Jul 1, 2021

The Impact of Apple’s Latest Privacy Changes on the Digital Ad Space

Welcome to Ad Tech’s Privacy Era It’s the one word on every ad tech professional’s mind lately—privacy. Conceptually, the right to privacy embodies the belief that a person’s private information should be free from public scrutiny and that we have a right to be left alone. However, as technology evolves, an increased amount of personal…

Welcome to Ad Tech’s Privacy Era

It’s the one word on every ad tech professional’s mind lately—privacy. Conceptually, the right to privacy embodies the belief that a person’s private information should be free from public scrutiny and that we have a right to be left alone. However, as technology evolves, an increased amount of personal information has become available to third parties for use in advertising targeting. From a marketing perspective, it makes sense. When consumers share information regarding their online browsing activity, advertisers are able to serve them with relevant messaging based on their interests, effectively resonating with them and driving action—win/win, right? Not quite.

With increased concerns surrounding how consumer data is being accessed, managed, and shared, the ad space has had to pump the brakes on certain targeting tactics and swiftly pivot processes to avoid the risk of losing consumer trust. As discussed in last month’s Trends piece, third-party cookies are disappearing—with mobile ad IDs (MAIDs) not far behind— and now IP addresses are being added to the list of vanishing signals used for audience targeting.

In it’s latest shakeup, Apple has announced a batch of changes to various apps that aim to put user privacy front and center. The news comes just one year after the company upended the mobile ad landscape, when it announced plans for the AppTrackingTransparency (ATT) framework, kicking off an extended confrontation with many mobile apps and advertising companies.

The Big Apple – U.S. Market Share

Apple Inc. is the world’s largest technology company by revenue and, since January 2021, is the world’s most valuable company. As of 2021, Apple is the world’s fourth-largest PC vendor by unit sales and fourth-largest smartphone manufacturer—with more than 1.65b Apple products in use worldwide. It’s safe to say Apple’s global reach (and influence) is massive. From its web browser and email services to device sales, Apple touches it all.

Apple iPhone continues to increase its stronghold as the leader in email client market share—up almost 5 percentage points versus the prior year. About half of all emails are opened on Apple apps. Apple iPhone (38.9%) and its native Mail app (11.5%) capture a majority of the global market share, followed by Gmail (27.2%).

When broken out by device, Apple is a leader in mobile and desktop opens:

Apple’s new features could hinder the market for email client competitors if more privacy-conscious email users migrate to Apple’s Mail app in the future.

Timeline of Apple’s Privacy Changes to Safari and iOS

Apple has always stressed user privacy as part of its core mission. Over the past few years, Apple has taken a strong stance on protecting the privacy of its customers by providing them with transparency and control over their information by introducing a number of changes to its devices, Safari web browser, and operating systems—and is likely to continue its focus on this issue into the future.

Understanding The Industry Impact

The industry has seen rapidly unfolding regulations around cookies and privacy data—and Apple’s focus on putting privacy at the heart of the user experience is just a sign of the changes still to come in the advertising ecosystem. Many see the latest changes as Apple serving its own interests, as these changes will likely give the company a better advantage over competitors. Apple’s latest round of privacy features, set to debut later this year, will impact the industry in different ways, creating new limitations for digital advertisers. Here’s an overview of the new features and their potential impact.

1. Elevated Email Inbox Privacy

Mail Privacy Protection prevents senders from using “tracking pixels” and allows users to opt out of sharing their IP address and location with an email sender. The Mail Privacy Protection feature is built specifically into Apple Mail, meaning users of other apps like Gmail and Microsoft Outlook will not be affected.

Impact: These features could severely hinder marketers’ ability to measure the effectiveness of an email campaign and limit the ability to build strong user profiles, as email addresses often serve as the unique, foundational identifiers that can then be enriched with third-party data. With the IP address hidden, email senders (marketers) won’t be able to connect the account to other online activity (such as web visits and sales) or to their location (limiting attribution capabilities to certain campaigns and ROI measurement), or know if and when the receiver opened an email.

These features will likely lead to lower open rates across the board and subsequently impact deliverability; low open rates often signal to internet service providers (ISPs) that subscribers are not engaged with a sender’s content. If open rates fall substantially, ISPs may even be forced to adjust their open rate benchmarks.

Apple’s new privacy plans could threaten many of the pandemic-era gains for email marketing. Open rates soared during the early days of the pandemic as people began to work from home—which amplified the reliance and importance of email marketing.

23.8% jump in open rates between February and March 2020.
78% of marketing professionals considered email to be important to a company’s overall performance, compared with 71% who said the same in 2019⁴

Apple also unveiled a feature, Hide My Email, which is automatically included in iCloud, Safari, and the Apple Mail app. This lets users generate a single-use, randomly-generated email address—essentially a burner email—for websites that ask for such information before allowing access. Users will still receive emails from said websites in their real inboxes, but the website will not be able to see a user’s actual email address.

Impact: Without access to IP addresses, marketers that rely heavily on this type of data for identification will need to adopt new, privacy-compliant means by which to track user behavior and serve targeted ads.

2. Privacy Reports

Apple announced a new feature called the Safari Privacy Report, where people will be able to see which trackers are prevented from profiling them, in addition to an App Privacy Report, which will live in settings and provide an overview of privacy-related matters as they relate to installed apps. For example: how often apps use your contacts, photos, camera, microphone, location, or other data and identifiers. The App Privacy Report will also show which third-party domains are receiving your information.

Impact: These reports offer users a quasi-report card for all of a device’s apps, but could present new challenges for marketers who rely on the collection, storage, and sale of first-, second-, and third-party data for tracking and ad targeting purposes.

3. Built-in VPN Access

The company announced a new service, iCloud+, which will likely become available sometime this Fall, that boasts several new data protection features, the most notable addition being Private Relay. It’s essentially Apple’s own VPN service within Safari, which allows Apple to route traffic through two separate relays to obfuscate information regarding who the user is. While one relay gives the user an anonymous IP address, the second is used to send the browsing query to the appropriate results—encrypting web traffic.

Impact: The move raises the already-towering walls of the walled gardens of top tech players. While it may be protecting consumer data, it is also likely to benefit Apple by giving the company greater control over the tracking and ad landscape. While it appears that for now the feature only applies to the web and a small percentage of app traffic (specifically, unencrypted HTTP app traffic), there’s no reason it can’t eventually also be rolled out for apps—and it could be one way to curtail fingerprinting, a banned identification method Apple has yet to begin serious enforcement against on iOS. Although IP addresses aren’t the only ingredient used in fingerprinting, they are one of the key signals.

Thriving in a Privacy-First World

The changes Apple has made to Safari and iOS make it harder to identify users across different websites and mobile apps—impacting the following capabilities:

As expected, Google (which recently announced that it will be delaying its third-party cookie removal to late 2023) is also following suit with AAID restrictions (though not as dramatic) coming to Android devices later this year—another indication that brands can no longer try to find loopholes in how they reach audiences. While many solutions have been proposed that aim to run these activities without third-party cookies and the IDFA, they don’t offer the same scale. Despite the latest shakeup, GroupM expects digital advertising (excluding U.S. political) to grow by 26% in 2021.⁵)

Ultimately, better engagement means better results for marketers. Organizations that embrace these industry changes, collaborate with strategic data partners, and work to create better engagement with audiences will be best positioned to thrive in the new privacy-focused landscape. To effectively earn their trust, brands need to show consumers that they value their information and are working to create an overall better online experience for them—in a privacy-compliant way.