How will Apple’s ATT update affect digital advertising?

Update: On 27 April 2021 the latest version of iOS launched which featured the new App Tracking Transparency Feature. We will continue to monitor the impact this will have on digital advertising as more users upgrade their software and opt-in or out of app tracking.

A lot has been said about how Apple’s latest update will affect digital advertising efforts, depending on who you listen to it could mean nothing, or it could mean the end of online ads as we know them.

In this post, we look at what is changing and what actually means for digital marketers and for clients buying digital ads.

What you need to know about Apple’s looming privacy update (any minute now)

On Data Privacy Day (January 28) Apple officially confirmed that their App Tracking Transparency (ATT) update will be coming in “early spring 2021”, which translates to Autumn for us Aussies. It promised some sweeping changes to the way Apple users are tracked online and aimed to provide them more control.

Apple first announced these changes in June 2020 and was originally expected to launch that September, which caused a slight upheaval in the tech world and resulted in a delay until 2021.

What is Apple changing?

The New App Tracking Transparency feature will require apps to get the user’s permission before tracking their data across apps or websites owned by other companies. Image via: Apple Press Release Data Privacy Day at Apple: Improving Transparency and Empowering users

1. Restricting third-party tracking through their ATT update
2. App developers will be required to submit information about the user data they collect, how it is used and whether developers will track users and send them targeted ads.
3. All Apple apps will have their privacy policy displayed on their App store page.

Taken together these changes provide users with a deliberate ‘opt in’ option for being tracked via the device for the purposes of marketing and ad display.

How tracking is accomplished on Apple devices

Users are tracked in many ways but, with regard to the ATT update, we are talking about device-level tracking. When someone is using an app on their Apple device, they are tracked across each interaction. The apps you use, the time you spend on them, the ones you pay for versus the free ones, the patterns of usages (i.e. when you connect headphone you then normally open Spotify), etc. is all monitored by the device. This data does not identify individual users but provides important data for marketers looking to design and target ads. The collection of data is done through something called the Identifier for Advertisers (IDFA) which is a unique ID assigned by Apple to a user’s device. (In case you were wondering there is an equivalent tracking tool in place on Android devices called GPS ADID, or Google Play Services ID for Android.)

This kind of tracking is not new or unique to mobile devices, users are tracked across almost all online interactions to build up a cloud of data that advertisers can use to target them with ads. The IDFA is just how this is accomplished on Apple devices.

An example of how marketers might use IDFA data would be to display ads based on device browsing history.  If you have been viewing a lot of washing machine related websites, for example, the data collected via IDFA can then allow you to be targeted based on this activity. Advertisers could design an ad and target users who have looked at washing machines in the last 7 days and then deliver these ads via other apps or the next time you search Google or visit a website on your phone’s browser.

This type of data allows digital marketers to show specific ads to target users. Without the ability to closely target your audience your ad may end up being displayed to people who are not interested in washing machines.

“Opt-in” tracking feature gives users peace of mind

Apple’s ATT update will give users the option to decide whether they want to be tracked, essentially, turning the IDFA into an “opt-in” feature. The big potential losers for a change like this are any platforms that rely on this data – e.g. Facebook and Google. Both have advertising platforms that either provide this data to others as a service or rely upon this data for their ad targeting, if there is no data then it directly impacts their products.

In the case of Facebook, the issue is very clear, users browse content on the platform, and this tells Facebook the kinds of things they are interested in and respond to, this data is then used for targeting ads. If Facebook cannot see this type of behavioural data, it reduces how targeted advertising can be – a product that generated roughly $84 billion in revenue for the platform in 2020 (so we understand their dismay).

“Privacy means peace of mind, it means security, and it means you are in the driver’s seat when it comes to your own data,” said Craig Federighi, Apple’s senior vice president of Software Engineering. “Our goal is to create technology that keeps people’s information safe and protected. We believe privacy is a fundamental human right, and our teams work every day to embed it in everything we make.”

How does privacy on Apple devices work now?

Currently, app tracking is turned on by default. A user can choose to turn this off within the settings of their Apple device which limits the information obtained about the users’ behaviour. Roughly 20% of all Apple users have enabled this feature and therefore cannot be tracked using the IDFA.

The concern is that once app tracking is switched off by default and there is the opt-in prompt, many users will select ‘no.’ It is expected that the percentage will grow from 20% to 70% once the privacy feature goes live.

It is important to note that this does not stop advertisements from occurring or those individuals seeing them, it limits the behavioural tracking obtained behind the scenes to ascertain if that user is an applicable or worthy audience.

How ATT will affect digital advertising

Apple has a huge share of the global market, so this change is significant. However, this is also part of the adtech evolution, that honestly, was largely anticipated.

Based on what we do know about the update, we can say that the new ATT feature will inevitably reduce identity targeting, attribution measurement and limit certain visibility on metrics used to show the driving factors of conversions on advertisements in addition to the value and bid of impressions, which is important to be aware of.

It’s necessary to acknowledge that IDFA is just one data signal used in mobile in-app advertising. Targeting will not become obsolete; we don’t suspect that digital marketing will lose its power, nor will it diminish – it may just change.

At this point, we can assume that the main area of impact on digital advertisers will be on the strategy known as Niche Targeting (ad targeting based on user behaviour and interest tracking).  Without this, narrowly focussed data available niches will be harder to identify, and instead more broadly targeted advertising based on contextual and geographical data will be utilised.

As a result, we believe that this will improve the quality of ads, as it amplifies the need for better ads to generate a response – better creative, better copywriting and better ad psychology by businesses.

It also magnifies the benefit of having diverse and cohesive channels of communication and not being reliant on one medium or audience type.

How has The Digital Embassy adapted and prepared for this change?

As a company that is very security conscious (and primarily comprised of iPhone users), Apple’s ATT update is laudable, and we expect it will certainly serve as a catalyst for updates that go further in the future.

There is a lot of speculation about what will occur and the impact on advertising, and no one (other than Apple) knows the specifics until the change occurs. For digital marketers this makes it challenging to prepare but there are some steps we have undertaken:

1. Understand the changes (as we know them) and factor them into existing client campaigns and overarching strategies moving forward. Realising that there is a large audience of people who will not be affected.
2. Communicate with any clients relying on niche targeting strategies and help them transition to more sustainable strategies before the changes hit.
3. Working with all our clients to provide additional support if required for review, strategy development and updates to occur as more is understood about ATT and how users are responding.

With any new challenges, they present new opportunities to learn, adapt, respond and thrive.