How could Apple’s iOS 14.5 update affect your business?

The latest update from Apple could mean big changes for small businesses. For our clients, we optimise across a number of channels so the impact on them will be minimal. But if you are using Facebook advertising here's everything you need to know about the changes and how they could impact your business.

From version 14.5, iOS users will now be able to say no to having their data collected by apps thanks to a new privacy feature. All eyes are on Facebook who relies heavily on the advertising revenue this access to information generates and how Mark Zuckerberg has responded.

How will the iOS 14.5 update work?

The new app tracking transparency feature will require app developers and advertisers to ask users if they are allowed access to their information via the device's unique identifier for advertisers (IDFA). In short, what this means is you will now start to see a pop up that will ask if you agree to have your activity tracked for advertising purposes and, if you're happy with this, you will need to click to opt-in.

Every iPad and iPhone has an IDFA and it can help companies who use mobile advertising target their ads as it provides information on who users are and what they’re doing. It also lets them measure how effective any advertising is - or at least get some idea of what is working well. With this information, they are able to better target their advertising.

The IDFA can be paired with tech like a Facebook pixel which allows Facebook to follow users around the web collecting information about their habits. Information that they can use to inform what ads it serves to them.

What is a Facebook pixel?

Facebook pixel can be used to track the behaviour of visitors to your site. Using the Facebook Pixel you can retarget to specific audiences based on what actions users have taken. Ever wondered why that pair of shoes you looked at seems to be everywhere you look? It's likely down to a Facebook pixel.

With the new update, if the iOS user hasn't agreed to be tracked, you'll no longer be able to target down to the individual person, or the same level of detail on your site. You can instead target groups using Aggregated Event Measurement. This has been designed to help measure campaign performance in a way that is consistent with the consumers' decisions about their data.

You'll be able to set 8 conversion events per domain, that's 8 pixel events or 8 conversions. If you have more than this currently Facebook will pause any beyond the first 8. So there is still some tracking and measurement available but it won't be as focused for the advertiser or the consumer.

How has Facebook responded to the update?

Facebook have been braced for the impact of the update for a while now; they’ve also hit back with some vocal objections - they are rumoured to be preparing an antitrust suit and have even gone as far as to take out print adverts.

For them, this is an attack on small businesses that do not have large advertising budgets. Their full-page ad which featured in the New York Times, the Washington Post and the Wall Street Journal, told readers that they were ‘standing up to Apple for small businesses everywhere'.

They argue that the forced software update will change the internet as we know it. Yes, larger organisations will feel the impact but really it’s the small businesses that will be left with no option but to switch to subscription services. Or at least that’s the angle they are taking. In truth, it’s estimated that around 80% of Apple users will choose to opt-out when prompted.

Last year alone, these same people spent on average almost five times as much per person using their devices to make purchases than those on Google’s Android. At the same time, Facebook reported around $84.17 billion in ad revenue. When you weigh these figures up, you start to get a picture of the impact that the update could have.

Will this affect Google Ads?

Google has been encouraging developers to upgrade to version 7.64 of the Google Mobile Ads SDK for new features like SKAdNetwork support. SKAdNetwork belongs to Apple and it shares conversion data with advertisers while still maintaining privacy and not giving away user or device information.

Google isn't entirely happy with where it’s at at the moment. You certainly aren’t able to track information and so you're unlikely to be able to tell which revenue is linked to which ad. They’ve stressed that they’re putting pressure on Apple to keep making improvements so that advertisers can better measure campaign results.

As with Facebook and other organisations impacted, they’re telling advertisers to monitor their iOS performance closely. Which, if you are a smaller business, will of course mean a lot more time away from your core operation.

So why is Apple doing this?

Why indeed? It was actually Apple who enabled the tech in the first place. In the 2000’s advertisers and app developers used early unique device identifiers (UDIDS) attached to iOS devices. These were, however, banned in May 2013 when Apple themselves faced a backlash over privacy. This put a stop to tracking for a few months at least.

Then came the identifier for advertisers which had the aim of allowing developers to generate revenue in iOS. This could be switched off but doing so was fiddly. In the following years though, having been under close scrutiny, Apple adopted an increasingly privacy-first policy.

It was central to a speech Apple CEO Tim Cook made in January 2021, where he called social media out for its part in spreading conspiracy theories for the sake of high engagement rates. He didn’t name any particular culprit here. He didn't need to.

So the official line is that App Tracking Transparency is being implemented to protect users data. Also perhaps in part because Apple generates income by selling devices and in-app purchases and so have little need for personal data.

On 27th April Wall Street Journal reported that advertisers would be able to get more data on iOS users if they buy Apple’s ad space. Their market share here is small - estimated at around $2 billion this fiscal year, a fraction of their $274.52 billion total revenue - but it is growing.

Apple is also building on subscription services, which generated $53 billion in 2020 and has recently announced that it will make podcasting a part of its revenue stream. Suddenly, Facebook’s foreshadowing of businesses switching to subscription services doesn’t seem quite so far fetched.

What does all this mean for advertising?

When all’s said and done, users will still see adverts but they will be less likely to be relevant to their interests - those Wish adverts we see on Facebook are about to get a lot more random!

Advertisers will need to monitor their campaigns ever more closely to try and build a picture of what’s going on. They will then need to make adjustments accordingly.

Will this really affect small businesses?

The short answer is yes. If you are using Facebook Ads as part of your marketing, then it is likely that these changes will impact your ability to target your ads in the way that you might have been able to in the past.

But, for any omnichannel marketing campaign, the channels impacted by this iOS update should only be a part of your marketing mix. For webdna marketing clients, we do not expect these changes to impact our clients’ marketing performance as our approach is to optimise and prioritise channels by performance. So if Facebook Ads are not working as well, we will just amplify another channel.

If you are concerned about how this change could impact your marketing, why not get in touch and we can have a chat about how webdna could help you.