Sunday, May 22

Mobile Advertisement Industry: Apple is a Threat to Facebook & others

Apple is looking to expand its mobile advertising platform alongside its implementation of the App Tracking Transparency (ATT) privacy policy. Both the initiatives pose significant commercial barriers to other mobile ad platforms and are likely to reduce their business performance. Apple, with ATT and expanding its advertising business, is severely undermining other advertising platforms, particularly Facebook. Apple’s implementation of a privacy policy effectively breaks the mechanism that those platforms use to target ads. In simple terms, Apple broke into Facebook’s bank in broad daylight, stole its most valuable resource, and left the scene, all while claiming the righteous goal of giving consumers privacy controls. 

In this case, Apple used its power to its advantage. ATT enables users to opt out of surveillance. It means, when a user chooses not to be tracked via the ATT prompt, the app is prevented from combining any data it gathers. This results in no data being passed on to third parties for ad customization purposes. 

When it all started, both Apple and Facebook have played fairly well in their respective partnerships with mobile app developers. They established successful commercial positions, with Apple serving as a content platform and Facebook serving as an advertisement platform. However, with both companies revising their business strategies, it put them at odds. Almost making them rivals. 

Until 2017, Facebook and Apple were bound together by necessity. Since Google posed a more urgent and harrowing challenge to both, neither company was stimulated to confront the other’s business model on mobile. However, product and policy changes at both firms may have undermined the strained bond. 

Apple saw services as a way to keep growing as hardware sales slowed; services have since grown to be an extremely primary source of income for Apple, accounting for nearly a quarter of the total revenue in Q1 2020. Following are the reasons why Apple is doing incredibly well:

  1. They are extremely strategic and know their business too well
  2. Substantial in nature
  3. Heavily demand-driven
  4. Efficient augmentation of all their initiatives

Apple is expanding its promotional options. The second advertisement slot will be in the App Store search page’s “suggested” apps list. Meanwhile, it attempts to grow its own advertisement business while undermining the 350 billion dollars digital advertising market, led by tech giants such as Facebook and Google. Rumour has it; iOS 14.5 would make it illegal for apps and advertisers to collect data from iPhone users without their permission. As a result, most users are likely to refuse to be monitored, potentially wreaking havoc on the mobile advertisement industry. Although Apple believes that this move would enhance consumer privacy, many suspect that it is simply an effort to improve its advertisement sector.

According to industry experts, there are two major reasons behind Apple’s compulsive need to expand its economy: 

Controlling App Distribution and Improving App Discovery

Ads have become the primary means of discovering new apps, and Apple has relinquished editorial power over content delivery. Facebook, on the other side, is the main beneficiary of this equation. Facebook essentially acts as the primary source of app discovery.

Enhancing Users’ Privacy

Apple consumers have more say about what information about them is gathered and used for ad targeting. Given that the current Limit Ad Tracking (LAT) rate on iOS is 30%, and the LAT setting is relatively difficult to locate, it’s reasonable to assume that customers care about their privacy and value the ability to monitor how companies use data about them. 

When Apple announced a dramatic new change to its Identifier for Advertisers (IDFA) in June 2020, it sent the entire mobile ecosystem into a frenzy. This update comes in the form of the new App Tracking Transparency (ATT) system, which requires developers to obtain users’ informed consent before accessing their IDFA. This is an inconvenience for marketers since the IDFA is the primary method for measuring and optimizing iOS advertising campaigns. 

However, it looks like the move is leaning more towards commercial benefits. It’s a clear commercial power grab disguised as a moral stance. ATT doesn’t offer users an “option,” and Apple’s recent users’ privacy policy changes are favorable to its ad network. 

In August 2020, Facebook mentioned a small part of its business that helps advertisers position ads on third-party websites and apps. It has also highlighted how Apple’s reform would affect small developers. Facebook’s main company, its flagship app, and Instagram will also be put under strain. The Apple move would require mobile applications to obtain permission from users before monitoring their activities, limiting the amount of data Facebook receives from apps to help create user profiles. Advertisers on Facebook essentially target their advertisements using these profiles. The move will also make it difficult for marketers to track the return on their Facebook ads, such as how many people see those ads on their phones and take action, like downloading an app. 

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