According to a Financial Times report, the privacy changes introduced with the iOS14 release earlier this year benefited Apple by resulting in significant increases in Search Ads market share, iPhone app downloads, and revenue.
Apple’s app tracking transparency initiative has proven to be a profitable business move, as evidenced by the brand’s advertising business more than tripling its market share in the six months following the update.
It wasn’t all good news for everyone.
The removal of the Identifier for Advertisers (IDFA), the random device identifier assigned to user devices by Apple, has severely hampered advertisers’ ability to deliver personalized advertising on other platforms.
In July, Brian Bowman, CEO of Consumer Acquisition, told VentureBeat that advertisers’ revenue had dropped by 15% to 20%, with some reporting losses of up to 40%.
Apple explained its motivations for adding an opt-in prompt for targeted ad tracking in a statement last year:
“We believe technology should protect users’ fundamental right to privacy, and that means giving users tools to understand which apps and websites may be sharing their data with other companies for advertising or advertising measurement purposes, as well as the tools to revoke permission for this tracking.”
However, this dedication to privacy comes at a cost that has enraged many, perhaps none more so than Facebook.
Apple’s change, according to Facebook, could “significantly limit your marketing efforts” and “harm the growth of small businesses and the free Internet.”
Facebook, an advertising behemoth in its own right, said in a statement:
“Apple’s proposed changes will limit your ability to effectively reach, understand and engage people on mobile devices and across the web.
They will affect your ability to understand performance, control who sees your ads and make informed decisions about your advertising budgets.
As these changes take effect, over time, you may see an overall decrease in ad performance and personalisation and an increase in cost per action.”
According to Sean Johnston’s July report, only 10% of users were opting into tracking at the time. Consumers who have the option to protect their privacy are taking advantage of it.
Read Should Brands Still Invest In Offline Marketing: What Marketing Gurus Say.
And the losses of advertisers on other platforms are turning out to be Apple’s gains.
According to data from mobile marketing tool Branch, Apple Search Ads now drive 58 percent of all iPhone app downloads, up from 17 percent a year ago.
According to some analysts, Apple’s advertising revenue will exceed $5 billion this fiscal year, rising to $20 billion in just three years.
Apple’s Search Ads provide advertisers with prime real estate in the App Store, where developers, editorial stories, in-app purchases, categories, and other content compete for attention. In 61 geographic regions, Search Ads appear above organic search results.
According to Apple:
- Search is used by 70% of App Store visitors to find apps.
- Search is responsible for 65% of all App Store downloads.
- The average rate for Apple Search Ads is more than 50%.
According to another analyst cited by the FT, marketing spending on mobile apps for both iPhones and Android phones will more than double year over year, surpassing $118 billion in 2022.
Apple makes a lot of money from App Store searches. While the brand’s commitment to consumer privacy is admirable, it is clear that it is not entirely altruistic.
According to the brand:
“The technologies are part of one comprehensive system designed to help developers implement safe advertising practices and protect users — not to advantage Apple.”
However, Apple now has a clear advantage.
Last month, Facebook stated that it has “become more difficult to measure (the effectiveness of ad) campaigns on our platform,” and that Apple’s decision to discontinue the IDFA has had a greater impact on businesses than anticipated.
We can expect the pointed questions to continue as long as competitors and advertisers continue to feel the pinch while Apple profits from its own private initiatives.
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