Apple’s iOS 14 IDFA Privacy Update Explained

Update: Apple’s app tracking transparency feature will launch in “early spring” with iOS 14 update

In case you haven’t heard, a major privacy update to Apple’s iOS 14 is scheduled for early this year. The change will require iPhone users to opt in to allow apps to track them across third-party apps and websites. iPhone users, who make up 50% of the mobile market share, are currently able to opt out of third-party tracking, though few have. When the change goes into effect (the exact date is TBD), a user installing an app from the Apple App Store will see a prompt like this:

Apple’s changes would give users a prompt to decide whether they want their activity to be tracked across multiple apps and websites.
The Apple App Store will ask iPhone users to opt in to 3rd-party tracking

App developers still have control over the timing and wording of the opt-in prompt, so it doesn’t have to be as grim as in the example above. Even so, opt-in rates are expected to drop to as low as 15%, effectively nullifying Apple’s Identifier for Advertisers (IDFA) as a persistent user ID for ad targeting purposes. 

This change primarily impacts in-app advertising, app install attribution, and mobile ad targeting. The extent to which ad targeting will be diminished across the open web remains open for debate. In this article we dive into the debate, with an emphasis on how the changes will impact digital marketing for small businesses, and what you can do to get ready for the changes. But first, a little background on how we got here.

Clash of the Titans

Since 2012, Apple’s IDFA has played a major role in online advertising, allowing companies to track customers not just within the Apple app ecosystem, but across third-party apps like Facebook, as well as websites beyond the walled gardens of Big Tech. With the 2021 iOS 14 privacy update Apple is doing away with third-party tracking, a direct challenge to Facebook’s business model and, by extension, the small businesses who rely on Facebook’s ad platform.

This IDFA privacy update is widely seen as a response to growing tensions between Apple and Facebook. As tech analyst Ben Bajarin told the New York Times, “A lot of the privacy moves that Apple has made over the past few years, in terms of allowing people to understand what’s happening to them in the background, a lot of it has to do with Facebook.” A tit for tat has ensued. When Apple made it harder for Facebook to distribute their apps on its App Store, Facebook got behind Epic’s accusation that Apple violated antitrust laws. By blocking Facebook apps that engage in third-party tracking, Apple gets to look good on privacy while continuing to extensively track users across its own vertically-oriented constellation of apps, devices, and distribution platform.

The hit to Facebook’s main ad business won’t be huge. Facebook already knows a lot about its user’s interests based on their in-platform activity alone. Whether the update will hurt small businesses that rely on Facebook to target ads is a trickier question. Facebook certainly wants you to think small businesses won’t be able to target ads as effectively, and that smaller ad platforms stand to lose ad revenue. The company launched a PR campaign in response to the announced iOS update, claiming to be “standing up to Apple” on behalf of small businesses already hit hard by the pandemic. (Yes, the same Facebook that has absorbed 82 startups in the past decade is now “standing up for small businesses everywhere.”)

Left: the (misleading) Apple pro-privacy ad that covered the side of a Las Vegas building during the 2019 CES (Getty Images); right: the full-page Facebook anti-Apple ad that ran in major newspapers

Facebook may know a lot about your customers’ interests, but in reality their user behavior data—device usage, prior purchases, etc—isn’t as reliable and accurate as they claim, according to internal communications unsealed by a judge. In light of these revelations, we can’t help thinking that the negative impact the IDFA changes will have on small businesses may be as overblown as Facebook’s promotional copy. For its part, Apple has provided very little information about how the update could impact small businesses.

So how will the iOS 14 update impact companies worth less than a trillion dollars?

How the iOS 14 IDFA Update Will Impact Small Businesses

App Install Attribution

If you have an app in the App Store, it’s clear that tracking app install attribution is about to get harder. The major ad platforms (Google, Facebook, Snapchat, TikTok) are indicating they’ll be adopting Apple’s SKAdNetwork protocol, which hides user identity as it provides advertisers with attribution data. Make sure your app is updated and ready for the post-IDFA App Store to ensure proper attribution tracking. 

As we mentioned at the outset, app developers still have a lot of leeway in how the opt-in ask is delivered, and what that messaging sounds like. Encouraging opt-ins by waiting until users are comfortable with your service and being transparent about how ad targeting works could be helpful temporary measures. But with Apple shielding more and more mobile users from behind-the-scenes tracking, it’s wiser for marketers to start thinking instead about ways to proactively boost mobile engagement as a means of gathering first-party data on those customers.

Ad Retargeting

Ad retargeting on Facebook will get less targeted, and that will undoubtedly hurt some small businesses, especially for businesses where mobile plays a big role. Our sense is that we don’t have enough data on how reliant ad platform ID graphs are on IDFAs to assess the full impact here. Frankly, we don’t see a wave of small businesses being wiped out by the loss of some iOS device-level targeting. Businesses may have to run more ads, and less targeted ads for a time, until the adtech industry develops new Apple-compliant workarounds to make up for the lost ground.

Final Thoughts

An effective digital marketing strategy relies not just on targeted advertising, but a healthy mix of paid ad campaigns, content marketing, email marketing, a social media presence, and of course the ability to track conversions. The iOS 14 update isn’t quite the end of ad targeting as we know it, but it does represent an inflection point for the ad industry and digital marketers. 

Consumers never signed up to be tracked by tech companies. A BusinessWeek poll shows that 88% of American app users support opt-in as the standard before a web service shares personal information with others. Apple flexing its market dominance on privacy only affirms growing consumer awareness around the issue, and should be welcomed as an opportunity to return to more direct methods of getting to know your customers. Observing foot traffic, asking questions, conducting polls, working social media, getting customers signed up for your newsletter—all of these things are still possible with or without granular iOS data, and they might just help you connect with your customers in more meaningful ways.

Don’t hesitate to reach out to Gator SEM with any questions you have or to get more information on how your company can best prepare for this update and adapt to the changing digital marketing landscape.

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