Apple’s iOS 14 update announced last year had started the battle of the giants even before it was rolled out. Starting in early 2021, Apple began to show Facebook and Instagram App users a popup message so they can opt out of data tracking “across Apps and Websites owned by other companies.” So the update requires developers to secure user permission before they can track them across apps. This improvement is apparently meant to help users maintain their security.
Apple’s primary revenue sources are electronic gadgets (iPhone, Mac, iPad, wearables) and services. On the other hand, Facebook profits majorly from its advertising. Though both the tech giants’ expertise in different fields and their revenue sources don’t overlap, the thought process behind their business model does. Apple has always been considered the most secure device that protects your privacy and provides you security. Contradictory Facebook ads have been giving personalized ads and targeted advertising options to its clients without knowing what data has been captured. Apple’s new iOS 14 policy strikes at the core of Facebook’s business model.
The IOS 14 update called ATT (App Tracking Transparency) gives the user a choice to disable tracking between the apps. App developers will entail taking permission before tracking one’s data across apps and websites. Users can get the information about which app tracks whichever data. This is where Facebook comes into the landscape. Facebook personalized and targeted advertising uses the App Tracking feature for targeting the right customers. As IOS 14 updates will give a choice to allow ATT or not, a significant number of users will most probably disable this feature, Facebook ads targeted advertising feature won’t be able to hit at the center on the dart of the customers. This change will influence an estimated 900 million Monthly Active Users, as from 2.6 billion active users of Facebook, 900 Million have IOS devices.
For e-commerce businesses whose growth strategies rely on direct-to-consumers relationships, the critical issue now is performance rather than politics. Let’s see what you need to know about these changes, how they can affect your e-commerce business, and how to adapt to the situation and continue growing.
As a reaction to Apple’s new iOS 14 privacy policy, Facebook published full-page ads in Wall Street Journal, New York Times, and Washington Post. They argue that Apple is hurting small businesses and publishers who are already struggling in the pandemic. That Apple is not playing by their own rules and protecting their profit and not user’s privacy. Facebook’s stand is that personalized ads and privacy can coexist and that the damage that iOS is creating is unnecessary.
On the other hand, Apple positions as a supporter of promoting its users’ privacy and security. And they hit back, stating — “When invasive tracking is your business model, you tend not to welcome transparency and customer choice.”
Apple CEO Tim Cook pitched in over Twitter that Facebook is welcome to keep tracking its users, but they should take permission first. Furthermore, Apple emphasizes that the new tracking control features equally apply to all developers, including Apple. The company points out that even with the new App Tracking Transparency feature, advertising is still possible, giving users more control over their data by requiring explicit consent.
But there will hardly be a winner in this battle. Although Facebook is coming up with a misleading argument on the disruption of small businesses, the company is well aware that in the long run, Apple’s policy will affect its business model, as 99% of the company’s total revenue comes from Facebook ads.
On the other hand, there are speculations that Apple is only trying to deviate the attention from its Antitrust case by promoting the security and privacy of its users.
It all comes down to three acronyms:
– Identifier for Advertisers (IDFA) is a unique code that Apple assigns to each iPhone for third parties to track users for ad-targeting. It replaced Unique Device Identifier (UDID) with the release of iOS 6. On Android devices, this is known as the Google Play Services ID (GPS ADID). Apple’s operating system creates the IDFA without a user’s knowledge or consent, and it could be used to track and identify users without revealing their personal information. It is like a tracking ID in a mobile phone instead of a browser cookie. For a better understanding of IDFAs, think of them as the user-to-app equivalents of cookies-to-browsers or pixels-to-shoppers.
In short, on Apple devices, IDFAs track, target, and personalize in-app advertising.
– SKAd Network was introduced by Apple in May 2018. It allows mobile app install attribution while preserving privacy. It refers to how Apple’s SDK (software development kit) interacts with advertising. SKAdNetwork is used to receive the attribution of advertising campaigns on iOS. Advertising networks must register with Apple, and developers must ensure that their apps are compatible with the registered networks and the new framework. With iOS 14’s privacy updates, app installs resulting from in-app advertising will be mediated by Apple’s SKAd Network.
But this change applies predominately to app developers and not e-commerce advertisers.
The SKAd Network provides click-through attribution for Publisher ID, Campaign ID, and Conversion Value (set by the advertiser) and excludes view-through attribution for apps and click-through attribution for browser, email, and non-in-app ads. As a result, Facebook now has significantly less insight into the apps its audience installs and runs, and consequently, so do business owners and marketers.
– App Tracking Transparency (ATT) or “AppTrackingTransparency Framework” is a new and universal prompt that will now appear on all apps to all users. For an e-commerce business, ATT is actually the main issue.
The following situations are not considered tracking and therefore do not require user permission through the AppTrackingTransparency framework:
All iOS Apps that collect data for “personalized advertising” are now displaying Apple’s ATT prompt. It serves as an additional layer of privacy to the current Tracking settings requiring users to either opt-in or opt-out:
Introducing a similar prompt by iOS 13 regarding geographic information, opt-in rates to allow sharing “with apps when they’re not in use” changed drastically – from 100% to below 50%. Facebook states a similar projection now: “In testing, we’ve seen more than a 50% drop in Audience Network publisher revenue“; and, “Our studies show, without personalized ads powered by their own data, small businesses could see a cut of over 60% of website sales from ads.”
The most noticeable effects of this change can be the following:
This change happens only for users on iOS devices who updated to iOS 14. Data tracking still works on Android and Desktop and for people who don’t opt out. All other advertisers are also affected by these changes – Tik Tok, YouTube, Pinterest, LinkedIn, Snap Chat, and Google.
This doesn’t mean that businesses can’t get leads, sales, or action from iOS 14 devices, only that they can’t track and optimize as well as before for these actions.
These are Ad Objectives that are affected:
Tracking any Pixel activity with the other objectives will also be affected. The other activities that happen on Facebook, in particular Lead Generation, will still be tracked and reported correctly.
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In conclusion, although we can predict that Apple’s iOS 14 update will significantly impact the e-commerce industry, there are still many unknowns, so there is no need for panic yet. Familiarizing with the problems and following these suggestions will keep you afloat, although the change will still be noticeable.
Our team will always gladly suggest creating a native mobile app for your online store, which will benefit your e-commerce business in the long run. At this time, a native iOS app will be a secure way to reach all those users that are now on iOS 14. With a native mobile, you will have a direct channel to your shoppers and increase customer loyalty and brand awareness.
