A big privacy move by Apple, a big shakeup in the mobile ad market



Those with iOS devices may have noticed a new pop-up while launching a newly installed application. The message puts in simple words whether you, the user, wish to allow the said application to “track your activity across other companies’ apps and websites?”

Given the growing concern for online privacy, many may have instinctively denied permission, knowing little what it was all about. This instinctive behavior is now a major cause of concern for the tech world.


Mobile operating systems allow app companies to track all sorts of user activity on handsets. This includes the apps they use, time spent on each app, new apps installed, mobile screen-time and so on. These metrics advise algorithms that show in-app advertisement, and form the back-bone of the $400 billion mobile ad industry.

Apple, now, has put a gate-keeper. The iOS 14.5, which rolled out 26 April, came in with a new privacy feature that describes as App-Tracking Transparency. What this means is that iOS users now have to “opt-in” to allow the said app to track activity across other apps and broadly on the smart device, instead of it being allowed as default in earlier iOS versions. It is set to default in Android.

Apple’s move has opened up fresh rivalry in the world of Facebook, which owns Instagram and WhatsApp, in particular has come out strongly against It said that the move would penalize ad-funded social media companies that support small businesses with free products.

Mobile ad analysts say that with the quality of targeting data going down, advertisers spending is likely to take a hit. Another outcome could be that some app publishers may decide to charge for app that were earlier shipped for free. Either way, this is the biggest shake-up seen in Ad Tech in many years and will likely impact all markets including emerging market like India.

iOS gate-keeper

In 2020, sold about 50 million iPhones in India and its market share, according to Counterpoint, is 3-5 percent. iPads’ consumer base is much lesser. That said, Apple users are recognized to be higher spending strata and thus valuable for any advertiser.

Now, with iOS 14.5, targeted advertising on Apple devices is going to take a hit. To break it down, all Apple devices have a unique Identifier for Advertisers (IDFA).

Advertisers use this to track data so they can deliver customized advertising. It is fairly intricate; the data can then be used to discover information such as which in-app events a user triggers, when users interact with a mobile advertising campaign, and whether specific users click an advert for payment and attribution purposes.

Essentially, Apple’s ad identifier is a string of numbers widely used to reveal where users go online, insight that is useful for targeting ads. Now this is moved to “opt-in” on explicit user consent instead of opt-in as default which was the case earlier.

“These changes will have a profound effect on in-app advertising in the Apple ecosystem,” Lauren Fisher, EVP Business Intelligence at InMobi, said in a 5 May webinar on the issue. According to InMobi’s estimates, only 20-25 percent of users would choose to opt in.

Prior to iOS 14.5, Apple had a Limit Ad Tracking (LAT) feature, through which users could select to not share their data for advertising purposes across all apps on their device. In 2020, about 30 percent of all iOS users had selected LAT.

“Once iOS 14.5 is fully live, we expect around 20 percent to 25 percent of all users will explicitly opt in – meaning that 80 percent of users will essentially have LAT functionality enabled on some or all apps on their device,” said Fisher.

Facebook feels penalized

Apple announced the feature in June 2020, and in September deferred the roll-out to allow developers time to comply with the new policy. The feature was finally rolled out in April 2021. In the meantime, Apple and Facebook have exchanged salvos in public forums and the latter has admitted that it may have potential revenue impact.

Apple has long maintained its position as a privacy-first company, and that it differentiates itself by giving users necessary disclosures and discretion. In January CEO Tim Cook said at a public forum, “If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it does not deserve our praise—it deserves reform.” The comment was widely quoted across the global press.

Facebook has another version. “Many small businesses will no longer be able to reach their customers with targeted ads,” Facebook CEO Mark Zuckerberg said in a January earnings call. “Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests.”

Facebook has last year warned that Apple’s updated privacy settings would trigger a 50 percent drop in revenue for its Audience Network, it’s ad product that lets developers use the social network’s detailed consumer data for in-app ad targeting.

Google, too, is on the offensive but said it will comply. Christophe Combette, group product manager for Google Ads, said in a blog post that the changes would reduce visibility into metrics showing how ads drive app installations and sales, and how advertisers value and bid on ad impressions.

iOS ad market upended

Even as the move is fairly recent, early estimates have started trickling in. According to the data from analytics firm Flurry Analytics, owned by Verizon Media, just 4 percent of ‌iPhone‌ users in the US have chosen to opt into app tracking after updating their device to iOS 14.5. The data is based on a sampling of 2.5 million daily mobile active users.

Flurry extrapolated the data to say worldwide, only 12 percent of all iOS users may opt in for tracking.

In terms of revenue impact Facebook and Google will be impacted, said US-based Media strategist Eric Seufert in an April blog. According to his analysis, Facebook may lose 10 percent or about $8 billion in revenue over the next 12 months, while the same percentage for Google would mean a loss of $17 billion.

Indian ad firms have sprung into action to advise clients (advertisers) on business impact and work-around.

“Here on Facebook will not be providing any reporting around age, gender, geolocation, or ad placement. Additionally, Facebook will not be providing the existing 28-day view-through and click-through attribution for active or deleted campaigns,” said Pulkit Jain, marketing specialist at Ad-tech firm MoEngage.

Further, Facebook marketers will have to create campaigns from scratch and may not be able to run reach and frequency campaigns, said Jain.



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