Apple is set to launch the new iOS update sometime in September, a few months after it was announced during the company’s annual Worldwide Developers Conference last June 22. With the update comes an option for users whether or not to allow tracking of their browsing behavior to generate the ads that will be displayed on the advice. Basically, Apple will alter the usual mechanism of digital advertising.
The repercussions of the iOS 14 will significantly impact the businesses of tech companies that run ads, one of them being Facebook, which also tracks their users’ internet activity to choose which ads will appeal the most to a web user. The iOS 14 mandates app developers to ask permission from users before they collect IDFA (ID for advertisers). An IDFA is a unique code on every Apple device that advertisers utilize to monitor the device’s activity while connected to the internet, and will enable them to customize the ads being delivered. While IDFA access does not touch any of a user’s personal information, it compromises online privacy.
Facebook released a public statement on Wednesday, notifying its advertising partners of the possible changes that will come about with the new update on Apple’s operating system. It is stated that Facebook will cease IDFA collection on their own apps temporarily, as they wait for Apple to provide them with recommendations on how to work their way around the situation. Facebook users will also be reminded that they have a say in how much of their information they want to disclose both on the app or site itself and other sites and apps that partnered up with Facebook and send user activity to the social network.
This tug-of-war is complicated because the parties involved have their own motivations and it is unclear as to how much one loses if a decision is to be made, or how it will impact the interest of one when a middle ground is found.
Apple is a closed-knit, almost exclusive tech network - constantly insisting that their products value user privacy - while lacking their own advertisement-running business. Facebook and other digital ad runners generate billions in revenue with that aspect of their business alone, and that apparently enables them to freely put out web content that users consume without the expense.
With the new option, ad runners are at risk of losing the audience. There will also be much less information on potential customers and reduced delivery of targeted advertisements. As a result, they will be compelled to lower their prices as the strategy gradually becomes ineffective. Apple’s similar action back in 2017 on the Safari browser caused ad rates to fall in the said browser.
If ad-running tech companies plan to continue having their platform on the iOS update, they may have to come up with new ways to run their ads with the same efficiency and should expect a drop in revenue from that aspect of their business. Facebook already warned their partners on their recent statement about the decrease in monetization on their Audience Network.
“Ultimately, despite our best efforts, Apple’s updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14,” stated the Facebook team.
Targeted ads earn more on platforms with millions of regular monthly user volumes, particularly Facebook and Google, who have the biggest shares in digital ad visibility. While the billion-worth market cap of both tech companies safeguards them from the consequences of possibly losing the ability to run ads on the Apple devices that will use iOS 14, the small entrepreneurs that rely heavily on Facebook’s digital ad network to market their businesses and services will suffer the biggest blow.