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Apple vs. Facebook and the impact on advertising

In case you missed it, Apple and Facebook are in what could be described as their biggest feud to date. It’s no secret that the two companies haven’t exactly gotten along for some time now. That said, this latest feud is shaping up to have long-lasting repercussions for many of Apple’s iOS marketplace partners, Facebook being one of them.

 

Apple has been making initiatives with every iOS update to put a strong emphasis on protecting consumer data. As a massive provider of hardware with margins nearing 40% in 2020 for their 1.4 billion devices, Apple doesn’t need to rely on harvesting consumer data for profits. Simply put, they are a hardware and software company.

 

For many years, iOS apps have flown under the radar when it comes to their data privacy practices. Companies like Facebook and Google heavily rely on data that is captured both on and off their platforms.

 

For many advertising platforms, the key initiative is to make their ads relevant to consumers so that they can deliver profits to their customers who actually pay for their services, hence the business owners.

 

In order to create an effective advertising platform, these companies must rely heavily on literally billions of different data points compiled using machine learning. Overtime, these algorithmic systems can become so effective they can practically predict a consumer’s behavior. As such, millions of businesses depend on Facebook and Google to both generate and predict revenue.

 

Apple recently announced updates coming down the pipeline that will significantly impact Facebook, Google, and frankly thousands of other iOS developers. As part of their iOS 14 update which is the current version of their operating software, they are now going to be alerting consumers when apps are tracking their activity.

 

As mentioned previously, advertising platforms can track your activities off of their respective platforms using Apple’s IDFA which is short for “identifiers for advertisers”. Prior to this announcement, iOS developers could put specific language in their terms of services which was considered more than sufficient for them to track your location, app-to-app activity, browsing activity, and the works.

 

While all this sounds very sketchy on the surface, be mindful these are more or less machines tracking datapoints for the sole purpose of promoting targeted ads to consumers. Advertising is a business practice as old as time but, it has gotten tremendously more sophisticated with the emergence of modern technologies.

 

Let’s fast forward to the point that is causing so much controversy for this new iOS update. Apple will now be enabling push notifications alerting consumers when apps are tracking their data and online activity. Advertising companies and many folks involved in the supply chain are fearful that people will be opting out in the masses.

If 8 out of 10 people decided to opt of out Facebook tracking their whereabouts, their platform could become much more vulnerable and less effective for the many agencies and businesses who rely on their services to operate. Just imagine trying to run an ad to promote your local business but not having access to demographic data such as location in your surrounding area. While that’s an extreme example, the fear is the data that is available today will be eroded overtime rendering it far less useful.

 

Additionally, Facebook is heavily reliant on Pixel data for their eCommerce customers. A pixel can be described as a snippet of code that allows you to track your website visitors in an effort to retarget them with your ads.

 

The pixel is complicated; however, the idea is simple: If someone clicks on your ad to learn more about your business and lands on your website, they are showing interest in your products or services. By utilizing the pixel, you can retarget those visitors by increasing the frequency or exposure of your ads in order to get them to make a purchase.

 

Retargeting is a very profitable means of advertising especially among eCommerce businesses who operate nationwide and even globally. Again, if consumers begin to opt out of sharing their data, they are essentially removing access to their IDFA making tracking and launching effective ad campaigns much more difficult.

 

Apple did not do a great job of alerting their respective iOS partners of these changes. In fact, they have been getting so much internal pressure on the subject that they have temporarily postponed the full launch of alerting users when their data is being tracked. It is said that they are wanting to allot more time for developers and the entire iOS ecosystem to prepare for these changes as they are seriously shaking up many people’s business models.

 

To be transparent, we are in the advertising space but, we are not saying this move by Apple is inherently a bad move, we are merely suggesting that there are going to be repercussions that maybe even Apple hasn’t fully considered. Experts in the field could have likely predicted this move by Apple because they actually enabled the ability to turn off your IDFA in the settings of your iPhone back on their iOS 10 update.

 

Here’s where things get a little more complex and perhaps controversial. Do consumers actually know what they are opting out of when they hit that button for the first time? Many consumers will state that Facebook is creepy but then proceed to login upwards of ten times per day.

 

Have you ever connected with an old friend, learned about a new product, downloaded an eBook, watched an educational video, or taken any action on Facebook that benefited you? Whether you are willing to admit it or not, the answer is likely yes. Additionally, whether you realize it or not, your entire newsfeed is literally a compilation of all the things you like, and value, based off of your interactions on the platform. This is likely what keeps consumers coming back for more and spending an average of nearly 45 minutes per day on the platform.

 

The question remains, what happens when people start opting out in the masses? Consumers should really consider how that will impact their experience on the platform. To give you an analogy, what if the next time you went to login into Netflix you were taken to a 7-year-olds account for kids? Do you think you would have the same great experience on Netflix? The answer is likely no.

 

If consumers start opting out in the masses, this could have significant impacts on their experiences on the platform. In other words, if you are married, do you want to start seeing random ads for wedding dresses and engagement rings?

 

Despite all the negative headlines received from advertising companies, there are methods to their madness. Again, advertising is as old as time, and it simply has gotten more sophisticated.

 

Moral of the story, there’s actually two sides to every story. I can appreciate Apple’s transparency in wanting to deliver a more secure and private experience for their customers. On the other hand, I can see why many advertisers, business owners, and agencies will be totally against this move.

 

Only time will tell how this shakes out. With great adversity comes great innovation. We will leave you with a little prediction for a future blog post. We predict there’s going to be a major shift in advertisers focusing on Customer Audiences through the collection of emails and phone numbers. Is your agency or business prepared for the change?

 

Feel free to tell us your thoughts in the comments or drop us a line at support@adszy.com.