Apple’s move to block user tracking generates new digital ad strategies

Changes to Apple’s iPhone software, which are part of what the company describes as an application transparency monitoring initiative designed to protect user privacy, will allow users to decide whether to allow applications to track for targeted ads. The iPhone maker first announced the plan in June and intended to roll it out in September, before delaying that timeline until 2021 to give partners more time to prepare.

Many of those affected have expressed opposition to the plan for months. But with the change expected for the coming weeks, the possible impacts are now being prepared and weighed.

“Most people are resigned to the reality of this,” said Eric Seufert, a strategist and consultant who has conducted several workshops on this topic for developers and advertising technology companies. “I don’t think anyone thinks they have any kind of agency here to change things or establish an alternative solution.”

Once the software is installed, Apple will ask users in a pop-up window if they want to allow a particular application to track their activity through other companies’ applications and websites. If users decide to “ask the app not to track,” apps will no longer be able to pick up a user’s creative ID without permission. This ad identifier is widely used by digital and data ad runners, but many expect users to reject tracking in the midst of privacy concerns.

Facebook warned investors in January that upcoming changes to Apple’s operating system posed a risk to its business. The social media giant has said it will launch its own pop-up message in the app to tell users that tracking helps personalize ads and supports ads-based businesses to reach consumers. The focus of duel pop-ups can baffle or annoy users as changes are implemented and implemented.

Facebook chief executive Mark Zuckerberg, during an appearance on the Clubhouse app last week, set a slightly more positive tone, though he remained critical of Apple’s change. He said the measure could strengthen the company’s own retail channel of the application “making it more difficult [advertisers] basically use their data to find the customer who would like to use their products off our platforms ”.

Alphabet Inc

Google has said it plans to comply with Apple’s new rules. Christophe Combette, product manager for the Google Ads group, warned in a blog post that the changes would reduce the visibility of metrics that show how ads generate app installations and sales, and how advertisers value and deliver. ad impressions. Google plans to expand the use of a tool that deduces whether an interaction with the ad resulted in online spending or subscription without identifying individual users.

Companies in China tested a possible alternative solution that would be to create an alternative advertising identifier to track users without letting them withdraw from data collection, according to people who are familiar with the subject. The tests were part of an initiative developed by the state-backed Chinese Advertising Association to create a national standard for Chinese technology companies, according to the people.

The identifier, called CAID, uses a technique known as “fingerprinting the device” that Apple has banned. This method records data transmitted between phones and applications, such as their Internet Protocol addresses, and uses them as clues to track that user. The Financial Times previously reported the effort.

Tencent Holdings Ltd.

and ByteDance Ltd. they were one of the companies that participated in the tests, according to people. Tencent has not implemented the technology, said a person familiar with the initiative. A Tencent executive on Wednesday told investors that Apple’s changes in ad tracking were causing uncertainty globally.

A platform familiar with the TikTok issue, owned by ByteDance, does not intend to use CAID.

Apple would reject those apps that violated its rules, which have banned fingerprinting of the device for more than a decade, a spokesman said. “We firmly believe that permission should be sought from users before a follow-up,” he said.

Apple’s plans to implement its new policy are likely to lead some applications to change their business models. “Some smaller apps, which until now were free, could become paid,” said Barak Witkowski, vice president of product for mobile ad measurement company AppsFlyer.

Nii Ahene, strategy director at digital ad consultancy Tinuiti, predicted an initial decline in advertising, especially if purchased through Facebook, while advertisers measure its effectiveness under the new rules. Over time, advertisers could move from finding new customers to communicating with existing ones to increasing loyalty, he predicted.

This can be especially painful for the video game industry, which has long used specific ads to find the rare customer who is willing to spend a lot on purchases from the app.

“He spends most of his dollars trying to find 1% or 2% of his audience that he spends $ 100, $ 200 a month,” Ahene said. “It will be significantly diminished by the fact that you don’t have a unique identifier to attract these people.”

Unity software, video game manufacturer Inc.,

which makes money selling software to other gaming apps, said last month that it expected a $ 30 million success this year, or about 3% of expected sales for the year, as advertisers adjust to Apple changes.

Julie Shumaker, senior vice president of revenue at Unity, said she believed spending is likely to pick up as advertisers target their ads based on the apps or webpages where they appear, rather than consumer behavior. individuals.

Some game creators will probably be motivated to change their games so that they better identify the users who spend the most money. Under the new rules, if a user downloads an app from an ad and spends money on the new game, the advertiser will be able to find out if they make a purchase on the first day.

“They will optimize their game to encourage the user to buy in the first 24 hours or create another signal that gives you an idea of ​​whether they will be a valuable player,” said Ionut Ciobotaru, product manager at Verve Group. . “This is important so that they can know whether or not they have acquired real customers from a particular advertising campaign.”

(Dow Jones & Co., publisher of The Wall Street Journal, has a trade deal to supply news through Apple News).

—Yang Jie contributed to this article.

Write to Patience Haggin at [email protected] and Tim Higgins at [email protected]