January 27, 2021 Tony Hymes Digital Advertising
The Negative Impact of Apple's Privacy Push
In September of last year Apple announced that its latest update to iOS and MacOS would include privacy reports to let you know who is tracking you as you browse the web (on Safari, its browser) and in the apps on the App Store. They claimed, with much fanfare, that your privacy is their number one priority, positioning them firmly against the world of Google's Android. To ensure this, they would filter our anything that tracks you, unless you opt in to being tracked.
Many a digital marketer immediately slapped their foreheads, and the major players providing targeted advertising to brands did the same. Digital marketing had successfully shifted from a contextual to audience approach, letting advertisers find the people they want to target wherever they might be. Thanks to cookies that let apps and websites notify their partners that you are there, you can be shown a targeted ad, thereby reducing ad spend waste and improving performance. Now, Apple is forcing the digital advertising world to take a big step back.
For the majority of consumers who are jaded by technology and tired of ads (look at the popularity of ad blockers) the gain is clear. Apple wants to be a trusted brand (if not the most trusted brand), what better way to establish that trust than go after their main competitors and position them as decidedly unconcerned by your privacy? Their latest ad campaigns, in print, out of home, and TV, hark on this point.
But how well-intentioned is this move really?
Apple's main competitor is Google, maker of the Android operating software that powers most of the world's non-iPhone smartphones, and maker of Chrome, the world's most popular browser (by far). The big difference is that Google makes the vast majority of its money from advertising, in the forms of search, YouTube, and their display network. Outside of the App Store, Apple makes almost no money from advertising.
Advertising needs to be effective if it is to continue to attract spend from brands. Over the past decade, Google has pioneered technology to better find, understand, and target consumers. With billions of users across its suite of services (not just YouTube but Gmail, Google Photos, and Google Drive, etc.) it has unrivalled levels of data. And this is where Apple is hitting them.
Apple is not just hitting Google, the major social and ad networks are going to suffer too. The pain will not be evenly dispersed. While the share of iPhones is not as large as Android, in some industries like Luxury, nearly every consumer has an iPhone. The practical impacts are big.
The ubiquity of tracking devices on the web means that everyone will be affected. Nearly every site on the web uses Google Tag Manager to place cookies into containers that can be released when people visit various pages triggering events. Generally speaking, first party cookies should be safe (for things like analytics). But any third party cookie that is installed on your site is at risk of being cut off. This is not just for serving ads. Many sites rely on third party services to optimize their user journeys and pull in additional personalization data from other connected services. The impact to you depends on how much traffic to your website is from Safari.
Ad platforms have been pushing back against Apple's decision and, after a delay for brands and advertisers to prepare, Apple has offered a middle ground of sorts so that advertisers can still track some events via third party cookies. But it is a complicated minefield – one that I haven't even begun to dig my teeth into and so cannot elaborate on right now. Let's just say my Linkedin feed is full of media agency people wondering aloud how their strategies are going to remain relevant based on performance that will slip away, or worse, disappear.
Digital advertising will get harder
The first impact hits advertisers where it hurts in two ways: reach and targeting. Cutting off access to third party cookies means an immediate drop in addressable audience. With iOS users essentially hidden from view, I will not be able to account for those people since I don't know where they are and if my ad is being shown to them. Since we need to know who we are targeting to trigger an ad, that means fewer ads get triggered.
Then there's the targeting, and this is where it gets really painful. I've written extensively about how effective retargeting is as a digital advertising strategy. It is as close as you can get to a holy grail – being able to show a dedicated ad to someone who has already visited my website. I can customize the messaging and entice interested people to come back instead of trying to go and introduce my brand to new customers. This is in serious jeopardy.
The middle ground I mentioned earlier can still provide a solution to people who opt in to tracking to let cookies go from one website to an ad service and so I can target people across the web if they have visited my site. But how many people are going to really opt in? It is naive to hope that the majority will do so in today's context.
Publishers, apps, and websites will earn less money
If it were just advertisers, I would say tough shit, that's life. Realtime bidding has been doing very shady things with people's data and I've written that it is incentivized to continue to hoover up information to gain an edge in performance, no matter what the impact on privacy. It's good that someone is finally saying that people need to opt in and to prevent personal data from getting continuously blasted into the abyss between DSPs and SSPs.
But alas, this is not the case. There has always been a tension on the web between people wanting to find information and entertainment and not wanting to pay for it. Services that are free to use have to be paid for somehow and although subscriptions are increasing in some areas, most people still do not wish to pay for a site that they access occasionally.
Most publishers don't have ad sales teams or enough volume to ink advertising deals by themselves. The solution then is plugging into ad networks so that advertisers can find their audiences. The better an advertiser knows their target, the more they pay. When an advertiser pays more it means that a site can run on fewer ad placements. For the sake of privacy, Apple is undermining this relationship which will effectively push website experience back a decade. Sites will potentially have to go back to running mass ads and as many as possible in order to make ends meet.
eCommerce conversion will drop
Finally there is eCommerce. Retargeting is the most effective way to work the bottom of the funnel, people who have visited your site and consulted a product. In our on-the-go reality today, people do not necessarily make purchases on their phones in the spur of the moment. With the torrent of feeds and information, much is forgotten. A well-placed and well-timed ad to bring someone back to complete a purchase is not only effective, but it can almost be considered a service to the customer. And it pays off.
Cutting off the cookies that make retargeting possible is nothing short of catastrophic. Google is working on an alternative to cookies (called the Federated Learning of Cohorts) but it is not sure if it actually works and if it will be rolled out.
A counter-intuitive conclusion
The irony is that people think they will see fewer ads but they will end up probably seeing more of them. Instead of seeing ads that are more relevant to themselves, they will see ads only from brands that have massive budgets. This will continue to degrade the impression that people have of advertising in general.
The truth is that advertising is the fuel that makes the web go round. It is foolish to think that people will switch to paying each website they visit. We need constructive solutions to privacy that protect customers and the services they use, not one actor forcing their muscle on everyone else.
Tagged apple, cookies, iOS14, privacy, retargeting, tracking
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