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Sprinkles in Opposition to the Changes

When consumers were asked if they would agree to a request from a mobile app seeking to share their data with advertisers, 23% said “Yes.”

“Facebook is speaking up for small businesses. Apple’s new iOS 14 policy will have a harmful impact on many small businesses that are struggling to stay afloat and on the free internet that we all rely on more than ever. Here is an overview of what Apple is doing and where we stand:

1. They’re creating a policy — enforced via iOS 14’s AppTrackingTransparency — that’s about profit, not privacy. It will force businesses to turn to subscriptions and other in-app payments for revenue, meaning Apple will profit and many free services will have to start charging or exit the market.
2. They’re hurting small businesses and publishers who are already struggling in a pandemic. These changes will directly affect their ability to use their advertising budgets efficiently and effectively. Our studies show, without personalized ads powered by their own data, small businesses could see a cut of over 60% of website sales from ads. We don’t anticipate the proposed iOS 14 changes to cause a full loss of personalization but rather a move in that direction over the longer term.
3. They’re not playing by their own rules. Apple’s own personalized ad platform isn’t subject to the new iOS 14 policy.
4. We disagree with Apple’s approach, yet we have no choice but to show their prompt. If we don’t, we’ll face retaliation from Apple, which could only further harm the businesses we want to support. We can’t take that risk…

… Apple announced the new iOS 14 AppTrackingTransparency policy under the banner of increased privacy for people, while actually pushing businesses and developers into a business model that benefits Apple’s bottom line in two ways:

  • Apple tax: If content creators have to turn to ways to make money outside of advertising, such as charging people for a subscription or in-app payments, those fees are subject to an Apple tax ranging from 15% to 30%. And this is big business: as Apple’s hardware sales are slowing and they have to pivot to their services business, its App Store platform grossed around $50 billion in 2019. With these changes, Apple stands to profit even more from the App Store. In short, Apple’s update changes mean more money for Apple and less free stuff for people.
  • Apple’s advertising business: Apple’s policies leave very limited options for app developers to find customers through effective advertising, and conveniently, Apple’s own advertising products is one of them. That’s right, Apple’s own personalized ad platform is exempt from the new prompt requirement they’ve imposed on other companies. By default, Apple uses data it collects — including in-app purchase data that Apple collects from within apps owned by other companies — to improve the efficacy of Apple’s own ad products. And, if people don’t want Apple using their data for ads, they’ll have to go find the control deep within their iPhone settings.

The truth is, these moves are part of Apple’s strategy to expand their fees and services business.”

Dan Levy, VP of Ads and Business Products at Facebook

“Apple has said it is making these changes to its upcoming operating systems to protect consumers, ostensibly in an altruistic move. But it is also possibly trying to head off regulators intent on crafting stronger privacy laws.

Some analysts believe that Alphabet Inc.’s Google could follow suit with its Android operating system.

‘These new Apple requirements are just one of many changes sought by platforms and regulators in the evolving ad ecosystem that prioritizes privacy,’ Colin Sebastian, an analyst with Robert Baird, wrote in a recent note. ‘Google could replicate many of these restrictions for Android, and cookies will be eliminated from browsers next year.’

Sebastian believes that other losers in this IDFA battle will be mobile app developers such as Snap, TikTok, LiveRamp and mobile marketing companies. He also included Zynga, Shopify merchants and other advertisers in his note.”

Therese Poletti, Marketwatch

“Apple may stand to benefit the most. As mobile ads in general become less effective, that may spur developers to charge up front for apps or implement paid subscriptions. Either of those options would increase Apple’s profitability because it takes a commission of as much as 30% for any digital content sold on its platform (its App Store is already the subject of antitrust efforts). The privacy push could also help the company’s device sales, convincing consumers it cares more about protecting their data. It may even help Apple’s own advertising business. The Financial Times reported on Thursday the company plans to add a second advertising slot on its App Store search page later this month just as app makers will be looking for other alternatives…

… Digital advertising dollars will have to flow somewhere, and Apple’s new policy does nothing to stop companies from tracking user behavior inside their own apps and ecosystems. So the assets of incumbents Facebook and Google parent Alphabet Inc. — both of which have unrivaled quantities of internal data on what the billions of users on their platforms buy or are interested in — become even more valuable for advertisers. Marketers will now pay more to buy an Instagram shopping ad if they can see it led to a direct sale inside an Instagram e-commerce Shop…

…There is no doubt Apple’s move will have positive effects on the privacy practices for the entire industry. That should be applauded. But on the inequality front, where a handful of technology behemoths grow more dominant while increasingly stifling the competition — this move may only exacerbate the problem.”

