook has turned up the heat on Apple for their release of iOS and IPadOS 14.5 saying that Apple's digital privacy changes will make it harder for them to target ads to their users. They've even gone so far as to take out full-page ads in prominent newspapers such as the New York Times. 

Although users' privacy certainly should be protected, critics argue that this digital tracking change will make it that much harder for small businesses to reach their target users as more and more people have the option to opt out of tracking prompts. But we argue there is still some middle ground to be found, wherein users' data is protected but digital marketers can still get through to their target audiences. 

What is iOS 14.5? 

According to Apple, the iOS 14.5 is a doozy. This update features a whole lot of improvements such as allowing you to automatically unlock some iPhones with certain Apple Watches while wearing a mask; a bunch of new, more-inclusive emojis; a newly designed Podcast app; different Siri voices; oh and the new App Tracking Transparency (ATT) privacy feature that allows you to "control which apps are allowed to track your activity across other companies' apps and websites for ads or sharing with data brokers."

Why did Apple roll it out?

Apple regularly rolls out software updates for its products, so that's nothing new. Most things, like the addition of emojis, ruffle zero feathers. 

Perhaps auspiciously, Apple decided to update their privacy rules to include more transparency so that app makers will now have to ask for your permission to track your data across other apps and services you use. Some experts say this is no big deal because Apple's primary business is hardware and services, not advertising. Others argue that Apple plans to expand its own advertising business by expanding its App Store ads.

In addition, Apple takes a cut whenever app developers end up charging more for subscriptions for in-app purchases, so the trickle-down effect could easily be in play here, all starting with ATT.

How will this impact current iOS users, especially when it comes to privacy?

Once you've given Apple the go-ahead to install 14.5 on your devices, you should see a pop-up box that says "Allow X to track your activity across other companies' apps and websites?" 

If you choose "Ask App not to Track," then that app loses access to your IDFA, a unique access code that allows companies to keep tabs on your activities across iPhone services and apps. In addition, when you install a new app, this same message will pop up, asking if you want to be tracked. 

If you select "Allow," then you've given permission to companies to track your data. 

Regardless if you've allowed or not, there's now with full transparency on your (the users') end. In addition, ATT even applies to Apples' own apps.

How will this impact advertisers trying to reach their relevant audience through targeted ads?

Large advertisers who rely on targeted advertising to reach their audience argue that without the automatic tracking of iPhone users' data, it will be much harder for most digital advertisers to make meaningful user behavior connections across apps and mobile websites within iOS. Therefore businesses (particularly the smaller ones) will suffer revenue loss because the number of iPhone users sharing their IDFA with other apps is predicted to decrease from about 70% to about 13% globally. 

Without IDFA, and subsequent tracking permissions, the efficacy of digital marketing and mobile ads will be called into question. Currently, 1.5 million businesses spend money on mobile advertising, and Facebook accounts for more than 9% of total digital ad spend and 18.4% of global mobile digital advertising. 

With much lower opt-in rates, advertising algorithms that target via observation of user behavior will have a much harder time reaching their targets, thus making ads less relevant for consumers overall. Less relevant ads means poor performance for non-Apple advertisers, less precise ad measurements for digital marketers, and overall making digital advertising less relevant.

How should digital marketers address these advertising concerns?

While this change is great for privacy concerns of the average user, it does make reaching a target audience much more difficult for the digital marketer. To help, Apple has offered a solution they call SKAdNetwork (SKAN) to provide marketing data at the campaign level, also known as differential privacy. (Google is looking into a similar solution.)

While this seems like a nice olive branch, it does limit the number of campaign slots available to each advertiser, and it comes with a random time delay and restrictions on how much one campaign can actually observe. 

But, until these solutions are proven effective, digital marketers will need to look into making changes in paid media strategies by investigating other avenues such as marketing mix models (MMM) that use data observed over time and don't require the use of tracking data to target users. 

Other ways to work around this privacy update include segmenting your users by Android and iOS devices; making use of the eight Facebook pixels you are able to target per domain; enable Value Optimization, verify your domain, enable the Conversations API, and enable or update the SDK in Facebook; or stop using Facebook to measure tracking all together, instead opting for independent tracking. 

No matter how you slice it, these privacy updates are here to stay. But the complete picture of how much they will affect digital marketers is unclear. Until the true impact can be known, it's best to not put all your eggs in one digital marketing basket. Keep trying different avenues to see which one works best for your efforts. 

At Oodle, we're constantly tracking and monitoring changes in digital marketing. If you're not sure what these changes mean for you and your business, contact us today — we'll be happy to help!