What Apple’s iOS 17 changes mean for advertisers

As Apple gears up for the public launch of its new operating system, iOS 17, updates to privacy and measurement practices are poised to impact how advertisers conduct their business. In particular, Apple will soon enforce new protocols to inhibit companies from surreptitiously tracking users. This behavior, known as “fingerprinting,” has been on Apple’s radar for several years, but iOS 17 sees the tech giant making its strictest swipe at the practice yet. Other changes that stand to impact advertisers include an update to SKAdNetwork—Apple’s ad measurement platform—and developments in Apple’s own ads business, which experts view as becoming a larger part of the company’s overall revenue. “I think it will be too tempting for Apple to avoid expanding its ad inventory,” said John Koetsier, VP of Insights at Singular, a marketing analytics company. The tech giant’s new operating system was announced in June at Apple’s annual WWDC conference. A series of beta launches, available to developers, have since rolled out; the public release is expected to come in mid-to-late September. More news from Apple’s WWDC Apple declined to provide a comment for this story. The company is scheduled to report its fiscal third-quarter results on Aug. 3. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Off with your fingers Starting this fall, Apple will require app developers to justify their use of specific application programming interfaces (APIs). The software in question is called a “required reason” API, some of which are commonly used and could therefore impact relevant advertisers. If Apple decides that the API use is unjustified, the app will not be permitted inside the App Store. The crackdown is meant to thwart fingerprinting, wherein companies access and trade device signals in order to determine a user’s identity. Ever since iOS 14.5, which initiated App Tracking Transparency (ATT), apps have had to receive explicit permission from users in order to track them. Only a small percentage of users are reportedly opting in, frustrating both advertisers and publishers such as Meta and Snap. Apple has set its sights on fingerprinting for some time, said Charles Manning, founder and chief executive of Kochava, a mobile analytics platform. Since 2021, the company has specifically stated that fingerprinting is prohibited under ATT, yet has stopped short of any substantial effort to curb the practice. The new API justification, referred to as “privacy manifests,” marks a change in strategy. “This is another step along the way of progressive enforcement,” Manning said. Privacy manifests were not expected to be the way that Apple fought fingerprinting. Instead, Private Relay, which anonymizes users’ IP addresses, appeared to be the probable tactic, especially as its popularity grew amongst Safari users. However, the feature remains accessible to iCloud subscribers only. Another feature called Link Tracking Protection seeks to inhibit fingerprinting by removing identifiable information from URLs accessed within Safari Private Browsing, Messages and Mail. “A lot of companies pass information across their sites, meaning this could cause a fair amount of havoc,” Manning said. In an effort to help adjust to Link Tracking Protection, Apple has extended Private Click Measurement to Safari Private Browsing. The solution provides a partial attribution report of which ads drive conversations, while also respecting users’ privacy. With its extension, the feature is now more effective in offering web-to-app measurement. More measurement problems Alongside iOS 17, Apple teased SKAdNetwork 5.0—the latest update to its measurement platform. Under 5.0, companies will be able to measure user re-engagement with their app, not simply conversions via an app download. This means that advertisers will know when users clicked an ad and were brought to their app. Beyond re-engagement, there does not appear to be much difference between 5.0 and 4.0. But this may not even matter for the foreseeable future given that industry adoption of 4.0 is still very much lacking. Only a handful of ad networks are significantly embracing 4.0, according to data from Singular. “Adopting SKAdNetwork 4.0 is a complex dance between multiple parties,” said Singular’s Koetsier. Look back: Apple’s privacy policies under fire from ad tech industry Not only do ad networks need to change their strategies around targeting and optimization, Koetsier said, but advertisers themselves have to alter their value systems, including their understanding of which ads work and which do not. The last week of July showed signs of increased adoption, most notably from Meta, which sourced 70% of its iOS measurement from SKAdNetwork 4.0 during this time. The rest of its measurement came from SKAdNetwork 3.0. SKAdNetwork 5.0 is simply too far away from adoption to be considered at the moment, Koetsier said. Apple itself hardly mentioned the update at WWDC, and has not yet announced a release date. In the meantime, advertisers continue to face issues with 4.0. This week, Singular discovered a bug in SKAdNetwork 4.0 that was altering conversion data. While not all ad networks will be affected, many likely will, and the issue could threaten to revert adoption progress, including Meta’s, said Koetsier. The word on Apple’s own ads business As Apple has clamped down on tracking in the name of privacy, it has steadily grown its own advertising business. The company’s U.S. revenue from advertising reached between $3 billion and $4 billion in 2021, depending on estimates, and as much as $5.3 billion in 2022. Apple does not specifically share these numbers, hence the lack of clarity. Search Ads make up the lion’s share of Apple’s ad revenue and are projected to continue doing so in the coming years. This platform serves ads that typically appear as sponsored search results in the App Store. There has been chatter, however, that Apple is nearing a point at which it will expand its ad inventory to include other formats. Podcasts, music and Apple TV+ apps have all been named as teeming gold mines for Apple to tap. Last year, Apple tested the waters on TV+ by bringing ads to its MLB programming. It is currently rumored to be in talks with the Pac-12, an NCAA football conference, regarding another TV+ deal, per ESPN. Koetsier, who thinks Apple could gross billions in ad revenue from podcast opportunities alone, believes the potential windfall makes growth a no-brainer for the tech giant. “It makes a ton of sense,” he said. There is still plenty of uncertainty, however. Apple, notably, does not utilize 3rd-party models like SKAdNetwork for its advertising, but rather Search Ads, given that it only advertises with first-party data. If it were to spread itself too thinly over different formats and with different partners, said Kochava’s Manning, Apple could feasibly come into violation with its own anti-tracking policies. “It is unclear how far they will go,” Manning said.

What Apple’s iOS 17 changes mean for advertisers

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