Over the last few years, we’ve seen growing concerns about consumer privacy and protection online.
Now, Apple is adding another layer of protection in its next iOS 14 update with its “App Tracking Transparency” feature, which will require apps to get the user’s permission before tracking their data across apps or websites owned by other companies. This data is used by businesses to personalize advertising for those users.
If you spend money on digital ads or have a mobile app for your business on the Apple Store, the upcoming iOS 14 data privacy changes could impact your business.
Here’s what you need to know about iOS14’s impact on advertising.
Table of Contents:
- What—and when—is Apple’s iOS 14 update?
- How Apple iOS 14 could impact your business
- How advertising on social channels such as Facebook will be affected
- How advertising will be affected if you have your own mobile app
- How your development team can prepare for the Apple iOS 14 update
- How your marketing team can prepare for the Apple iOS 14 update
What—and when—is Apple’s iOS 14 update?
You’re likely already familiar with the cookie permission pop-ups that you see on nearly every website these days; think of this as the mobile version.
The update for Apple iOS 14 will require app developers that share customer information to third parties for marketing or ads monetization purposes to ask iPhone and iPad users for permission to track their data, including across other apps and sites in order to deliver personalized advertising to those users. Previously, users could have been opted in by default. This new policy will only affect Apple product users, but that’s no small number—about half of the American population owns an iPhone.
You’ll start to see this pop-up as you open-up apps on your phone:
In addition to pop-ups, under “settings” users will also be able to review and make changes to which apps have requested permission to track their data.
The beta version has recently launched—we’ve begun to see pop-ups for select apps—with the changes being anticipated to roll-out broadly in Spring 2021.
How Apple iOS 14 could impact your business
While the change is attempting to meet the demands of online shoppers for increased consumer privacy (one recent survey indicates that 97% of Americans are somewhat or very concerned about protecting their personal data) what it means for ecommerce merchants is that there will be less data to use in ad targeting.
You’re most likely to be affected by this change if you:
- use digital advertising for your business
- have your own mobile iOS app that shares information with third parties for ad personalization purposes
While only time will tell the exact impact of this change—the actual opt-in rate will vary from business to business. Using GDPR banners as a proxy, consent rates can vary based on a number of factors: One study cited by TechCrunch indicates that acceptance rates on similar GDPR notices averaged 50.8% on mobile and 26.9% on desktop.
TechCrunch reports, “Hence the conclusion that if European web users were given an honest and genuine choice over whether or not they get tracked around the Internet, the overwhelming majority would choose to protect their privacy by rejecting tracking cookies.”
How advertising on social channels such as Facebook will be affected
This change affects all ad platforms that collect data for targeting and measuring ad performance. However, we’ve chosen to focus on Facebook in this article because it’s one of the platforms with the widest reach and the most robust targeting options, meaning that your store likely relies on it for a healthy portion of your online advertising.
If Facebook isn’t able to track users’ activities across apps outside of Facebook, its targeting options will become less effective—if a user has visited your online store, you can no longer retarget them on their iOS social channels, unless they consent. This will likely mean that users will see less relevant ads. It’s also worth noting that you can still retarget users who have liked your Facebook page with Facebook ads, because this data exists in the platform where the ad is running
This change in Facebook tracking will disproportionately affect certain formats, such as Facebook’s dynamic ads for retargeting, which show specific products to people (based on, for example, items previously abandoned in their online carts). This loss of personalized advertising will make it harder for brands to fill the top of the funnel.
The impact of this will vary for each merchant based on how much of your advertising budget is dedicated to ad platforms such as Facebook, how much traffic digital advertising drives to your site, and how heavily you rely on third-party data to reach new and existing customers. You may also find variance in opt-out rates based on where your customers are typically from—certain nationalities may be more or less likely to opt-out of tracking, with Americans being amongst the world’s most privacy-sensitive.
The problem isn’t just in the loss of personalized ads—it’s that generic advertising may actually do a disservice to your brand; 90% of consumers say that messages from companies that aren’t personally relevant to them are “annoying.”
