Advertisers Strategize as Apple Rolls Out Its Privacy Initiative

Apple will finally roll out its app-tracking transparency initiative to protect user privacy. With new software, users will be asked in a pop-up window whether they want a given app to be able to track their activities. Advertisers, ad-tech companies and app developers are preparing ways to weather the change, which could include tweaked payment models and new advertising strategies. Many experts expect users to reject tracking. Facebook plans to debut its own pop-up window telling users the benefits of tracking.

The Wall Street Journal reports that strategist Eric Seufert noted, “most people are resigned to the reality of this.” Facebook chief executive Mark Zuckerberg, although critical of Apple’s move, said it might help his company’s in-app retail channel “by making it harder for [advertisers] to basically use their data in order to find the customer that would want to use their products outside of our platforms.”

At Alphabet, Google Ads group product manager Christophe Combette noted 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.” Google will “expand use of a tool that infers whether an ad interaction led to online spending or subscription without identifying individual users.”

In China, some companies tested an alternative advertising identifier, dubbed CAID, that uses “device fingerprinting,” which Apple banned 10 years ago. The testing, part of an initiative developed by government-backed China Advertising Association, is intended to “create a national standard for Chinese technology companies.”

Sources reported that Tencent Holdings and ByteDance were among the companies that tested CAID, although TikTok, owned by ByteDance, “doesn’t intend to use CAID.” An Apple spokesperson pointed out that the company “would reject such apps that violated its rules.”

At AppsFlyer, a mobile-ad measurement company, vice president of product Barak Witkowski noted that, in response to Apple’s new opt-in policy, “some smaller apps, which used to be free until now, might switch to being paid.” Digital ad consulting firm Tinuiti’s chief strategy officer Nii Ahene “predicted an initial pullback in advertising, especially if bought through Facebook, while advertisers gauge its effectiveness under the new rules.”

Ahene pointed out that the new policy “could be especially painful for the video game industry, which has long used targeted ads to find the rare customer willing to spend big on in-app purchases.” “They spend most of their dollars trying to find the 1 percent or 2 percent of their audience that spends $100, $200 a month,” he said. “It’s going to be significantly diminished by the fact that you don’t have a unique identifier to attract those individuals.”

Video game developer Unity Software predicted it will suffer a $30 million revenue loss this year, about 3 percent of its expected annual sales. But Unity senior vice president of revenue Julie Shumaker also forecast that, “spending would eventually rebound as advertisers target their ads based on the apps or webpages where they appear, rather than on individual consumers’ behavior.”

Related:
Facebook Could Emerge Stronger After Apple’s iOS Privacy Change, The Motley Fool, 3/22/21
What an Upcoming Apple Privacy Prompt Will Mean for You – and the Apps You Use, USA Today, 3/20/21