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Breaking Down Apple’s New “App Tracking Transparency” Feature

Two weeks ago, Apple released an iOS update that restricts tracking from digital advertisers through a feature called “App Tracking Transparency.” Apple announced these changes last summer, but they finally took effect last week after giving app developers and advertisers months to prepare.

This update specifically works by changing the Identifier for Advertisers number (IDFA). Each iPhone has a unique IDFA assigned to it at random, which allows advertisers and app developers to track user behavior, like app usage and web browsing data. This information is often used to hyper-personalize ads, like when you are looking at a dress in Google Chrome and then immediately see an ad for it when you open Instagram.

Here’s what you need to know, as both a user and a business owner:

  • Apple now requires app developers to ask for permission from iPhone users via pop-up notification to track user activity across third-party sites and apps.

  • Facebook is claiming these rules will harm its $70 billion advertising business and the businesses that rely on it. Facebook depends on this third-party data to sell highly effective ads based on your behavior.

    • Remember, Facebook Inc also includes Instagram and WhatsApp.

  • These new rules will have an effect on advertising for businesses. After Apple’s announcement, Facebook bought a full-page ad in the New York Times which stated, “The average small business advertiser stands to see a cut of over 60% in their sales for every dollar they spend.”

  • Google is not planning to make similar changes to its Android OS system. They will keep their current system as is, similar to Apple’s IDFA system. They ask for user permission via a one-time pop-up that asks for app access to the phone’s location, camera, and microphone.

    • Google’s stance makes this a US and Japan-specific issue. While the iPhone rules the smartphone market in the United States and Japan, the Android is much more popular on a global scale, with a greater user base outside of these two countries.

While it may seem that Apple is on your side as an individual, it’s important to remember that this is a business move by Apple. This strategy keeps Apple firmly in control by stating that the only way to be certain that your data is protected is by owning a $1,000 iPhone. And of course, with this new level of control, Apple’s ad business is looking to takeover. According to the Wall Street Journal, it seems that advertisers will get more ad-performance data for ads purchased through Apple than third parties. Advertisers who buy ads through third-party platforms, like Facebook, to target iPhone users will have to wait three days for campaign insights and will only receive aggregated information, like the total number of users who saw the ad. Advertisers who buy ads through Apple will receive ad results in real-time and will have much more data, like which version of their ad users saw and which search keywords ads appeared on.

Facebook is seeing this as an attack from Apple. When meeting with advertising clients after last year’s announcement, a Facebook product director was quoted saying, “Apple made unilateral decisions without consulting the industry about a policy that will have far-reaching harm on businesses of all sizes. The impact of Apple’s changes makes it harder to grow. And for some, even survive.” Facebook also claims that app developers will likely have to start charging for downloads or creating in-app purchases to make up for lost revenue from user data. Apple even used a photo example of Facebook in order to show the new App Tracking Transparency feature.

This isn’t the first time Apple’s features have affected the efficacy of Facebook’s advertising. Apple’s screen-time tracker affected Facebook Inc., encouraging users to spend less time on social media apps like Facebook and Instagram. While Apple CEO Tim Cook has been quoted saying, “I’m not focused on Facebook… They would not be listed as [one of our biggest competitors],” Apple and Facebook do compete in messaging, mobile gaming, mixed-reality headsets, and now, advertising.

As social media users, we want to make sure our data is secure and safe, but if you’re a business owner and want to run high-performing ads, you can’t have this level of privacy. You need that user data in order to target and convert your ideal customers. Unfortunately, effective digital advertising and data privacy cannot coexist.

Need help developing your business's digital advertising plan? Local Social Media is here to help! Reach out to schedule a free consultation!

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