Apple Feature Forces Change in Online Ad Industry

Apple’s Intelligent Tracking Prevention feature has made it difficult for online advertisers to use cookies to target Safari users based on their browsing habits, according to The Information, which cited data from The Rubicon Project.

Third-party cookies “serve as the foundation for almost all advertising use cases,” noted Jordan Mitchell, head of consumer privacy, identity, and data at the IAB Tech Lab.

The blocking “negatively affects the ability for brands to target audiences, and therefore the revenue earned by website properties,” he told the E-Commerce Times.

“I think much of what we’re seeing is specifically focused on advertising retargeting and clamping down on the bad actors who are leveraging tracking techniques to execute more bad spray-and-pray tactics pretending to be personalization,” suggested Constellation Research Principal Analyst Liz Miller.

“Serving me an ad that shows me the shoes I bought yesterday now, for a lower price, doesn’t enhance the customer experience or foster trust and loyalty among customers, but it sure moves targeted ad units,” she told the E-Commerce Times.

The Scourge of Advertisers

Safari users tend to be more affluent and, thus, more attractive to users. Safari claimed nearly 53 percent of the mobile browser market in the U.S. last month, while Google Chrome’s share was about 40 percent.

Only about 9 percent of iPhone Safari users allowed outside companies to track their activity on the Web, versus 79 percent of Google Chrome browser users, Nativo told The Information.

Blocking tracking cookies has sent ad prices on Safari falling by more than 60 percent. Meanwhile, the cost of ads on the Google Chrome browser has risen slightly.

However, Apple is not alone in blocking tracking cookies.

Firefox’s Enhanced Tracking Protection blocks third-party cookies by default. Microsoft announced it will do the same with its Edge browser, and Google will add cookie-blocking controls to its Chrome browser.

“This news of more hurdles and roadblocks to profit and margin isn’t good for ad agencies, media firms, and publishers,” Constellation’s Miller remarked. “Ad units are shrinking while ad costs are increasing by as much as 6 percent, so everything could start costing more.”

That said, focusing on first-party data — the data gleaned after getting permission from consumers — “is becoming more and more important to both advertisers and publishers,” observed Constellation Research Principal Analyst Nicole France.

“Apple, Firefox, and Microsoft have all figured out that their browser users expect to have better data privacy and protection,” she told the E-Commerce Times. “Successful businesses are starting to come to the same conclusion.”

Alternatives to Cookie Tracking

Personalization will remain a key issue for both advertisers and the ad industry. Members of the Association of National Advertisers selected “personalization” as the ANA 2019 marketing word of the year.

However, marketers should use caution with their personalization strategies and tactics because they might not be well received by consumers, advised the ANA, and because some believe that more personalization does not necessarily provide a better experience.

Advertisers are turning from tracking cookies to contextual advertising and other technologies.

“Large-scale blocking of cookies, without a privacy-forward alternative for the industry, further undermines consumer privacy and results in unintended consequences,” the IAB Tech Lab’s Mitchell cautioned.

“For example, it’s encouraged misdirected innovation around more opaque tracking techniques such as fingerprinting, which cannot be detected or controlled by the consumer or used in ways that preserve and respect their privacy choices,” he pointed out.

Browser fingerprinting tracks Web browsers by the configuration and settings information they offer websites, creating profiles of consumers based on various factors. It is difficult to detect and thwart.

If advertisers move to platforms such as Facebook, Google, or Amazon, consumer privacy could take a huge hit.

“Amazon, Facebook, and other platforms collect their own internal data from their customers, regardless of browser, so consumers might end up surrendering more of their online privacy than they might think,” noted Keri Rhodes, marketing director at Etailz.

Amazon “has seen explosive growth in its ad revenue over the last few years,” she told the E-Commerce Times. “More companies are taking their own search engine marketing knowledge and moving over to Amazon and Walmart through these companies’ software solutions.”

Tokens May Be the New Key

The drive to limit tracking “is accelerating marketing and advertising towards an alternative of tokenized networks where consumers are given more control over their data and what is shared in exchange for transparent value,” Constellation’s Miller said.

Such networks are blockchain-based and create a trusted connection between the advertiser, publisher, and user.

The IAB Tech Lab has issued a Proposal for Enhanced Accountability, which suggests the use of an encrypted, revocable token for ad delivery that builds consumer privacy into the fabric of the ad ecosystem.

“We are calling for collaboration across industries to rethink the HTTP cookie as the only technical mechanism available for storing and respecting consumer privacy settings,” Mitchell said.

“Part of getting personalization right means understanding when, where, and how to advertise in a way that’s useful rather than invasive,” France remarked. “That’s where thoughtful advertisers and publishers can take the lead.”