It is a fascinating time for privacy in the ad industry. In recent blog posts, I focused on the future of cookies, programmatic advertising, and ad fraud. Today I will present you a new chapter in the revolution of the ad industry caused by Apple and its privacy-first approach. After a year of intensive rumours, arguments, and threats, Apple introduced iOS 14.5 with a crucial change to data collection method by apps and sharing it with third-party vendors. Apple allowed customers to decide whether they want their data to be collected and shared. There is a consensus in the industry – customers overwhelmingly will say no.
What are the implications?
It means a revolution in mobile advertising. With an updated system, customers can decide if they want their Identifier for Advertisers (IDFA) to be shared with third-party vendors. It equals consent if they wish to track their activities across different apps and websites and then use it to deliver them personalised ads.
Estimations show that 0-30% of all Apple’s users will consent. It means another enormous damage for behavioural targeting after cookies’ diminishment. Advertisers will have a much more challenging task to target audiences and potential clients for ad buyers correctly. According to Forbes, iOS users are almost twice as valuable for advertisers as Android users. They spend nearly two times more on apps purchases, and they are worth more than half of the $80 billion mobile ads market.
Lack of possibility to precisely target iOS users means lower revenue for ad sellers and middle-men like DSPs. Without cookies and IDFA, it is almost impossible to collect third-party data and behaviourally target customers. What is interesting, it strongly hits Facebook and Google. A significant part of the revenue of these tech giants relies on advertising. Their abilities to target customers used to exceed competitors’ possibilities to do so. With Apple’s move, the status quo can change, and Google with Facebook might lose their advantages over rivals.
What is it all about?
It is a massive win for customer’s privacy on the Internet. But it is not only about that. Apple also offers advertising services, and with blocking IDFA, they offer unmatched first-party data about iOS users. It will result in more ad buyers using Apple’s services and increased revenue for the company. They fill two needs with one deed with an increment of their importance on the ad market and prove that their claims about the customer-first approach are valid.
Customers and Apple are winners here, but surely the advertising industry is losing. How will they fill the void after IDFA and cookies? That’s a million-dollar question. Probably we will observe the increasing importance of first-party data and contextual advertising. Is it bad? I don’t think so. There is enough data to find the necessary audience for businesses correctly. Advertisers can do it with respect to user’s privacy. The industry just needs to adopt.
The IDFA situation reminds of banning cookies firstly by Safari, which Google strongly criticised. A few months later, Google decided to do the same, and until 2022 they will eliminate third-party cookies from Chrome. Smartphones with Android will probably follow the path, and in a few months of years, they will do the same as Apple just did.