Apple's new iOS 14 update: More bad news for advertisers?

We recently discussed Google’s planned third-party cookie policy update, and the inevitable impact it will have on the digital advertising industry.

It’s certainly turned many heads since the news first broke. But it’s not the only big privacy-related policy update that’s made the headlines recently.

Fellow US tech giant Apple has another one just around the corner. The new iOS 14.5 update is set to implement a number of new changes that will strengthen Apple’s stance on personal data privacy. But it's going to make life more difficult for digital advertisers

So, how comparable is Apple's new iOS 14.5 privacy feature to the Google Chrome update? And, as always, how will it affect promotions?

Apple has been a big proponent of user privacy for a while now. The upcoming App Tracking Transparency (ATT) feature is the latest in a long line of pro-privacy moves the company has made.

Previous examples include blocking third-party cookies on Safari, and a high-profile legal dispute with the FBI over end-to-end encryption.

The new ATT feature that will be released with the iOS 14.5 update is set to alter default app tracking permissions from opt-out to opt-in. This means that developers will have to ask users’ permission to access and share their Identifier for Advertisers (IDFA).

The IDFA effectively performs the same basic function as third-party cookies. It allows advertisers to link actions and events, like ad clicks and app installs, to individual phones. This way, they can serve retargeted users with relevant ads and increase ad revenue.

Users will see two pop-ups when they download an app. The first will be from the app developer, and the second from iOS itself. The purpose of these pop-ups is to give the app permission to share the user's IDFA.

Unlike Google’s upcoming third-party cookie restrictions, Apple’s IDFA policy change is mainly related to apps and the user data they share. As a result, it won’t affect data that’s offered up by customers or collected via profile/log-in details.

This is an important distinction with regards to promotions. Many promotions don’t make use of customer information at all. Take generic discounts for example. They’re simply applied to products (often aided by a bit of market research), and customers are drawn to them organically.

Then there are promotions like loyalty programs, which rely on customer profiles to track things like product preferences, buying behavior, etc. While loyalty programs do collect data about customers’ activity, it is simply related to the actions they perform as consumers.

The final type of promotions are those that use personal customer data taken from sources like third-party cookies. In this case, personalized promotions are served to specific customers using personal data. It’s this type of promotion that will be much less effective as a result of the new IDFA and third-party cookie restrictions.

Both Apple and Google have faced accusations of monopolistic behavior with their new privacy-first policy changes. Competitors say that they’re trying to create ‘walled gardens’ for their own advertising products.

In other words, they’re supposedly tightening restrictions on cross-app tracking and third-party cookies, but they’ll still allow advertisers to target consumers via their own platforms. This significantly limits the options available to advertisers.

Interestingly, the walled garden analogy translates quite well to loyalty programs. Loyalty programs are effectively walled shopping environments which allow vendors to pick and choose which deals to show to their customers. They also offer a much simpler way to collect data about which products their customers like, and they offer customers better rewards and incentives.

You may be wondering whether loyalty programs will be affected by the iOS 14.5 privacy update, because they technically record customer data too. The answer to this question is yes and no.

Many loyalty programs are browser-based. They require customers to log in to their account, and then track metrics like purchases, point spend and promotion redemption in the backend. These loyalty programs won’t be affected by the iOS 14.5 update because they don’t track customers on their own devices.

However, many businesses, like Flash Coffee, have loyalty programs with dedicated apps. Customers use these apps when they shop, and many of these apps track various metrics to give better, more relevant rewards. They may track user location and clicks on products to offer more relevant rewards, for example.

These loyalty programs most likely will have to display an ATT pop-up, as they track customers on their phones. However, this doesn't mean they'll be useless once the policy changes come into effect.

This means that the vast majority of them expect to receive personalized incentives and rewards.

Going back to the app tracking pop-up, Apple allows app developers to display their own data privacy opt-in pop-up before the iOS pop-up appears. So, if you’re thinking of releasing an app for your loyalty program, just make sure you word you pop-up correctly.

Users should be aware of the advantages of sharing their data with your loyalty program. This includes being able to offer more relevant, personalized promotions.

If you communicate this clearly beforehand, you shouldn’t have anything to worry about when the iOS 14.5 update rolls out.

Apple's iOS 14.5 update will is big news for a few reasons.