Monday July 06, 2020 |Notes

Apple's privacy changes will make it more difficult for independent online businesses

Apple is implementing privacy changes that will require users to opt-in to third-party site tracking. This will make it more difficult to track the effectiveness of online marketing campaigns, which in turn will lead to higher costs.

In yesterday's post, I linked to an excellent piece by Ben Thompson. In addition to his comments on the Facebook ad boycott, Thompson also discusses apple's privacy changes in relation to direct to consumer ads.

Facebook was the king of the IDFA (and the Google Advertising ID equivalent on Android): it was the linchpin around which its app install business in particular was built. The company could understand when a user spent a certain amount in a game, for example, look for users that were similar, and then display an app install ad for that game, and measure how effective it was. In fact, over the last few years, Facebook has simply asked advertisers to specify what return on ad spend they are hoping to achieve, and Facebook does all of the work of figuring out how many ads to display to which users — the entire process is automated.

This part of the business is going to change a lot. Apple was quite clever in their approach: instead of killing the IDFA, which could be construed as anti-competitive, particularly given Apple’s expanding app install ad business (which is expanding beyond App Store search ads), Apple is simply asking users if they would like to be tracked, and letting them render the IDFA useless. Notably, Facebook has declined to even show app install advertisements to the 30% of U.S. iPhone users that turned off their IDFA of their own accord — and now it is opt-in, instead of opt-out.

While privacy is a legitimate concern, its disappointing that it will make it more difficult and costly for direct-to-consumer businesses built upon the existing model.

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