Apple Shook Up the Mobile Ad Market with iOS 14.5. TIKI Saw a Major Opportunity.
Bridging the trust gap between brand and consumer is as easy as S-D-K
Here at TIKI, we are in prime position to fill an enormous vacuum left in the wake of the revolutionary privacy changes implemented by Apple with the release of their 2021 iOS 14.5 update (interesting quote in that article from some “Mike Audi” fella).
How? We’re building an SDK that will allow brands to increase the opt-in rates of data tracking by letting them tell consumers exactly what data they’re allowed to track, for what purposes, and what the consumer will receive in exchange for allowing data tracking.
Apple’s iOS 14.5 updates have a great deal to do with why brands are in need of improved methods of collecting user data for the purposes of personalization and building loyalty.
If you want to skip the history of Apple’s changes and the ripple effects it caused for behemoths such as Facebook, feel free to skip down to the TIKI-specific section. If you’re unfamiliar with the monumental Apple iOS 14.5 privacy changes and how in one update they accomplished more than any government or legislation has accomplished when it comes to data privacy, read on. We’ll get to the TIKI details a bit later on, and the full picture will be painted.
Apple Changes the Ad Revenue Game with iOS 14.5
Let’s take a trip back to April of 2021, when the internet landscape changed drastically due to one solitary iOS update from the folks over at Apple. Seeing an opportunity to please its users by catering to their desire for increased digital privacy and not at all having anything to do with an enormous business opportunity, Apple released version 14.5 of their iOS which forced any company publishing to the app store to ask users whether or not they wanted to opt in to ad-based in-app tracking. It is rumored that when the update was released, Mark Zuckerberg, age 38 of Palo Alto, California, threw an entire bottle of Sweet Baby Ray’s barbecue sauce at a wall in a fit of rage.
It was later reported in February of 2022 that Facebook lost $10 billion in ad sales revenue (8% of its yearly revenue) and had its stock drop a whopping 26%. Facebook blamed Apple’s iOS 14.5 privacy-oriented changes as the reason for the massive loss.
So what exactly is going on here, why did it piss off Facebook, and why does it matter?
First stop, IDFA. IDFA stands for “identifier for advertisers” if you’re keeping track at home. Simply put, an IDFA is a unique and individualized identification Apple assigns to every user’s device which allows for companies to track data generated by the device for the purpose of digital advertising. Technically, when we say companies are advertising to us, we really mean that companies are advertising to our specific device.
Prior to version 14 of Apple’s iOS the limit ad tracking (LAT) feature was not turned on by default. Instead, users would have to turn off ad tracking manually. Back in 2016, only 11.4% of users opted to limit ad tracking. In 2020, that number jumped to 31.5%. The 216% swing was of course enormous, but still less than 1 in 3 users were opting into the LAT feature. With iOS 14.5 things…changed. To say the least.
It's hard to get an accurate number (only Apple has that official data), but reports have estimated that only 5% of US-based users opted in to tracking on iOS 14.5, with 11% being reported globally. Other studies have found opt-in rates as high as 50%. Not to downplay the difference between 5% and 50% but the inverse of the percentage, 95% and 50%, are still much higher than the 31.5% of users who chose to limit ad tracking prior to iOS 14.5.
TIKI to the Rescue
So, how is TIKI in position to take advantage of the changing tides of digital advertising? Let’s dig into some surveys that may help us understand the huge market opportunity that sits in front of us. In 2020, AI-based personalization company Formation.ai surveyed over 2,000 consumers regarding their feelings toward brand loyalty. The answers show a huge discrepancy in ad-tracking opt-in versus actual willingness to share data with brands.
Check this out: 81% of the surveyed consumers are willing to share basic personal information for personalization. 83% said they’d be more willing to share data is the brand was transparent about how the data is being used. Good thing one of the three foundational pillars of TIKi is transparency. The other two, trust and user-centricity, certainly fit the bill here as well. If we dig into ol’ faithful, the 2019 Pew Research survey (4,272 panelists) on Americans’ sentiment toward online data privacy, we find that 79% of Americans are not confident that companies would publicly admit to misusing their data, 69% are not confident companies use their personal information in ways they feel comfortable with, 84% are concerned about the amount of personal information advertisers know about them, 69% understand very little or nothing about what companies do with the data collected about them, 72% say they benefit very little or not at all from the data companies collect about them, and 81% believe the potential risks of data collection from companies outweigh any potential benefits.
However, 64% of Americans say that the ads based on their personal data that they see reflect their interests somewhat, or a great deal. Couple that with the research from Formation.ai which finds 79% of people agree they’d be more loyal to a brand the more personalized its marketing tactics are and 73% say they’d be more likely to engage with brands that offer loyalty programs, and we unveiled a major opportunity in the deficit between the desire for personalization and acknowledgement of consumer loyalty and the lack of trust and understanding when it comes to the collection of personal data.
We already see Google trying to take advantage of this discrepancy with their AdMob integrations. One major flaw with the current Apple iOS data tracking pop-up is that it gives zero context as to what data is being collected, for what purpose, for how long, etcetera. Additionally, it only appears once---the first time a user opens the app---after which users have to toggle the setting on or off manually. In short, the Apple data tracking pop-up is essentially a “track all of my data for whatever you want” or “don’t do that” decision.
Enter TIKI. With the magic of research, we know users are actually more inclined to opt-in to data tracking if they know what’s in it for them. The Apple pop-up does not do that at all. Personalization and loyalty programs you want? With the upcoming TIKI SDK, personalization and loyalty programs are what you get. It’s a little thing we call compensation. Take a peek at an initial mock-up of what that would look like on your phone when you open up an app:
Users don’t know what companies are using their data for? We tell you. Toggle on and off at your own leisure. Don’t know what’s in it for you? With each toggle, businesses can offer specific bundles catered to your own personalized choices. For example, Company A might offer a 10% off of your monthly subscription to their service if you opt in to ad personalization and measuring ad performance. They might up that to 15% if you include cross-sell, up-sell and retargeting opportunities as a part of your data sharing. In this vein, it’s not really sharing. Sharing is giving something away with the expectation of receiving nothing in return. This is more of a trade, or an exchange. With TIKI enabling the user to actually own their own personal data, they can trade their data (opting in to tracking) in exchange for various forms of compensation, which could take the form of cash, discounts, or points toward loyalty programs.
PSA to the brands reading this: despite what the Facebook campaign might have you think, your digital ad revenue does not have to take a major blow due to the Apple iOS privacy changes. In fact, consumers actually want to trade their data with you, so long as you’re transparent about what data you’re tracking, what you’re using it for, and what the consumer receives in return. The people want personalization, but don’t necessarily understand that good personalization comes from their personal data. And, as of 2019, consumers don’t really trust you. Apple’s defaulting LAT to “on” didn’t do you any favors, but that’s just because they didn’t give you the ability to actually be transparent about what you’re doing. Loyalty comes from trust which comes from transparency. TIKI is set to give you the infrastructure to build long-term loyalty by letting you tell consumers what you’re going to do, and letting you do it.
After all, isn’t that what builds trust? Doing what you say you’re going to do? We think so. Time to re-think how we view user data.
Until next time.
Shane & The TIKI Team