June 16, 2021

The Cookie Apocalypse: Apple’s New Privacy Rules and What They Mean for Ad Quality

What’s happening: Apple’s new iOS update, 14.5, is tackling privacy concerns in a way American users and businesses haven’t seen before. The new update changes App Tracking Transparency (ATT) and Identifier for Advertisers (IDFA) by giving users the option to opt out of cookie tracking. The choices posed seem straightforward–– users can select “Allow Tracking” or “Ask App Not to Track”.

The idea was originally set forth in 2020, with plans to implement the update in September of last year. However, big firms including Facebook pushed back and delayed the update’s launch.

But now, it’s here and it’s posing many questions for companies who rely on cookies to sell their products to the right consumer. As 06.15.21, 20% of Apple users have already enabled Limited Ad Tracking (LAT), so where does this leave advertisers?

While data privacy signals alarms in some consumer’s heads, the concept of business-consumer compatibility is nothing new. Before technology, magazines were a staple in marketing pursuits. Candy and toys ads were featured in Nickelodeon Magazine in the early 2000s. Lawn equipment and furniture were advertised in Better Homes and Gardens. Why? Because the magazine’s target reader aligned with the company’s target consumer. Likewise, the reader of the magazine wouldn’t have to flip through pages of products that had no value or interest to them. It was a win-win-win for all parties.

The digital age moved that concept online. Since there is a vast landscape of measurable attributes, companies have relied on cookies to stay connected to consumers whose interests correlate with the companies’ products.

Consider this scenario: John Doe is a family man with a passion for grilling meats. He’s recently opted out of tracking with the newest update to his device. Now, he’s getting advertisements for dating websites and vegan products. So much here is wasted: the company’s money that paid for this ad, the time of the consumer who most definitely is not interested in these specific products, and the potential for another consumer who would be interested in veggie burgers and swipe-right dating.

Of course, the update does beget some favorable outcomes. Users can be assured that the conversation about the new Thai place down the street won’t elicit a string of advertisements for Asian restaurants popping up on their feed. On the flip side, companies, such as data brokers, that function solely in the cookie business will have to completely reevaluate their model.

The new update leaves many questions unanswered as to exactly how private this data will become. Third parties are left out of the loop; however, Apple users aren’t completely in the clear. Their device still records and tracks users to provide targeted ads in Apple-owned apps (you know, the ones pre-downloaded onto your phone such as the App Store and News) through anonymised interest-based cohorts. The key is that this information never leaves the device.

Of course, some skepticism arises here. Is this another play by Apple to gain the upper-hand against competitors through the promise of privacy?

Prior to this, we fundamentally understood that our data was used to show us ads that suit our consumer preferences. Now, we no longer have a clear idea of what’s being protected and what’s being tracked. Is it better the devil we know?