Tae Kim, Bloomberg ($)

Sprinkles in Support of the Changes

When consumers were asked if they would agree to a request from a mobile app seeking to share their data with advertisers, 39% said “No.”

“Richer data on consumer spending and behavior has, of course, always been desirable. Imagine the allure of a marketing campaign that puts ads for Homer Simpson sleeping bags only in front of fans of “The Simpsons” during camping season. But such data collection really isn’t consumer-friendly, and it’s unnecessary for corporate growth — many companies in the pre-internet era somehow managed to rise from start-up to major corporation. Furthermore, it is not the consumers’ job to ensure that companies have effective marketing…

… While Apple’s proposed fix is not a panacea, it would be a step in the right direction. If users want to provide more of their data to app makers, they can make that choice. It seems that most Americans would prefer to keep their every click to themselves: An August survey by TapResearch showed that fewer than one in four respondents were likely to allow apps to track them if given the choice.

It’s also possible, if not likely, that Apple has ulterior motives for the change. By making tracking more difficult, it could be pushing free apps toward paid services to make up for revenue lost from targeted advertising. (Apple takes as much as a 30 percent cut of in-app sales.) Or it could be working to preference its own tracking technologies that allow it to make digital dossiers based on consumers’ behavior within Apple apps and services. Apple denies it has anything but consumer privacy in mind, and it has said it doesn’t share that data with others.

Until the federal government more seriously takes up data privacy, consumers will be vulnerable to corporations that are motivated by profits to find new and creative ways to harvest personal information. Apple may have a hidden agenda behind its privacy measures, but if a result is Americans’ having more control over how and where their sensitive information is used, it’s a risk we should be willing to take.”

Greg Bensinger, NY Times

“The end of third-party cookies and the beginning of opt-in user tracking in Apple’s iOS devices have some advertisers worried, but pivoting toward first-party data and better customer experiences may lead to even more success…

… For example, to learn how it might promote its liquor brands in a world without third-party tracking data, Bacardi ran an advertising campaign for one of its brands, Bombay Sapphire gin, in the United Kingdom, according to The Wall Street Journal.

The campaign sent offers such as emails and Instagram ads to 10,000 consumers who had visited Bacardi’s website or distillery. The campaign did not use third-party data.

‘The result was a click-through rate, which indicates how often ad exposures lead to clicks, around 9-percent higher than previous campaigns that relied on common but now endangered targeting methods, such as using data from third-party sources. The new campaign also saw a 14-percent increase in cost efficiency as measured by a cost-per-click metric,’ wrote Alexandra Bruell in the aforementioned article.”

Armando Roggio, Practical Ecommerce

“It’s true that small businesses generally depend on advertising. In recent years, because of the overwhelming popularity of social media, and Facebook’s monopoly in that space, that’s meant that many small businesses depend on Facebook. But it doesn’t have to be that way—small businesses would still find other places to advertise in targeted ways even if Facebook didn’t exist, let alone if its targeting and tracking features were fully deprecated. Consider the statistics Facebook presented in its ads. What does the fact that 44 percent of small businesses increased advertising during the pandemic effectively mean? Only that, during the pandemic, more people are stuck at home, and Facebook’s monopoly ad network is seeing more consumption as a result. More businesses are advertising over it because more consumers are on the couch looking at their phones. This figure doesn’t necessarily indicate that small businesses benefit from advertising on Facebook, just that they have no other option.

The company also notes that without targeting, sales for small businesses would decrease by 60 percent for every dollar spent on Facebook ads. But that’s a potentially misleading figure that doesn’t speak to the possibility that these businesses will identify alternative places to reach consumers. We already know that without targeting based on personalized optimization, advertising on Facebook would be far less effective. Recall that in the Facebook advertising network, ad placement is priced by auction, meaning that with less effectiveness in targeting, the price of advertising on Facebook would correspondingly decrease—which in turn would open up more marketing budget for small businesses to advertise elsewhere…

…Apple’s policy will take a bite out of surveillance capitalism, and will hand that excess profit back to traditional media and advertising businesses that will offer small businesses a greater diversity of opportunities to get the word out about their products and services. A more meaningful number for Facebook to report would be how deprecating ad-targeting options correlates, if at all, to the overall commercial success of small businesses—not their sales rates on Facebook itself. Facebook can research and eventually report the former, but it is well aware that such a study wouldn’t yield a useful number for their purposes.”

Dipayan Gosh, Wired