Behind the glitz of Apple’s April 20 “Spring Loaded” event, which featured new iMacs, iPads, and a Willie Wonka purple paint job for iPhones, Apple quietly announced a tiny tweak to its operating system.
It will have major repercussions for user privacy and the digital ad industry.
The change affects Apple’s ID for Advertisers (IDFA), an identifier that allows the digital ad industry to track iOS users’ activity across apps to better target ads and measure the effectiveness of marketing campaigns. Until now, users have had the option to opt out of being tracked by flipping a switch in the settings menu. But with the release of Apple’s latest operating system, which rolls out today (April 26), all apps will have to ask users to opt in before they can begin tracking you.
If that seems like a small, esoteric change in Apple’s user interface design, it is. But the fierce protests it has elicited from Facebook and others in the digital advertising industry illustrate just how big an impact it may have. Creating a pop-up prompt that asks people if they want to be tracked—as Apple now says it will on iPhones, iPads, and Apple TVs—is forcing advertisers to rethink their approach to data collection and privacy.
Ad tech needs a new business model
Apple’s software update will have the biggest impact on “ad tech” vendors—hundreds of companies that gather data about what people do online and on their phones, to help their clients target ads to those people wherever they go on the web. Ad tech firms also watch to see if people eventually buy the products they see in targeted ads, so they can demonstrate their value to their clients.
These companies, in other words, have built their business models on the type of granular, individual tracking that Apple’s IDFA enables. And they believe that almost no one would voluntarily sign up for that level of tracking—meaning that being forced to ask users for permission to monitor them represents an existential threat.
“There is great power in that one tiny little thing,” said Emily Ryan, a user experience developer currently working with the US Department of Justice’s civil rights division to improve the design of its websites. She noted that transparently asking users for permission to track them—instead of quietly doing it in the background—could be a great opportunity to increase trust. “It just depends upon how you think about your business and whether or not long-term customer trust is really important to you,” she said.
Will anyone sign up for IDFA tracking?
Apple’s new operating system will create some friction for any app that wants to make money from ads. Currently, app developers don’t need permission to incorporate targeted ads in their apps. By default, those apps can use IDFA to collect data about what people do on their phones and use that data to deliver targeted ads. If users want to opt out, they can find a button to do so under the “tracking” menu in their privacy settings.
Under Apple’s new operating system, when users download an app that wants to track them for advertising purposes, they’ll see a pop-up informing them that the app “would like permission to track you across apps and websites owned by other companies.” App developers will be able to add a sentence or two explaining why they want this tracking power. (Generally, it’s because they want to make more money from targeted ads and recoup the cost of building the app.) Then users will be able to choose whether to accept or decline ad tracking.
The digital marketing agency Tinuiti laid out the industry’s expectations in a blogpost: “Currently, about 70% of iOS users share their IDFA with app publishers,” the company wrote. “After this change it’s estimated that this number will drop to 10% to 15%.”
In other words, if you give people a clear choice, the industry expects the vast majority of them will choose not to be tracked. But if you bury the opt-out button in the settings menu, not many people will bother to find it. The industry has come to rely on people being too indifferent to find the opt-out button, says Mike Woosley, chief operating officer of the ad tech firm Lotame. “I know that’s a cynical view,” he said, “but it’s a realistic view of the nature of human behavior.”
Woosley gave the example of the cookie consent boxes that have recently proliferated across websites as a result of Europe’s GDPR privacy laws. The pop-ups ask visitors to allow the site to track them for ad targeting purposes. Most of us just blindly click “accept” to get rid of the box. “You just can’t get to that button fast enough to click it if it’s in the way of the information you’re seeking,” Woosley said.
The data supports his point. Almost no one actually uses cookie opt-outs, according to CookieLaw, a company that sells privacy compliance tools to web developers. Most pop-ups only give users the option to accept cookies—if they want to decline, visitors usually have to go to another page on the site and find an opt-out button. In a blogpost analyzing data from the websites it partners with, CookieLaw said just 10% of people clicked through to another page in an attempt to find the opt-out button, and less than 1% of users actually managed to decline cookies.
The price of privacy
If almost no one agrees to be tracked under Apple’s new opt-in system, advertisers will be left with very little iPhone, iPad, and Apple TV data to use for ad targeting. Forecasts for digital ad revenue are grim. Facebook predicted in press releases that news publishers could see their ad revenue from Apple devices drop as much as 50%, and also took out full-page ads in The New York Times, The Wall Street Journal, and The Financial Times predicting that small businesses would “see a cut of over 60% in their sales for every dollar they spend” on ads on Apple devices.
The ad industry warns that more privacy and more transparency come at a cost: Lower ad revenues, they say, means less money flowing through the industry to news publishers. Some (including The Verge’s Casey Newton) draw a line from there to a decline in the quality of journalism and an implied threat to democracy. The argument may be overblown, but to illustrate the point, the publisher of Daily Mail told Recode that the loss of ad revenue may push the company to delete its iOS app if it stops bringing in money.
Ultimately, the ad world may be more upset about Apple’s high-handed rollout of its privacy updates than the changes themselves. Arun Kumar, chief data and marketing technology officer at the ad agency IPG, said he supports efforts to improve privacy and applauds Google’s approach to eliminating third-party cookie tracking on its Chrome browser. The search giant gave the industry two years to digest the news before implementing the change, and has been working with industry groups to develop new, alternate ways for advertisers to track its users.
“In many cases I do think that the data industry unnecessarily goes for the most granular data when you don’t need it, so I’m all for [privacy changes like Google’s],” Kumar said. “I’m not in favor of companies arbitrarily, without any consulting with anyone, deciding, ‘I’m just making the IDFA go away. Deal with it.’”