Apple's privacy fortress means an end to ad-tech patchwork solutions

Apple plans to start rolling out its long-awaited App Tracking Transparency (ATT) framework on April 26. This new development requires active and explicit consent for access to a device’s identifier for advertisers (IDFA), meaning publishers need permission before using a device ID or any other identifier for personalization and tracking on iPhones, iPads and even Apple TVs.

Apple has said that this move is designed to enhance transparency, even equating it to the FDA required “nutrition labels” you see on most food and drinks. But for marketers, this signals a significant decrease in the ability to use Apple’s IDFA for targeting, activation and measurement of their campaigns. It’s another move in the ongoing trend toward reducing marketers’ access to the data required for personalized media.

Similar to other moves by Google, these changes are made in the name of consumer privacy, but they also strategically bolster Apple’s ability to own the consumer relationship and the content consumers receive. Not only does Apple dominate the hardware space, but it appears the company is now staking its claim to be a gatekeeper to consumer data, much like Google and Facebook.

"Not only does Apple dominate the hardware space, but it appears the company is now staking its claim to be a gatekeeper to consumer data, much like Google and Facebook." – Loch Rose, Chief Analytics Officer, Epsilon

The impact won’t be small: 69% of marketers across industries say the elimination of IDFA and third-party cookies will have a bigger impact than the GDPR and CCPA. These shifts improve consumer privacy but will significantly reduce web and app publisher revenue and have already altered the way ad-tech companies do business. It’s not that the changes shouldn’t be happening—we support consumer education, transparency and data control—we just don’t think these changes materially improve consumer privacy. Instead these changes only put more power with the walled gardens, further shifting the balance of the marketing ecosystem.

At the end of the day, Apple’s announcement is another example of a platform inserting itself into the relationship between the consumer and the publisher, while building another higher wall to strengthen its own fortress. And within Apple’s fortress, it’s defining what privacy is for users, publishers, advertisers and ad-tech companies, without limiting Apple’s own access to its users’ devices.

The writing on Apple’s (rising) wall

Estimates vary on what levels of opt-in to IDFA to expect post-ATT rollout. Some experts are predicting a global opt-in rate of less than 20%. These low opt-in rates will significantly reduce marketers’ ability to reach Apple device users.

This move is no accident, and it will create a void in the market to access Apple consumers. So, who will fill that void? Apple is certainly well-positioned to do that.

Not only does Apple dominate the hardware space, but it appears the company is now staking its claim to be a gatekeeper to consumer data, much like Google and Facebook. As Apple’s device sales stagnate, it’s looking for the next conquest. Controlling the app store and forcing developers to move to subscription-based models (including its own, like Apple TV+, Apple Music, as well as the Apple One bundle) gives Apple the opportunity to favor apps most likely to provide lucrative revenue sharing, while keeping open the option to enable advertising through an Apple-controlled platform in the future.

Meanwhile, consumers are unbothered because they believe Apple has shielded them from errant companies looking to exploit their data. Little do they know that Apple is simply confining them to its own fortress.

While Apple announced this change in 2020, it’s been increasing privacy controls for a long time, beginning in 2017 with Intelligent Tracking Protocol (ITP) and the deprecation of third-party cookies in Safari. The common theme is one of Apple making it harder for publishers to monetize and marketers to personalize—except in ways controlled by Apple.

Overall, these shifts are going to shape a very different connected experience.

A patchwork solution won’t work forever

While this change is disruptive and a competitive advantage for Apple, it’s not the end of the story. No one should be crying for ad-tech companies; it’s our job to meet and exceed the requirements of our market. But companies that are continually putting patches on their technologies to weather the changes are going to fail. As access to data diminishes, we’re past the point of being able to solve problems reactively as they arise.

It is clear that any ad-tech partner that heavily relies on mobile ad IDs will be severely impacted. This will also create fewer choices for reaching users on Apple devices, meaning advertisers may feel forced to spend more with walled gardens, such as Facebook and Google, which have first-party account-based logins and thus don’t require access to IDFA. Fewer options for advertisers affect the economy of the market, decreasing the ability for smaller publishers and newer brands that are struggling to gain traction in the marketplace.

Not all ad-tech partners are hindered by this change, and brands should take notice. As privacy continues to evolve—and as big players like Apple and Google set the tone of how that privacy is implemented—brands need an identity partner that isn’t (and has never been) dependent on third-party cookies or device IDs.

At Epsilon, we are confident that we can ride this next wave of data deprecation. For more than 50 years, we’ve been supporting brands’ first-party data. In a recent Forrester report, analysts said “Epsilon’s PeopleCloud offering shows: It’s modular, scalable, and better integrated with CORE ID, Epsilon’s resolution product. That means better reach and scale across the digital media ecosystem.” Epsilon also received the highest score in the current offering category in the evaluation.

Epsilon’s CORE ID can identify and serve 98% of ads to real people. Less than 5% of our IDs rely on IDFA as their only digital touchpoint, and on average, each CORE ID is attached to five digital touchpoints. Because of this, we have already proven our ability to succeed within Apple’s environment; we saw a 25% increase in ad delivery for our clients on Safari after Apple deprecated third-party cookies in 2017. And we’re leaders in consumer privacy, ensuring persistent opt-out across devices and cookies (vs. just opting out of a single identifier but still receiving ads on others).

Those in the ad-tech space who don’t already have future-proofed solutions are a day late and a dollar short. We’ve all known for years that this is coming. As we built our digital solutions, we prioritized privacy, security and strong partnerships that helped us anchor our identity to a durable name and address foundation. This has created solutions that enable brands to have long-lasting connections with consumers in a trusted, consent-based relationship.

**This article was originally published on Adweek, April 2021.