For its part, Facebook announced it will begin showing a prompt on its mobile app that’s designed to encourage users to allow ad tracking. The prompt will include information from Facebook on how it personalizes ads and uses data.
How advertising will be affected if you have your own mobile app
Apple will require app developers to ask iPhone and iPad users for permission to track their data.
If your store has its own mobile app and users choose to opt-out, Apple’s policies don’t permit you to run ad campaigns based on your users’ in-app behaviors on digital ad platforms, such as retargeting ads on Facebook. Only if users opt-in for both your app and the social platform will you be permitted to run targeted advertising campaigns on third-party platforms based on actions they take in your app.
How your development team can prepare for the Apple iOS 14 update
If you have an iOS mobile app
If you run a mobile app on iOS for your business that shares customer information to third parties for advertising purposes, you likely need to implement this pop-up asking permission to track users. You can find more information on Apple’s developer site.
If you run digital ads
Facebook has developed a list of changes to their ad optimization and reporting and a recommended set of actions for businesses to consider. The full list of recommendations is available on the Facebook Business Manager help center and a customized version is available in the Resource Center tab in your Ads Manager, but we’ve listed a couple of key actions below.
If you deliver Facebook ads optimized for conversion events on your online store,
- Going forward, you will be limited to the use of eight conversion events per domain for optimization. If you use more than eight events today, you will need to prioritize the top 8 in Facebook Business Manager.
- Domains with pixel events shared by multiple Facebook Business Managers will need to be verified in the appropriate Business Manager. Domain verification establishes which Business Manager account has the authority to configure and prioritize the 8 available conversion events for a given domain. Learn how to verify a domain
Shopify’s Facebook Channel lets you connect and manage your sales and marketing activities on Facebook properties. You can customize the amount of information you share with Facebook once you have all required customer consent, to optimize ad spend for Android, web, and iOS traffic.
How your marketing team can prepare for the Apple iOS 14 update
Here are actions you can take to optimize your ad spend overall, and to continue to deliver a personalized experience to users who do consent to tracking.
Focus on building your customer database and improving customer retention
With an increased reliance on using Lookalike Audiences, now is the time to refocus on building your email subscriber list and customer database. Similarly, customer retention will continue to be one of your strongest strategies for increasing profits, as it results in up to 95% more revenue. Loyalty programs, subscriptions, and personalized email campaigns can all serve this function.
Offer a carrot to opt-in
According to a 2020 survey conducted by Pollfish, 38.6% of iOS users would potentially allow themselves to be tracked—but only if there was a virtual reward offered in exchange.
If you have your own mobile app, you may consider encouraging users to opt-in with incentives such as access to exclusive items, discounts, free samples, or a loyalty program.
Make sure to speak to a legal expert about legal and App Store requirements around offering a financial incentive for data collection and sharing for the jurisdiction in which you operate, such as the California Consumer Privacy Act.
Monitor return on ad spend (ROAS) and adjust budget allocation as necessary.
As we’ve outlined above, iOS 14’s impact on advertising will vary widely from one retailer to another based on a range of factors. Now is the time to engage your marketing team in paying close attention to ROAS and readjusting it as necessary.
Experiment with different ad types and copy
If you’ve been considering testing different ad campaigns—whether that be copy or on new social platforms—there’s no moment like the present. Writing for SEO (including Google Ads) will continue to be important, but remember to write for people, not just bots.
Finally, for those customers who do opt-in, be clear about your actions and intentions
In a 2018 study conducted at Harvard Business School, researchers found that being honest about targeting practices can lead to more click-throughs and purchases. When shoppers were shown ads with messages like “here are items recommended based on your clicks on our site,” they were more likely to be engaged—and ultimately to make purchases—compared to if no message was present.
“Even the most personalized, perfectly targeted advertisement will flop if the consumer is more focused on the (un)acceptability of how the targeting was done in the first place,” wrote the study’s authors.